Your Biggest Uninsured Risk Is Walking Through the Door
General contractors who don't verify subcontractor insurance are playing a game they'll eventually lose. When an uninsured sub gets hurt on your job or damages a client's property, the claim rolls uphill to you. Your insurance pays, your experience mod increases, and your premiums climb for years.
Why Sub Insurance Management Matters
California law holds general contractors responsible for workers' compensation coverage for all workers on their projects, including subcontractor employees. If a sub's policy lapses or never existed, you become the employer of record for insurance purposes.
A framing subcontractor's employee fell from scaffolding on a residential project in Orange County. The sub's workers' comp had lapsed two months earlier. The GC's policy picked up the claim, which ultimately cost over $350,000 in medical expenses and lost wages. The GC's experience mod jumped from 0.92 to 1.35, adding roughly $40,000 per year to their premiums for the next three years.
What to Verify Before Work Begins
General Liability
Confirm the sub carries at least $1 million per occurrence and $2 million aggregate. Check that the policy is occurrence-based, not claims-made. Verify your company and the project owner are listed as additional insureds. Confirm primary and non-contributory and waiver of subrogation endorsements are in place.
Workers' Compensation
Verify the policy covers California operations. Confirm the sub's employee count matches what they're bringing to your project. Check the experience modification rate. A mod significantly above 1.0 signals claims problems.
Commercial Auto
Ensure the sub has proper vehicle coverage, especially if they're hauling materials or transporting crews to your site.
Umbrella or Excess
For larger projects, verify umbrella coverage meets contract requirements. Make sure the umbrella follows form over the underlying GL and auto policies.
Certificate Tracking Systems
Manually tracking certificates across dozens of subcontractors and multiple projects creates inevitable gaps. Consider dedicated certificate tracking software that automates renewal reminders, flags expired coverage, stores certificates digitally, and generates compliance reports.
The cost of a tracking system is trivial compared to a single uninsured claim.
Common Certificate Problems
Certificates that don't match contract requirements. The sub provides a cert showing $1 million limits when the contract requires $2 million. Catch this before work starts, not when a claim happens.
Lapsed coverage. A certificate shows current dates when issued, but the sub lets their policy cancel mid-project. Automated tracking catches these lapses.
Missing endorsements. The cert shows you as additional insured, but the actual endorsement was never issued by the carrier. Request copies of the endorsements themselves, not just the certificate.
Indemnification and Insurance
Your subcontract agreements should include clear indemnification language requiring the sub to hold you harmless for claims arising from their work. But indemnification is only as good as the sub's ability to pay. Without adequate insurance backing the indemnification clause, you're holding an empty promise.
Match your insurance requirements to your indemnification expectations. If the contract requires the sub to indemnify you for $5 million, but they only carry $1 million in coverage, there's a significant gap.
Common Questions
What if a sub refuses to provide certificates?
Don't let them on your project. No exceptions. The risk exposure is not worth the convenience of using an unverified subcontractor.
Should I require the same limits from every sub?
Not necessarily. A painting sub may not need the same limits as a structural steel sub. Tailor requirements to the risk profile of the work being performed. But never go below $1 million per occurrence on GL.
Can I be liable for a sub's auto accident?
If the sub is driving to your project and causes an accident, your exposure depends on the circumstances. Having proper auto coverage requirements and additional insured status on the sub's auto policy provides protection.