Why do organisations employing sub-contractors request a company's insurance certificate?

Guidance issued by the HSE nowhere states this step as being required when 'managing contractors'.

In the event of an accident / claim by one of the sub-contractors employees or in consequence of their activity as proof of valid insurance being held at the time of engagement and for the duration of works.

Not legislativley driven (hence no HSE reference).

Generally requested with the Pre-Qualification Questionnaire - the thought process being if the sub-contractor has failed to arrange adequate insurance what other short cuts could they take if engaged?

To expand on what David has said (we come from a similar insurance background), here are a couple of examples.

1) You engage contractors to fit a suspended ceiling in your premises. In the course of this work, they damage a water pipe and flood your IT server room. Your insurers will pay but if the contractor has no Public Liability cover, your own insurer will not recover their outlay. The sizeable claim therefore sits against your insurance history and you see a big premium increase at next renewal.

2) The same contractor manages to drop a heavy tool on the head of one of your employees. Who does your employee sue to ensure they are compensated and receive timely medical care / future care? The contractor is not insured / winds their business up to avoid the claim. They could sue you, the employer but you were not the negligent party (leaving aside work area access controls for which you have a joint responsibility).

Checking for evidence of PL insurance is sound business practice and any contractor worth their salt will expect the question and have a standard letter from their insurance broker to provide the details.

I do recall a classic example around 10 years ago when a university engaged a friend of a friend to do some lead flashing work (hot works) on the roof. Ignited a birds nest and fire spread, damaging valuable archive materials from Charles Darwin IIRC. The contractor had no insurance and no clue as to how to correctly manage hot works but simply walked away as he was a man of straw.

Indeed JohnW.

My Google Mojo is with me today and I've found details of the incident.

It was the Glasgow University Bower Building fire in 2001. Loss of the facility for 4 years whilst rebuilding works undertaken. I worked for the insurer at the time.

http://www.telegraph.co....-fire-at-university.html

http://news.bbc.co.uk/1/hi/scotland/1618521.stm

Thanks all