Fairbanks Insurance Blog

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insurance for construction contractors
01 December 2017

I’m a Subcontractor – Do I need Subcontractor Insurance?

Operating as a subcontractor undoubtedly has its advantages; you get to pick who you want to work for, you have better control over the hours you operate and to a differing degree you are allowed to be your own boss. From a business owner’s and from a subcontractor’s standpoint, there are many risks involved.

Establishing who is liable in the event of a mishap might appear like a minefield, but there are particular key issues to consider that can make this much easier to establish. Do I have to have insurance as a subcontractor? The circumstances for you as a subcontractor differ dependent upon whether you are labor only or an actual subcontractor. It pays to work out upfront where the borders of responsibility lie, particularly when it comes to the difficult issue of where the liability lies.

Who Is Responsible for the Insurance?

Being transparent about what kind of subcontractor you are will help to express the legal guidelines when it comes to the question of do I need insurance as a subcontractor? If you are a labor only subcontractor, your situation is very similar to that of a contractor employee, except in contrast to an employee that is on a permanent contract, yours is transitory.

As a result, you will probably be managed and instructed – to a varied degree, your manager will set your hours, and you definitely will use materials, hardware or equipment, and specific tools supplied by your employer. Do I need insurance as a subcontractor? In these situations, due to the type of responsibility your short-term boss is taking on, it will be up to him or her to provide general liability and workers compensation etc.

The circumstances are very different if you are operating as a bona fide subcontractor. As an actual subcontractor, you are fundamentally more independent: you determine the hours you work, you supply an invoice for the work that’s been done, you work without oversight, and you bring each and everything you will need for the job – tools, materials, etc. Do I need insurance as a subcontractor? Since you are the one who is in the driver’s seat, the burden of responsibility lies with your company.

The employer does not need to provide your workers comp or general liability to protect you in the event of an accident. It is your obligation to take out general liability insurance for yourself and anybody working for you, you need to make certain that they are insured as well. As a subcontractor, you ought to expect an employer to request proof that you are licensed and that you have general liability insurance and depending on their specifications and what state you’re are working in – workers’ compensation. So the answer to do I need insurance as a subcontractor? Yes, you certainly do.

What Types of Insurance will I Need?

As a subcontractor you need to consider all kinds of risks, such as someone in the public falling on your site and suing you, to you damaging a third party’s property. There isn’t one size that fits all when it comes to contractors’ insurance. Here are a number of coverages your general contractor or customer might require you to carry:

  • General Liability– If a third party sues you for an injury or property damage that you are held liable for.
  • Workers Compensation– If as a subcontractor you have employees, workers comp is mandatory in most states. It can cover you against a compensation claim if an employee suffers a work-related injury or illness.
  • Commercial Auto– To cover bodily injury and property damage you may be responsible for while in your vehicle and on the job. The general contractor or customer could also require you to have hired and non-owned coverage as well.
  • Commercial Umbrella– If you are working for a general contractor on a job that is very large – you might be required to purchase an umbrella policy. This is excess liability coverage that sits on top of the underlying policies.
  • Tool Coverage– In case your hand-tools or power-tools are damaged or stolen on the job.

 

We hope this article will help you determine when you need insurance as a subcontractor, and if you do, Fairbanks Insurance Brokers should be the first call you make for information and affordable pricing.

Here is What We Recommend

General Liability: Contractors General Liability will be the foundation of protection for your business. The coverage will respond if you or your employees are found liable for bodily injury, property damage, or have a products/completed operations complaint. The coverage also covers defense costs for your business to respond to any lawsuits brought by a third party.

Workers’ Comp: Many states will require contractors to provide workers’ compensation coverage for their workers before they can begin a project. Accidents will happen at the job site that can result in an employee becoming injured and missing work. Your workers’ compensation coverage will provide financial assistance for medical expenses and lost wages.

Surety Bonds: It’s very likely that your state will require you to be licensed before you can begin operations. Most states and customers will require contractors to offer a license or surety bond before you are allowed to bid on a job or begin working.

Commercial Auto: Typically, most contractors will have light and heavy vehicles that require commercial auto insurance to make certain their vehicles can be repaired or replaced in the event of an accident, vandalism, or theft.

Tool Coverage: Also known as Inland Marine Insurance, this policy will provide for reimbursement for expenses to repair or replace tools and equipment. Your tools represent an important part of your livelihood, so we always encourage carpentry contractors to consider this valuable coverage.

Get A Quote

 

For more information about your liability as a subcontractor, call the insurance professionals at Fairbanks Insurance Brokers at (949) 595-0284, during normal west coast business hours, or contact us through our website at your convenience.