Working with subcontractors can be a necessary part of any construction project, but hiring subs also creates additional risk on your job site. Because of the added hazard, it's crucial to make sure your subcontractors are adequately insured.
Do you need to see proof that they carry their own contractors insurance policies, or will your existing insurance be sufficient? Protect your business by learning how to ensure your subcontractors are covered on the job site.
Does Your Contractors Insurance Policy Cover Your Subcontractors?
If an uninsured subcontractor damages your client's property, and they aren't covered by liability insurance, you may be held liable because you hired them. Because of this, you want to make sure that they either have their own policy or can be covered under yours.
The best way to know if your liability insurance covers your subcontractors is to check with your insurance agency. Most subcontractors will carry their own liability insurance, but you may also be able to extend yours temporarily to cover a specific project. Reach out to your agent to go over your policy to make sure you understand who is covered. If your subcontractors aren't covered, you'll need to add them to your policy or request a certificate of insurance from them to ensure they have their own.
Do you need to have workers compensation for your subcontractors in case they're injured or sick on the job? If your subcontractor is an independent contractor, they generally do not need to be covered by your workers comp coverage.
That said, it's essential to understand how your state defines an independent contractor vs. an employee in order to ensure that your subcontractor doesn't qualify as an employee and you're not surprised by a workers comp claim down the line.
Finally, if your subcontractor has their own employees it is wise to ensure that they have their own workers compensation policy in place in the event of an accident.
Builders risk coverage protects you and your subcontractors from losses related to damage to buildings in progress. This is a short-term property insurance policy, and it can cover your subcontractors too if they're listed on the policy.
As always, make sure you read through your policy carefully, you and any subcontractors or other parties should be listed as "insureds" or "additional insureds."
If you let your subcontractors drive your company vehicles, are they covered in the event of an accident?
Generally, your subcontractors should carry their own commercial auto insurance, and they should be using their own vehicles. Ensuring your subcontractors have the appropriate auto policy before hiring them helps keep your business and job site safe.
Tools and Equipment
Also known as inland marine insurance, tools and equipment coverage protects your valuable equipment from damage and theft.
As with commercial auto insurance, your subcontractor should have their equipment insurance for their own equipment. It's important to ensure your subcontractor has adequate coverage so that broken or stolen equipment doesn't impact your work.
What's the bottom line?
Depending on your policy, the subcontractors you hire may or may not be covered by your contractors insurance. Make sure you read through your policy carefully and don't be shy about requiring certificates of insurance from your subcontractors. It's the best way to make sure they have adequate coverage for the job.
Want to make sure your contractor insurance has the coverage your business needs? Get a quote.