Question

If my Parish Meeting uses a Contractor to cut roadside verges, what should we check for in his insurance cover?

Answer 1

Public Liability insurance obviously but would the cover provide indemnity against damage to submerged gas, electricity and phone service lines and pipes?  If the contractor floored a streetlamp, would the cover include repairs or re instatement costs for it?  Would it include damage to kerbstones, drain covers and roadside tarmac?

Comments

Thankyou, this helps.

Answer 2

You ask "...what should you check for..."

The answer is "...what ever you want it to be..."

The terms of the engagement contract should specify what the council requires the contractor to be insured against and to what level.

The only legal requirement for an employer is Employers' Liability insurance as defined by the Employers' Liability (Compulsory Insurance) Act 1969 and there are exemptions to that requirement if the employee is a close family relative.  Even this is a requirement which rests with the contractor NOT the engaging entity.  

There is an unfortunate and widely held 'belief' that contractors must hold public liability insurance.  This is not a legal requirement but it has crept, seemingly irreversibly, into just about every facet of common practice.

The essential element that so often gets lost in the apparent hysteria is the consideration of what / who is actually "at risk" and who is liable should any mishap occur.

There is no requirement for a contractor to hold public liability insurance.  That is not to say they hold no responsibility for repair, renumeration or compensation for reckless or careless action resulting in damage or harm.  The liability will always rest with the person occasioning the damage / harm regardless of what insurance they may or may not hold.  Similarly, there is no compulsion upon a contractor to register a claim against their insurance in the event of damage or harm.

It is perfectly reasonable for any entity seeking to engage a contractor to set and define the terms of the engagement.  The point which is so often missed is that the greater the complexity in the terms of the engagement = the greater the cost of the service provision.  Expenditure from public money must be subject to the greatest degree of scrutiny and management.

In the original question road side verges are mentioned.  It may be a requirement of the local authority that work in or adjacent to the highway requires a 'licence' and that the person has suitable qualification for street works operative / supervisor.  There are certain exemptions for 'mobile' works as defined in the Safety at Street Works and Road Works Code of Practice https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/321056/safety-at-streetworks.pdf 

The terms of the licence may state that PL insurance of £10million is required.

The point remains - when a contract is let, the terms must dictate specific qualifying criteria.  

What do you want / require your contractor to be insured against and why?

The higher the complexity of the engaging entities requirement as set out in the contract directly effects the cost.

Comments

Thankyou, very helpful.

Answer 3

A word of caution. Parish meetings have very limited powers and duties and you may not have the power to appoint a contractor at all. Ask your local association to confirm your powers in this regard.

Comments

I think you are correct. However we have established that as Trustees of the Parish Meeting, the Chair and the Proper Officer appointed by the District Council, can contract on behalf of the PM. Our contract is therefore worded to suit. Thankyou for pointing this out.

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It's good to see a district council taking such a proactive view.

In terms of insurance cover, I would certainly expect to see a robust public liability policy. However unlikely, there are many ways in which this person might cause serious injury or death to a member of the public, either directly or indirectly, whilst undertaking work for you. If you have your own insurance policy, perhaps you could ask your insurer what cover they would expect to see for a contractor working for you. When things go wrong, it will inevitably come down to insurance company fighting insurance company to sort it out, so their input might be helpful.

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Good point, will do.

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Dave, you appear to be falling into the trap of double / over insuring which has the potential to necessarily increase the cost to the public purse...

If an entity engages a contractor to undertake a specific task and there is no master / servant relationship - ie the contractor is bona fide rather than an employee - all risks and liabilities for the action of the contractor lie solely and exclusively with the contractor.

It is perfectly reasonable for an engaging party to specify that RAMS must be supplied as a condition of contract, it is also perfectly reasonable to require that the contractor carry a specified level and scope of PL insurance - but regardless, the engaging entity will bear no responsibility for careless or reckless actions of a contractor provided they have conducted due diligence to satisfy the contractors capacity, capability and delivery of the service.  The ENTIRE service and all associated liabilities for it are contracted out.

It's as simple as this - the greater the complexity and specification of the contract schedule = the greater the cost of the contract.

Look at it through the other end of the telescope...

Bona fide contractor fulfilling a contractural obligation damages property or causes injury - who is liable?

The contractor.  They either have PL insurance or not.  If they have it they may / or may not decide to submit a claim to cover damages.  They may simply make good the damages without even informing the PL provider.  If they don't have PL they are just as liable as if they did under civil law.  There is NOTHING an engaging entity can do to compel a contractor to call upon PL insurance if they do not wish to.

When this is understood, the illogical fascination with setting and demanding often £5, not uncommon £10 million PL, starts to be revealed as an entirely voluntary and often unnecessary specification in a contract which ALWAYS results in costs being passed along to the public purse.

The simple fact is - levels and scope of insurance are the business of the contractor not the engaging entity.  The engaging entity might wish to specify but this will always add to cost....

