Am I liable for the work of my subcontractors?

A: You don't necessarily need to buy liability insurance for your subcontractors, but you do need to make sure that everyone working a project you're in charge of is covered by someone's liability policy.

Contractors and construction businesses often depend on subcontractors to complete specialized tasks or work on the job. If a subcontractor you hire causes damage to a client's home or business, you could be held liable for his mistake.

For example, you're remodeling a master bathroom and the client decides she wants heated floors. You decide to hire a subcontractor to help you install the specialized electric radiant heating, but does your insurance cover their work liability? That depends. You have two options when it comes to subcontractor insurance:

  1. Require subcontractors to have their own insurance coverage.
  2. Add subcontractors to your General Liability Insurance (aka Contractor's Liability Insurance).

Most of the time, it's best to go with the first option: make sure the subcontractor carries their own insurance.

It is common practice to require any subcontractors you hire to have their own insurance, so don't be shy about including this requirement in your contracts. You can check that a subcontractor's coverage is adequate and up-to-date by asking to see their Certificate of Liability Insurance.

However, if it isn't feasible for your subcontractors to get their own coverage, you can also add them as an "Additional Insured" to your policy. When you add them, you only cover the work they do for you during the contract, so you won't be liable for mistakes they make working somewhere else.

Whatever you decide about subcontractor insurance, remember to discuss these requirements with your subcontractor before you hire them. If you require them to have their own coverage, make sure their insurance requirements are outlined in the contract and check their Certificate of Liability Insurance as proof of coverage.

Who Counts as a Subcontractor?

A contractor is the key person or leader hired to complete a project. Especially in an industry like construction, a contractor may have employees to expedite project completion or allow simultaneous work on more than one project. Often, contractors who are small-business owners are also sole proprietors or freelancers. If you're a contractor and need additional help on a project, the people you hire are called subcontractors.

Subcontractors are not considered employees of the contractor that hires them. They are hired to perform short-term work and share a temporary work relationship until the contract is fulfilled and the project is complete.

In order to begin working on a project, clients often require proof of coverage for yourself and any subcontractors. To add a subcontractor to your current GL Insurance as an additional insured or get a free quote, contact an insureon agent that specializes in your construction business' needs.

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