Will your insurance policy respond correctly between BFSC & LOSC?


Is your contractors policy set up correctly?

The insurance definition of BFSC & LOSC is different to the HMRC definition. Make sure you have the correct procedures in place to ensure your insurance policies respond in your time of need.

Whilst it is difficult to provide an accurate definition (as the law does not provide one), it is important to try to correctly determine the status of sub-contractors acting on your behalf in the rail industry to ensure the correct insurance cover is in place. If a sub-contractor is a bona-fide subcontractor (BFSC), Employers’ Liability Insurance is not required but if a sub-contractor is a labour only subcontractor, (LOSC) Employers Liability is required.

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Who are labour-only subcontractors?

The defining characteristics of labour-only subcontractors are as follows:

- They work under your supervision and direction.

- They use your materials, kit, equipment and tools.

- They must comply with your health and safety policies.

- They do not have a guarantee for work done and may leave part way through.

Download our guide

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Who are bona-fide subcontractors?

The defining characteristics of bona-fide subcontractors are as follows:

- They work under their own supervision and direction.

- They provide their own materials, kit, equipment and tools.

- They are responsible for their own health and safety.

- They may have additional employees.

- They provide their own method statement, carry out risk assessments and are responsible for their own guarantees and maintenance.

If your policy provides cover for bona fide sub-contractors on a contingent basis, it is up to you to ensure they carry satisfactory and adequate insurances and that their policy will include a business description to cover the work they are doing for you. Their policies must have an adequate limit of indemnity and contain an indemnity to principals’ clause.


You must keep a record to show their insurances have been checked and a diary system to identify when they are due for renewal. If you have any questions regarding this or are unsure what your policy covers, please get in touch on 01245 449060.

You can read our latest documents here. This document outlines key differences between LOSC and BFSC as well as providing key questions to ask to determine whether you are covered for your subcontractors.


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Have any questions? please don't hesitate to contact one of our team

Stuart.belbin@ascendbrokingold.co.uk  |  Office: 01245 449067


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