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Although you can never be sure things will work out according to theory. https://www.theguardian.com/money/2021/mar/13/family-bill-insurer-claim-house-loft-renovation

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But (in the case you highlight) the family are NOT unprotected. They have recourse to civil law for recovery of damages
It’s an interesting article but I’m not sure it supports the case for a PC to insist on contractor PL insurance. PI maybe, but even so, liability remains with the person occasioning the harm / damage.
All this article proves is that whilst insisting upon PL / PI insurance will ALWAYS increase contract cost - there is no guarantee it will be worth the paper it’s written on...  Therefore, can VfM be satisfied by insisting on something that may be entirely nugatory?

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I don't disagree with anything you've said, but where do parish councils go to get these legal contracts drawn up? In this particular example of a minor roadside verges contract, the cost of a solicitor to draw up the contract would be more than the cost of the service to be provided. For this reason, many basic PC contracts are written on the back of a fag packet and rely on double insurance as the safety net. The minimum requirement is that the contractor is fully covered from the outset and commits to maintaining an appropriate level of cover throughout the duration of the contract. In a longer contract, annual evidence should be obtained. In this way, the council can demonstrate that it has taken appropriate steps and that any failure represents a breach of contract by the contractor.

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I have huge respect and appreciation for your knowledge Dave, but on this point you're not making much sense by suggesting double insurance because contracts are back of a fag packet.

The opposite of that is the point I'm putting forward.

A poor contract, even if double insured, is still a poor contract and probably unenforcible,

Where do Cllr's go to get good contracts?

Ideally an informed Cllr would be capable of drawing up a simple contract - I did.

Failing that, there are a myriad of free online templates.

To rely upon insurance in the absence of a contract - or one from a fag packet - just reenforces my previous point that to over insure is no substitute for a proper contract document since it probably wouldn't be a valid insurance anyway and we all know that insurance companies will gladly take your money.  They are not always quite so engaging when you need them though....

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Civil law isn't much use against many small building contractors. They don't have the substance to pay, and are likely to go into bankruptcy if pressed. And probably start up again with a slightly different name.

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That's not quite the point under discussion.

Should a PC insist that a contractor has PL/PI insurance was the discussion as I understood it.

The point you make does nothing to support the position that they should since, in your example, it would be meaningless.

The key point is where does liability lay.  If a contractor negligently, carelessly or unlawfully causes damage or harm, the liability remains with THEM not the entity which engaged them (unless there are identifiable deficiencies in the due diligence / terms of contract.)

If the engaging entity does / or does not insist upon PL/PI insurance, it changes nothing in terms of where liability lays.  It does however change the cost the contractor will charge for engaging the contract.

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I appreciate that, but it does seem to me to undermine the idea that liability insurance is entirely a matter for the contractor. It might well be that there isn't a complete solution to the problem that I cited. But it is as well to be aware that there can be circumstances where things could go badly wrong with no practical recourse. It makes sense to me that the client should make some enquiries to get at least some confidence that there is a reasonable probability of some kind of recourse. It can't be assumed. The contractor's liability for problems is quite likely to turn out to be theoretical, since there is no point suing a company that has little substance.

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Liability absolutely IS entirely and exclusively a matter for the party that bears the liability.
In the circumstance described initially, and subsequently, of the original question, if the task is contracted out - liability is with the contractor not the engaging party (under normal circumstances.)

My point was, and remains, the engaging party can specify what ever it (lawfully) wants to be in the terms of the contract from colour of contractor vehicles, to bio-oil, to specific time/day of delivery, to any amount of qualifying criteria - or not, as it sees fit. Each qualifying criteria however is guaranteed to carry a financial penalty.
The lesser the qualifying criteria - the lesser the likely cost.
If liability naturally lays with the contractor there is no reason or logic for the engaging party to incur voluntary, unnecessary additional contract costs.
It’s a shame the circumstance described includes roadside or highway margin work since under those circumstances PL may be required as a condition of licence - making this discussion fairly void since a contractor WITHOUT PL wouldn’t qualify for a licence and therefore not be able to deliver the terms of the contract.
If it were grass cutting in a public open space (not highway margin) I would be a 100 times more adamant that PL is a total nonsense.
It all comes back to actually ‘properly’ understanding where a risk (probability of occurrence in relation to severity) actually exists.
I can’t recall the last time someone was mown down by a runaway ride on mower.

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PS - I like your login “counterpoint.”

That’s suit me ):0)

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Thanks for your remark!

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Actually, lawn mowing is quite dangerouse :) http://news.bbc.co.uk/1/hi/health/8362373.stm

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I stopped ready at line 2 “Americans!”

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66k / 5 years into a population of 328 million (I suppose you could use ride on mower ownership figures but where you gonna get that from?). Then break down by severity low - med - high maybe?

Meh.....

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Actually, in this context, it would be 328 mill since it is “risk” to public we’re concerned with.