Phone icon
Menu icon
Professional insurance
with a personal touch
We're here to help
0345 222 5391
Mon-Fri, 9am-5.30pm, local rate & mobile friendly

The difference between freelancers and subcontractors

08/11/2019

The difference between freelancers and subcontractors can affect the validity of your professional indemnity insurance.

Freelancers and subcontractors 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, there's a whole heap of difference between freelancers and subcontractors.

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

Here's why.

Two sides of the same coin

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, of course. 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 your insurer approaches that claim.

Defining the difference between freelancers and subcontractors

To fully understand the difference between freelancers and subcontractors, it's useful to look at definitions for both:

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 insurance 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 that 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?

Self-preservation.

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.

Got any more questions about working with freelancers and subcontractors? Give us a ring on 0845 222 5391.

If you liked this, you might like thesethis...

Why use an insurance broker?
Don’t pick up the phone to that do-it-all, household-name insurer just yet. There are compelling reasons to use an insurance broker instead.
Insurance for copywriters explained
The pen is mightier than the sword, right? Sure is. Until things go wrong. If that happens, insurance for copywriters is a much better bet.
Management consultants' insurance explained
We all know what can happen to best-laid plans. Here's how management consultants' insurance can help if a client doesn't see the cunning in yours.

More Advice, News & Know-how

Sign up to being prepared and protected

Get reliable advice on protecting and fine-tuning your business or charity sent straight to your inbox. Plus, receive other occasional bits we think you'll enjoy, like competitions and offers. We promise not to swamp you, and you can unsubscribe easily.

Sign me up