Subcontractors Need Insurance

Do My Subcontractors Need Insurance?

2 minute read

Hiring subcontractors for a job you’ve secured can be a smart move. Hiring one that specializes in a portion of your project can free you up to focus on your area of expertise and save you time and money. Of course, this is assuming you’ve vetted and selected a subcontractor properly. You don’t want your subcontractor to put your project at risk for lack of experience or claims history. That is why subcontractors need insurance.

Do My Subcontractors Need Insurance?

Yes, your hired subcontractors need insurance. They can either be covered through your Business Insurance policy (typically General Liability or Professional Liability) or their own policy. Otherwise, you risk being liable for poor or incomplete work, damages, and even Worker’s Compensation claims. If you choose to extend your Business Insurance coverage to your subcontractor, you’ll need to include them in your policy. In addition, the insurance carrier may note the type of work they’ll be doing for you and review your policy limits. If you require your subcontractor to have a policy, or they already do, make sure that they are licensed, bonded, and insured. Note that some states require subcontractors to be licensed while others don’t. Also, some states, like California, will require you to have Worker’s Comp Insurance for your subcontractors.

Should I Hire Subcontractors?

Again, hiring subcontractors may be the right choice for your project. Especially if they’ll help you complete your project on time and within budget. Subcontractors may specialize in one type of work, such as electrical. They may be more informed on the cost of needed materials and work more efficiently. However, if you’re not in a time crunch and the task at hand is well within your skill set, you may be better off without one.

If you do decide to hire a subcontractor, you’ll have lots of options but will need to take your time finding the right one. Your best bet might be hiring through a trusted referral. However, many use online resources. Construction and skilled-labor contractors use services such as The Construction Association and BuildingConnected. Those who need more tech-oriented subcontractors find candidates through Upwork and ZipRecruiter.

Do I Need A Contract When Hiring A Subcontractor?

A subcontracting agreement is a signed agreement between the primary contractor and a person or company who’s been delegated (subcontracted) a portion of the work. You should have a subcontracting agreement. Having one will protect all parties and allow you to work in confidence. Your agreement may include details on:

  • the subcontracted services
  • duration of project
  • price and payment
  • dependency on the main contract
  • termination of the agreement
  • how changes will be handles
  • liability

This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms, and coverage in a given policy may be different from those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.