If your contracting company faces a claim due to work completed by your subcontractor, you don’t want to realize after the fact that your contractor’s insurance won’t pay. When hiring independent contractors, you need to ensure that your business insurance policy provides coverage for subcontractors and the work they perform. As a contractor, your business needs to carry general liability insurance as part of your San Antonio, TX business owner’s policy. That insurance covers you for property damage and personal injury for any work your company does, however, it generally won’t cover work performed by your subcontractor on your behalf. If your subcontractor performs shoddy work that causes damage, such as water damage due to improperly installed plumbing, that will be excluded from your general liability coverage, and you will be on the hook financially to cover the damage costs. Here’s what you need to know about subcontractor insurance from LeapFrog Insurance.
Why You and Your Subcontractor Must Have Insurance
In order to ensure that you are covered in the event of an accident or damage due to your subcontractor’s actions, you need to make sure that they carry general liability insurance, and that your company is named as an "additional insured" party in their liability policy. Require that they provide that insurance in your contract, and require proof that they carry it. If your insurance company determines that your subcontractor is not insured, they may consider your subcontractor to be part of your company and may increase your premiums. Even if there is no claim filed against them, your general liability coverage premium will go up to cover them.
Your subcontractor also needs workers’ compensation coverage. So that in the event that one of their employees suffers an illness or injury on the job, you won’t be held financially responsible. If you aren’t paying premiums to cover your subcontractors and one of their workers is injured on the job, you could end up paying their damages out of pocket if your subcontractor does not carry workers’ compensation insurance. You can cover yourself by adding the subcontractor’s employees to your own business’s policy and pass the cost on to the subcontractor in your contract.
Your client may file a loss, damage, or personal injury suit months or years after your subcontractor’s work is completed. So you need continuous coverage to protect yourself. If your business is in the San Antonio, TX area, call LeapFrog Insurance today. Our helpful agents will help you get the correct amount of contractors and subcontractors insurance for your unique needs.