Subcontractor compliance

Subcontractor insurance compliance for contractors

What a subcontractor's certificate does and does not protect you from, the three ways a sub creates exposure, and how to check rather than collect.

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3 exposuresSubs create for you

Additional insuredWhat actually protects you

WC or exemptionRequired from every sub

RenewalsDiarise the dates

What you owe your subs, and what they owe you

Hiring a subcontractor does not transfer the risk as cleanly as most contractors assume. If a sub causes damage, the claim can reach you because you hired and supervised them. If a sub is injured and carries no coverage, the claim can be treated as yours.

That is why general contractors require certificates from every sub and why the requirement exists on both sides of the relationship. It is not bureaucracy, it is the coverage itself.

What to collect from every sub

A current certificate of insurance
General liability at your required limits
Workers compensation, or a valid exemption
Additional insured naming you
A waiver of subrogation
A renewal date you diarise

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The three ways a sub creates exposure for you

Their work damages something. The claim can come to you because you hired them. Your policy may respond, but a carrier can then pursue the sub to recover, and if the sub is uninsured, that recovery often fails.
They are injured on your job. If they carry no workers compensation, the injury can be treated as your employee's. That claim lands on your policy and your experience modification rate.
They are not really a subcontractor. An uninsured worker who takes direction on hours and methods looks like an employee to a workers compensation board, whatever the contract says. Misclassification is the expensive version of this problem.

Collecting a certificate is not the same as checking one

A file full of certificates proves nothing if none of them were read. The four things worth confirming on every one:

The policy is still in force. A certificate with a passed expiry date is not evidence of anything.
The named insured matches who you contracted with. A policy in a personal name does not cover an LLC that signed your contract.
You are named as additional insured. A certificate alone gives you no rights under their policy.
Workers compensation is present or a valid exemption is on file. In most states this is the difference between a claim landing on them or on you.

Diarise the renewals. Certificates expire quietly. Track the expiry date for every sub and ask for an updated certificate before the old one lapses, not after a claim.

Common questions

Am I liable if my subcontractor is uninsured?

Potentially yes, in two ways. If their work causes damage the claim can reach you because you hired them. If they are injured without workers compensation, the claim can be treated as your employee's and land on your policy and your experience modification rate.

Is a certificate enough to protect me from a sub?

No. A certificate is evidence that their policy exists and gives you no rights under it. To be protected you need to be named as additional insured on their policy, which is a separate request.

What if a sub claims to be an independent contractor with no insurance?

The label does not decide it. If they take direction on hours and methods and provide no tools of their own, a workers compensation board can treat them as an employee after an injury, whatever the contract says. Either require coverage or confirm the classification properly.

Should I require my subs to carry the same limits I do?

Generally yes, or at least the limits your own contract requires. If a sub carries less than you are required to carry, the gap between their limit and your requirement is exposure you are holding.

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Tell us how many subs you use and in what trades, and a licensed specialist will confirm your exposure.

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