Commercial Insurance Blog

As a General Contractor, one of the best ways to control costs and reduce risk is to hire qualified and vetted subcontractors for specific functions. If their trucks have "fully insured and licensed" on the side they're perfect, right? Maybe.

There are a number of important questions to ask when hiring a sub, and believe it or not, price should not be the most important consideration. Some of these questions should be:

• Do you have experience and a track record for the discipline you specialize in?
• Will you be subbing out any of the work assigned to you?
• Have you had any claims made against you? (Ask for Loss Runs and Workers Compensation Experience Mods)
• Are you financially able to complete the job we're hiring you for?
• Do you have insurance and will you provide us with a Certificate of Insurance directly from your agent or company?
• Will you sign a contract specifying the work we are hiring you for and your responsibilities for that work? NO? Move on. YES? Don't be afraid to push for what your insurance agent tells you that you need to include.

Now it's decision time, so let's figure this out!

YOUR CONTRACT - You must have a signed Contract with your subs that detail their and your responsibility. Be sure to include the full scope of the job so should a dispute arise it can be clearly addressed. Be sure to include all insurance requirements and don't forget to include such often overlooked items as their need to insure their own equipment .

INSURANCE COVERAGE FOR YOU AND YOUR SUBCONTRACTORS - Your subs should maintain the same limits that you do. Most jobs you are bidding on will have an "Insurance Requirements" section detailing YOUR prerequisites; these same prerequisites should be applied to all subcontractors. Typical insurance coverage that will need to be evidenced include General Liability, Business Auto, Workers Compensation and Umbrella/Excess Liability. Along with being named an Additional Insured on your sub's policies, you should demand Waiver of Subrogation, Hold Harmless clauses and strong Indemnification wording. Requesting these insurance points as part of your Contract is key because many company forms will not be "triggered" unless these agreements are in writing and executed before the time of any loss.

INSURANCE CERTIFICATES - So now you've chosen your responsible, financially sound, properly insured and vetted sub. Your final step is to secure validation of such via a Certificate of Liability Insurance.

We are often asked to provide copies of the contractor's actual policy forms and endorsements as a check that there is compliance with construction documents. You want and need to have insurance in place to pay claims for which you are ultimately responsible, and to be able to pass through these claims to subcontractors when warranted.

Call the insurance professionals at Gordon Atlantic for a deeper discussion by calling toll free 1-800-649-3252, or click below if you have a specific question we can answer!