In liability insurance, it matters who takes out the policy, whose responsibility it stands behind, and who ultimately receives payment. Clarifying these roles isn't legal hair-splitting: it determines whether an employee's mistake, a subcontractor's work, or a helping family member's activity is actually covered. Let's take them one by one.
- The policyholder is the business: it takes out the contract and pays the premium.
- The insured is whoever's liability the cover extends to – typically the business and its employees.
- The injured party is an outside party: the insurer settles their claim, but they are not a party to the contract.
- A subcontractor's position depends on the policy terms – this is the most important point to clarify on chain jobs.
Policyholder and insured: often the same – but not always
In the typical case, the business takes out the policy for its own liability, so policyholder and insured are the same. Cover typically extends to employees acting on the business's behalf too: if a technician makes a mistake, the injured party takes action against the company, and the company's liability insurance responds. It's important, though, that the policy terms define exactly who “counts as insured” – for people working under a contract for services, student workers, or a helping family member, it's worth checking the wording item by item.
The injured party: affected, but not a party to the contract
The injured party – the one who suffered the loss – is not part of the insurance contract: their compensation claim stands against the business that caused the damage, and the insurer, under the policy, steps in behind that liability. In practice, this means the policyholder reports the injured party's claim to their own insurer, via the claims line or the online portal – the notification process article covers the procedure in detail.
The subcontractor question: the weak link in the chain
In a main contractor–subcontractor chain, two questions often get mixed up. One: does your policy cover damage caused by your subcontractor? This depends on the terms – some policies typically cover it, others exclude it or make it subject to an extra premium. The other: does the subcontractor have their own cover, and have they proven it? A well-run chain settles both questions in writing – the details are in the main contractor–subcontractor chain article and the subcontractor checklist.
The list of insured activities: the real framework of the cover
Alongside “who,” the “what” is also a matter of scope: cover applies to the activity recorded in the contract. If the business takes on a new activity – the tiler starts building pools, the accountant takes on payroll work – it needs to be reported, or even the best policy will have a gap. This is covered in the article on changes of activity; for the initial assessment, the activity assessment article offers a starting point.
Example: the helping relative
A classic small-business scenario: during the summer rush, the owner's nephew helps out on installation jobs – informally, no paperwork, as is common. Then a bottle slips from his hand and spills across the freshly finished floor of an office building. Who is liable? The business, toward the client – but whether the policy's definition of insured persons extends to an informal helper with no formal working relationship depends on the terms. If it doesn't, the loss stays with the business. The lesson is twofold: it's worth formalising helpers' working relationships, and clarifying the definition of who counts as insured when you take out the policy – a question that takes five minutes to settle in advance, and weeks to argue about after the fact.
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