You are a contractor and you may hire a subcontractor for a specific task. FACT: most of our clients do that.
The subcontractor or one of their workers may get injured on the job. FACT: some of them get that.
QUESTIONS: Are you liable for workers’ compensation insurance? Are you liable for general liability insurance?
The answers to these questions could very well be yes, especially if the subcontractor is unlicensed and or uninsured. You could be held liable for workers’ compensation benefits if the employee of an uninsured subcontractor gets injured while working on a project for you.
The subcontractor damages your work or the work of others. Your general liability policy could also be negatively impacted by having to cover claims from your uninsured
Here is a list of tips to help you to mitigate the risk of working with subcontractor:
– If certain jobs require a license, insist on seeing and writing in your records license numbers of all your subcontractors working on those jobs.
– Obtain Certificates of Insurance from all of your subcontractors, especially if they, in turn, subcontract portions of their work.
– Require that the Certificates of Insurance name their workers’ compensation, commercial automobile liability, and general liability insurance companies and list the liability limits for each of the workers’ compensation, commercial automobile liability, and general liability policies, respectively.
– You should also require that you be named as an Additional Insured on the subcontractor’s commercial automobile liability and general liability insurance policies depending on the type and extent of work the subcontractor performs for you.
If such documentation is not provided, you may be charged additional workers’ compensation and or general liability premium based on the contract price, payroll, or subcontractor cost to cover any liability that may exist. Worse, your policies may exclude coverage for work performed by uninsured subcontractors.
Unlicensed and uninsured subcontractors ultimately increase your cost of workers’ compensation and general liability insurance. You can help your own cause and those of your peers by not hiring unlicensed or uninsured subcontractors.