The difference between subcontractors and freelancers

category Insurance know-how

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You say potato …

Subcontractors and freelancers are the same aren’t they? Both independent, self-employed people?

Well, yes and no. Depends on your point of view.

To you and me they’re pretty much the same. But to your professional indemnity insurer they’re not.

And that difference of opinion can mean a wallet-emptying hit if you work with one and it leads to a claim.

Here’s why.


Same difference

Contracts involving more than one type of work are common. A web designer’s client asking for a full website review, for example. Not just the design but the copy and SEO too.

Those extra things, while financially welcome, can cause problems. You want to do the best you can but if you don’t have the expertise or the time to do everything, what do you do?

Ask someone for help, usually.

Problem is, if there’s a claim against you further down the line, your insurer will want to know who did what and when. If it’s clear the problem is with the person you worked with, it changes how it approaches that claim.

It’ll start by defining your extra pair of hands as one of these:

Freelancer: a person who works with/for you as an assistant. They’re under your supervision, doing what you’d otherwise do, possibly using your equipment. They’re there to lighten your load.

Subcontractor: a person who works with you doing something outside your area of expertise. They’re a specialist professional in their own right, with their own equipment, their own ideas and their own clients. They usually work unsupervised.

These definitions aren’t ‘industry standard’ and, to some extent, are interchangeable. But your insurer has to start somewhere.

When it’s done that, it’ll take a view on whether to pay all, some, or none of your claim.


What’s the problem?

In simple terms, generally, freelancers are covered by your professional indemnity and subcontractors aren’t.

If your client sues you for negligence, and the claim relates to your freelancer’s work, it’s covered.

But if the claim relates to something your subcontractor did, it’s not. This is because your insurer is covering your expertise, not someone else’s. If you’re not covered to do it, it follows that someone doing it in your name won’t be either.

The real bad news here is that your client doesn’t care. Their contract’s with you, not your subcontractor. Unfortunately, protestations it’s not your fault won’t make a difference – you’ll be blamed for, and will have to pay for, someone else’s mistakes.


What’s the solution?


If you use a subcontractor, take these steps to protect yourself:

1. Do some checks. Do they have relevant experience? Do they have a portfolio? Do they have checkable qualifications? Can they provide testimonials?

2. Ask for insurance. Ideally, anyone you work with should have their own professional indemnity insurance. It means their insurer pays for their errors and you don’t. Make sure they have at least the same level of cover as you too. If they don’t have insurance, you should have a signed, written agreement between you that states they’ll cover your losses if you’re sued for their mistake. Not unreasonable, really.

3. Get it in writing. Your client has a contract with you, and you should have one with your subcontractor. Make sure the terms match. That way there’s no room for misunderstanding and everyone knows who’s doing what, and when.


There’s nothing wrong with someone giving you a hand. You just need to make sure you’re not being handed problems you don’t need.


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