It has become a common practice for freelancers to sub-contract out packages of work to other highly skilled professionals. 'Subbies' as they are known. This approach can greatly enhance a freelancers in house capability without increasing overheads.
In some cases sub contractors are hired because they possess expert skills, others as a stop gap measure to handle big projects and seasonal demand. Either way before you consider bringing in re-inforcements its wise to check out if your own professional indemnity insurance policy covers the liabilities of subcontractors working on your behalf. The last thing you need is this kind of scenario!
Nick: Hey, John I got into a deep trouble. I've just been sued by one of my clients for damages of £500,000.
John: Hey, that's bad to hear. What went wrong?? Don't you've professional indemnity cover, that should take care of it.
Nick: I've got professional indemnity but I spoke to the insurance copmany and my professional indemnity doesn't cover me.
John: Really!!! Why so??
Nick: Actually what happened is one of my Jr. Architects defaulted on a design and I failed to check it. Now the project has crashed and the client is seeking compensation. My professional indemnity doesn't cover me, as my Jr. Architect who worked as a sub-contractor on my behalf was responsible. My professional indemnity policy only covers my own professional liabilities and not those of my subcontractors.
John: Oh! well that's bad to hear. I hope you will reach to some sort of settlement with your client.
Nick: Yes, I hope the same to. Anyways, that is an important lesson learnt learned the hard way.
Message of the story? Engaging in large projects often requires you to hire subcontractors. If the work is not done properly and a loss occurs, you and your insurer may have to pay for the loss. So, always make sure your PI policy covers subcontractors liabilities. If it doesn't, request that your sub contractors carry adequate professional indemnity cover themselves. Otherwise you are exposing yourself and your business to potentially ruinous claims.
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