A £7.2 MILLION award for compensation has been made by the High Court to a Marine Trades employee who sustained a life-threatening brain injury. The yard-worker was struck on the head by falling metal after a gantry collapsed when he was working in a boatyard in September 2006. He was given only a five per cent chance of survival by doctors after an initial emergency operation and will require constant care for the rest of his life. The award was made against the insurers of the boatyard.
The incident demonstrates how even simple day-to-day activities in boatyards and marinas can result in catastrophe. It also provides an excellent example of the need for Marine businesses to have the right insurance programmes in place to protect them in the event of accidents occurring in the workplace.
It is essential that business owners determine whether their sub-contractors are working on a Labour Only or Bona Fide basis as the insurance requirements relating to the 2 categories are quite different. Getting it wrong could potentially lead to a catastrophic loss for the business and the personal assets of the business owner. Broadly speaking, the 2 types can be defined as follows:
Labour Only Sub Contractors (LOSC)
Labour only sub-contractors should be treated as Employees as far as insurance is concerned. Generally they work under the direction of the Insured and do not provide their own materials or tools (with the exception of small hand tools). Cover would therefore be arranged for such individuals by the hiring business under the Employers Liability Section of their policy.
Bona Fide Sub Contractors (BFSC)
Bona-fide sub-contractors are generally deemed to be contractors who work without direction from the Insured, hold their own insurance and usually provide their own materials and tools.
As long as they are not working under the direction of the Insured, have their own legal liabilities and indemnify themselves, there is no need to count them as employees.
What insurers will not do is extend the insured’s policy to include the legal liabilities of the bona-fide sub-contractor – they should have their own Public Liabilty Insurance in their own name.
Please note that it is a condition of most insurance policies that the Insured (the main business) checks that bona-fide sub-contractors have their own public liability cover to at least the same limit of indemnity as the their own before they engage them.
Marine businesses should be particularly careful to establish the scope of cover of their Bona-fide subcontractors. Whilst cheap insurance for contractors is generally available from on-line sources, it is unlikely that such policies will cover marine sub-contractors for water-related risks such as testing or demonstration of vessels. That scope of cover is generally only available on a Marine Trader’s policy.
Are You Covered?
Modern businesses cannot afford to leave their statutory duties and liability insurances to chance. If you have people working in your Yard, they should be covered either on your own Employers Liability Insurance or on their own Public Liability Insurance (with the right insurance to cover their actual activities).
If you would like further clarification of, or would like a competitive quotation for your Liability Insurance, please contact the IRCM team on 01902 796 793.