The Insurance Life of a Subcontractor

For most commercial retail agents and wholesale agents, contracting risks make up a significant portion of the risks we insure.  Artisan contractors consist of plumbers, electricians, welders, masons, roofers, carpenters and many others trades.  They need affordable liability coverage that offers them the flexibility to work as either an independent contractor or a subcontractor under a General Contractor. 

General contractors (GC) are advised by the insurance industry and others to push as much liability down to the subcontractors they hire to complete a project as possible.  To do this, general contractors require the subcontractors to have insurance that provides them with the following:

  1. Additional Insured Status.
  2. Primary and Non-Contributory Wording that makes the subcontractor’s coverage primary.
  3. Waiver of Subrogation Wording that will insure that the subcontractor’s insurance carrier not file suit against the GC’s coverage for reimbursement of loss payments made by the subcontractor’s carrier.
  4. In addition, the contract that the subcontractor may sign with the GC may have “hold harmless” wording that attempts to relieve the GC from any liability claims arising out of the work of a subcontractor.

Each State has laws that determine how much of the GC’s liability can be passed down to the subcontractors in “hold harmless” agreements.  For example, Massachusetts and Rhode Island do not allow Broad Indemnity  – which makes the subcontractor at fault regardless of who is at fault.  

Given the requirements of GCs  to subcontractors, what should a subcontractor do in regard to insurance?  The best solution is to find General Liability coverage that provides ALL of the insurance requirements needed. 

  1. Blanket Additional Insured with Primary and Non-contributory Wording Endorsement.
  2. Blanket Waiver of Subrogation Endorsement.
  3. Per Project General Aggregate Endorsement.

Buying a General Liability policy with these makes a subcontractor’s life easier:

Who wants to pay for Additional Insured and/or Waiver of Subrogation status for each entity needing this status?  With Blanket included on both, a subcontractor doesn’t need to worry.

Having a Per Project General Aggregate Endorsement, allows a subcontractor’s full limit of insurance to be available to meet a particular contract requirement.

In summary, an artisan contractor who has affordable coverage with needed endorsements up front is prepared to accept a job knowing there will be no last minute scramble to meet a GC’s contractual demands. 

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