Make sure your insurance is up to scratch

There’s nothing wrong with signing a contract with a client directly, but it’s important that these new contract terms are carefully reviewed. This is to ensure that the insurance you hold is adequate, should things not go to plan whilst an individual is on their placement.

In this situation, you might ask:

• Who accepts liability for the individual whilst on assignment? Is my business being held liable or does the ultimate responsibility lie with the end client?
• What limits of indemnity does my business require? Are these stated in the contract?
• Is my business sufficiently insured if a situation does arise and if not, what additional covers do we need?

As well as making sure that the insurance your business holds is fit for purpose, it’s also vital to check that the contract doesn’t contain any particularly demanding or harsh terms that could impact your business.

Three key terms to pay close attention to:

1. Acceptance of Liability – certain liability or indemnity clauses mean that your business is expected to accept all responsibility for the actions, errors and negligence of the personnel supplied, whilst they’re working on assignment.

The implications of signing a contract containing this clause could mean that your insurance may not provide the correct cover or if it does, at more of a cost to your business. Also, if an accident occurs involving a placement you have provided (e.g. they’re seriously injured), you could be held legally liable for the damages and/or injury.

2. Waiver of Subrogation Rights – this is a clause that prevents an insurer from recovering any losses back from your client named in the contract.

Maintaining your and your insurer’s rights of subrogation is usually a condition of your insurance. It’s important to note that acceptance of a waiver of subrogation without your insurer’s prior written consent is a breach of your insurance terms.

3. Hold Harmless Agreement – this is a promise not to sue, even if the party who is “held harmless” caused or contributed to the accident or loss. 

If your business agreed to hold the end client ‘harmless’, this would mean that you couldn’t redirect any claims occurring to the end client, even if the end client were at fault. As a result, your insurer may pick up any claims that occur, thus having a large impact on your future renewal premiums.

How can we help 

We’ve been working in the industry since 1988, offering specialist products tailored for your payroll or recruitment companies. We also offer different group models – such as Group Personal Accident and Group Public Liability – to help your contractors stay protected should an incident arise.

• Free contract vetting service for policyholders – we’re able to look at your client contracts and advise on insuring clauses to ensure your clients are being fair and reasonable within their demands.*
• Ability to place Primary Insurance for Combined Liability, if requested under Contract.
• Full Vicarious Liability under Professional Indemnity Insurance if required
• Support and assistance of our in-house claims team from start to finish

To find out how Sutton Winson can help your business, contact James Allan on 01444 251 181 or [email protected]

*Please note that our service does not include dispensing legal advice on contract law and negotiation, nor the suitability of the agreement to meet your business needs. However our comments, founded on our experience, are intended to assist you or your legal advisers in negotiating an acceptable contract yet minimising your risk exposure.