Turnover, subcontractors and insurance questions
How revenue and contractor use can change the questions an insurer asks.
When you run a business, your insurance needs aren't static. They shift as your company grows, takes on new work, or brings in subcontractors. Two factors that frequently trigger a review of your insurance coverage are your annual turnover and your use of subcontractors. These aren't just internal metrics—they directly influence the questions insurers ask, the premiums you pay, and the scope of cover you need.
Turnover is a key indicator of business size and activity. As your revenue increases, so does your exposure to risk. More projects, more clients, and more transactions mean a higher likelihood of something going wrong. Insurers use turnover to gauge the scale of your operations and set premiums accordingly. If you underestimate your turnover when applying for cover, you could face reduced payouts or even a denied claim later.
Subcontractors add another layer of complexity. When you hire subcontractors, you're not just delegating tasks—you're also sharing risk. Insurers want to know how many subcontractors you use, what kind of work they do, and whether they carry their own insurance. If a subcontractor makes a mistake that leads to a claim, your policy might be the one that responds, especially if they're uninsured or underinsured.
The interplay between turnover and subcontractors can significantly alter the questions on your insurance proposal form. For example, a sole trader with low turnover and no subcontractors might face a straightforward set of questions. But a growing business with multiple subcontractors and a rising turnover will encounter more detailed inquiries about project values, contract terms, and risk management practices.
Insurers may ask you to break down your turnover by activity type—such as design work versus on-site labour—or by the proportion of work you subcontract. They might also require you to verify that all subcontractors have adequate public liability and professional indemnity insurance. In some cases, you may need to include subcontractors as additional insureds on your policy or ensure your contracts include indemnity and hold harmless clauses.
It's not just about getting the right cover at the start of the policy year. If your turnover spikes mid-term or you suddenly start using more subcontractors, you should inform your insurer. Failing to update your policy could leave you underinsured. Some policies include automatic growth provisions, but these have limits, and it's your responsibility to check they're sufficient.
When preparing for an insurance review, gather accurate figures for your projected annual turnover and a clear list of all subcontractors you plan to use. Be ready to explain the nature of their work and their insurance status. This preparation can speed up the quoting process and help you avoid surprises. It also ensures you're comparing apples to apples when reviewing multiple quotes.
Remember that insurance requirements can vary by industry and jurisdiction. What applies to a construction contractor might not apply to an IT consultant. Always verify the specific requirements with your insurer or broker, and check any relevant legislation or contract conditions. The information here is general guidance and should not replace professional advice tailored to your situation.