Do you need insurance if you hire subcontractors or freelancers?

If you’re self-employed and need to bring in some outside help, even just occasionally, your current policy might not cover you.

Whether you hire a labourer for a few days, outsource some admin or a design job to a freelancer, or call in a specialist on a large job, you may need to update your insurance policy or take out a new one entirely.

It all depends on who they are, how they work, and whether they’re legally classed as part of your business.

The two types of subcontractors

Insurers usually draw a line between two categories: labour-only and bona fide subcontractors. The difference has significant legal and insurance implications, particularly in terms of liability.

1. Labour-only subcontractors

These individuals work under your direction using your tools and often on your site or premises. That could include:

• A tradesperson you’ve hired short-term to meet a deadline
• A helper you’ve brought in to lift or transport stock
• A general assistant who follows your instructions during client work

Even if they invoice you as self-employed, HMRC and insurers may treat them as temporary employees. That means you’re likely legally required to have employers’ liability insurance.

This applies even if:

• They only work with you occasionally
• They’re family or friends
• They carry their own public liability insurance

Not having cover puts you at risk of a fine – up to an eye-watering £2,500 for every day you’re uninsured – and leaves you personally liable for any injury or illness they suffer while working for you.

More on employers’ liability insurance

2. Bona fide subcontractors

These are professionals running their own business. They usually:

• Use their own equipment
• Work independently without day-to-day direction
• Invoice clients directly
• Take responsibility for their own tax, insurance, and risk

If you’re bringing in someone to handle a specific project – like a freelance web developer or a fellow contractor with their own setup – they’ll usually count as bona fide. In this case, you might not need employers’ liability cover, but you should make sure they have public liability insurance of their own.

That’s because if they damage a client’s property or cause an accident, and they’re uninsured, the legal fallout could land on you — particularly if you brought them onto the job or introduced them to the client.

More on public liability insurance

Practical example: builder hiring help

Let’s say you’re a sole trader running a small building business. You win a job that requires extra hands, so you bring in a mate to help with demolition and clearing. He uses your van, your tools, and follows your instructions.

Even though he’s self-employed, he’s acting like a labour-only subcontractor. If he injures himself on site, you’re responsible – and if you don’t have employers’ liability insurance, you’re exposed.

Now imagine he accidentally knocks a brick through a neighbouring window. If he doesn’t have public liability insurance and you hired him, the client may pursue you instead.

The same principle applies to freelance web or creative work – liability follows the chain of control.

Ask before you hire

Before you work with any subcontractor or freelancer, ask:

• Do they have their own public liability or professional indemnity insurance in place?
• Are they registered as self-employed or do they trade through a limited company?
• Do they invoice you for a specific piece of work, or are they effectively part of your team?

Also, check your own business insurance wording. Some policies will exclude subcontractor-related claims unless you’ve disclosed that you use them.

And most importantly: talk to your insurer. They’ll tell you exactly what cover you need for your setup, and whether you’re crossing into employer territory.

What about online freelancers?

If you’re outsourcing work remotely – say to a virtual assistant, content writer, or designer on a platform like Upwork – your legal exposure may be lower. But if a mistake they make costs a client money or damages your reputation, you could still face claims.

You won’t need employers’ liability in this case, but professional indemnity insurance could help protect you if a client takes legal action because of subcontracted work.

More on professional indemnity insurance.

Final word

Just because someone is self-employed doesn’t mean they don’t need insurance. If they’re working under your control, using your kit, or representing your business – even for a few days – you might be classed as their employee.

The safest route?

• Ask for their insurance certificate.
• Check your own policy.
• Speak to your insurer before work starts.

Because if something goes wrong, the last thing you want is a claim you can’t cover.

Read more in our guide to insurance for tradespeople.

For fast, flexible cover for the self-employed – including public and employers’ liability, get a quick quote from Qdos.