Your Subs' Coverage Is Your Problem
When subcontractors are uninsured or underinsured, you inherit their risk. An uninsured sub gets hurt on your site. You're liable. A sub causes damage and their coverage is inadequate. Your policy picks up the slack.
Proper subcontractor insurance requirements transfer risk where it belongs. The time you spend verifying coverage is time well spent.
Standard Minimum Requirements
For most subcontractor relationships, these minimums provide reasonable protection.
| Coverage Type | Minimum Limits | |--------------|----------------| | General Liability | $1,000,000 per occurrence and $2,000,000 aggregate | | Workers' Compensation | Statutory limits | | Employers Liability | $500,000 each accident | | Commercial Auto | $1,000,000 combined single limit | | Umbrella | $1,000,000 for higher-risk trades |
Adjust these based on the specific trade and project requirements. Roofers and demolition contractors warrant higher limits than finish carpenters.
Trades That Need Extra Scrutiny
High-risk trades present greater exposure. Roofing, demolition, excavation, crane operations, and steel erection all have elevated injury and damage potential. Require higher limits and verify coverage more carefully.
Professional services like architectural and engineering work need professional liability coverage, not just GL.
Environmental work such as remediation, tank removal, and asbestos abatement requires pollution liability that standard GL excludes.
Essential Endorsements
Don't just check limits. Verify the endorsements you need are in place.
Additional Insured Status
Your company should be added to the sub's GL policy as an additional insured. This gives you direct access to their coverage when claims arise from their work. Ongoing operations and completed operations coverage are both important.
Waiver of Subrogation
This prevents the sub's insurer from coming after you to recover money they paid on a claim. Standard in most construction contracts.
Primary and Non-Contributory
Makes the sub's policy respond first, before your coverage kicks in. Without this language, insurers argue about who pays what and claims take longer to resolve.
Reading Certificates
Certificates of insurance prove coverage exists at the time of issuance. They're only as good as what you verify.
| Verification Point | Why It Matters | |-------|---------------| | Named insured matches contract | Make sure you have the right legal entity | | Dates are current | Expired policies don't protect you | | Limits meet your requirements | Don't accept less than you specified | | Endorsements are actually listed | Verbal commitments mean nothing | | You're named as certificate holder | Ensures notification of changes |
Certificate Red Flags
Be cautious when you see policies from unknown carriers. Verify they're licensed in California and financially stable.
Claims-made policies instead of occurrence-based policies can leave gaps if the sub changes carriers.
Aggregate limits that are already reduced from prior claims mean less coverage available for your project.
Missing workers' comp for a sub that clearly has employees is a compliance violation you don't want on your site.
Owner or officer exclusions mean key people working on your project aren't covered.
Tracking Compliance
For a handful of subs, a spreadsheet works. Track certificate expiration dates and set reminders 30 days out.
Larger operations need more robust systems. Certificate tracking software automates reminders and flags lapses. Some agencies provide tracking services for their clients.
Whatever method you use, the goal is catching coverage lapses before subs show up for work without valid insurance.
When Subs Won't Comply
First, don't let them start work. An uninsured sub on your site creates liability from day one.
Second, help them find solutions. Sometimes connecting them with the right agent solves the problem. Coverage may be more available and affordable than they realized.
Third, document everything. Written communication about your requirements protects you if problems develop later.
Fourth, tie compliance to payment. No valid certificate, no check. This creates powerful incentives.
Contract Language
Your subcontracts should include specific insurance requirements with exact limits, endorsement requirements by name, your right to approve their carriers, the requirement to provide certificates before work begins, an obligation to maintain coverage throughout the project, notification requirements if coverage changes or cancels, and indemnification provisions that shift risk appropriately.
Template language is available, but have an attorney review your subcontracts to ensure they're enforceable in California.
Helping Struggling Subs
Some subcontractors genuinely struggle to get coverage. New businesses have limited options. Poor claims history narrows markets. High-risk trades require specialized carriers.
We work with subcontractors to find coverage so they can meet GC requirements. When a sub can't get insured through normal channels, connecting them with the right specialty markets often solves the problem.
Common Questions
Can I require higher limits than I carry myself?
Technically yes, but it creates credibility issues. Your subs will ask why you're demanding coverage you don't maintain. Keep your own limits at least as high as what you require.
What about sole proprietors with no workers' comp?
California allows sole proprietors to elect exclusion from workers' comp requirements. Require a signed waiver documenting their exempt status. If they later add employees, the waiver becomes invalid.
Should I verify coverage directly with carriers?
For significant projects, yes. Call the carrier using the number on their website, not the number on the certificate. Confirm the policy is active and the endorsements are in place. Certificates can be falsified. Direct verification catches fraud.