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Uninsured Subcontractors Can Be Costly

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COVERAGE TIPS | 5-MINUTE READ

Imagine you are a tech firm that subcontracts some of its on-site installation or tech support.

During an on-site installation, one of your subcontracted technicians leaves a computer cable out, causing your client’s employee to trip and hurt themselves. Are you liable?

If a subcontractor causes a worker injury or property damage, do you want to pay the resulting claim?

Wouldn’t it be better if you could have the claim paid by the person or firm who is actually responsible?

That’s where insurance for subcontractors comes in.

If a claim is made against your firm for error, injury or property damage caused by a subcontractor, you can turn to their insurance to defend you and pay the damages.

You are a savvy businessperson whose firm protects itself with insurance and pays its premiums, so you should expect your subcontractors to do the same.

It’s best practice to collect and retain certificates of insurance, typically on an Acord 25 form, for any subcontractors you employ. The form lists the name of the subcontractor’s insurance company and their policy number.

If a claim is filed, their insurance must respond. This is true even if the subcontractor has gone bankrupt or disappeared.

Subcontractors may be reluctant to retain insurance, citing the costs; however, the idea of insurance being cost-prohibitive is a fallacy.

General liability premium rates are typically less than 1% of revenues for a $1M limits policy. This means your subcontractor could buy insurance to protect your firm for less than 1% of what you paid them for the job.  

So what questions should you ask to ensure your firm is properly protected?

  • Do all of my subcontractors carry general liability insurance?
  • What are their insurance coverages or limits, and are they less than my policy?
  • Have all of my subcontractors provided a certificate of insurance?

If you’re still not sure whether your subcontractors’ coverage protects you, we can help you establish a recommended level of baseline coverage for subcontractor to keep your business protected.

Contact Aldgate Insurance to schedule your free consultation today.

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