Getting Uninsured Subcontractors, Insured!

Your clients who work with subcontractors often face legal issues that can be frustrating and time-consuming. For them, finding subcontractors with the right skills, craftsmanship, experience, and track record is just the first step.  

Carefully assessing the subcontractors that your clients want to make use of can present difficulties, especially when they are working with several different subcontractors on larger projects.

Having robust requirements on the insurance policies a subcontractor holds, before employing them, is the best way for contractors to make sure they are not exposed to unnecessary risks should their subcontractor make a mistake.

Unfortunately, this can be a notoriously difficult task. Just finding a reliable and high-quality subcontractor can feel like an impossible challenge. Even then, many subcontractors are blissfully unaware of the various liabilities that working with them can expose your clients to.

This isn’t necessarily negligent on the part of the subcontractor. In many cases, carrying the correct insurance is not something that they are obligated to do.

It’s important that your clients understand the different types of insurance available, what risks are being taken when working with uninsured contractors, and how they can mitigate that.

What Insurance Should a Subcontractor Carry?

Subcontractors often bring skills and expertise to projects that your contracting clients do not specialize in. These subcontractors are often not required to have any type of insurance, other than what is asked of them by the contractor they work for.

This can pose risks to both the subcontractor and, by implication, your clients.

In the event of something like a workplace injury or damage perpetrated by the subcontractor, your clients could be exposed to serious financial costs that they have not accounted for.

Unexpected risks can pose threats to any business. This is especially true of our clients who employ subcontractors.

It is therefore of critical importance that the different types of insurance that your client’s subcontractors should have, as opposed to what is only legally required, are properly understood, and considered.

Unfortunately, due to the existing regulations governing subcontractors, it is your client’s responsibility to make sure that the people they choose to hire are properly insured and that industry best practices are followed.

What To Do if A Subcontractor Has No Insurance?

The simplest solution for most of our clients is to add an uninsured subcontractor to a general liability policy that is already in place. This means the subcontractor will benefit from the cover the client holds in the event of a mishap or accident.

It’s important for them to contact their general liability insurer before doing this as some policies will only cover the main policyholder in the event of a claim.

This can present our clients with several problems.

In many cases the additional premiums that have been paid by the client will then have been in vain, leaving them out of pocket for the damages. They also run the risk of reputational damage which can be detrimental to both their business and livelihood.

Often General Liability policies will have limitations for coverage when work is performed by an uninsured subcontractor.  It is important to know if your client uses insured or uninsured subs before the policy is written to ensure the property forms are on the policy.

Where Can I Get Commercial Lines Insurance?

Purchasing a policy of this nature can be at the very least time-consuming and is often difficult to understand for your clients. These policies require the advice of an expert in surplus lines insurance who is qualified to give the right advice.

Craig & Leicht can help you place general liability coverage for both general contractors and the subcontractors they hire.


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