Subcontractor Insurance Coverage

June 10, 2018


The last thing anyone wants is to receive a nasty surprise from their insurance company telling them that they won’t get paid. Whenever you are hiring independent contractors it is important that you know in advance whether your business insurance cover provides any coverage for the work they do.

General Liability

Some people make the mistake of thinking that since they carry a general liability insurance for their business either alone or as part of BOP (Business Owner’s Policy), any property damage or personal injury that happens at work is covered. However, this is not the case if a subcontractor did the work.

Some insurance companies do not include damage caused by an independent contractor in their general liability insurance policy. So, say for instance an independent contractor drops your client’s server, the client would be entitled to go after the subcontractor and make them pay for any damages they will have caused. However, if that is not possible, it is you who will be held financially responsible for any of the damage.

This explains why many small businesses won’t work with independent contractors unless those contractors have their own general liability insurance.

So how can you know for certain that a subcontractor carries their own general liability cover? The first step is to demand that they have it in their contract. Next, you will need to see evidence of the coverage. Normally, it is in the form of a certificate of insurance.

As an additional measure it is also recommended that you have the subcontractor name your business as “additional insured” in their GL policy. This is because once your business is named in the subcontractor’s general liability insurance policy, it is protected by the same GL policy. This ensures that in the event your business is sued as a result of any losses incurred by any damage caused by the subcontractor, their insurance company is expected to cover that claim.

Workers’ Compensation Insurance

This type of insurance policy is designed to cover employees disability and medical costs that are related to work-associated injuries and illnesses. Numerous States require that businesses acquire Workers’ Compensation Insurance for W2 employees. However, there are some States that require that businesses procure Workers’ Compensation insurance for 1099 contractors.

In case you are not sure what the State of Florida requires of you regarding Workers’ Compensation Insurance, get in touch with Compare A Quote insurance agents.

No matter what a State requires of your business, we recommend that you insist all your subcontractors carry their own Workers’ Compensation policies.

Similar to General Liability insurance policies, we recommend that you require independent contractors in your contract with them.

Professional Liability Insurance Policy

Also known as an errors and omissions insurance policy, professional liability insurance is designed to compensate your clients in the event that you make a mistake that costs them money. You want to make sure that no matter who makes the mistake, that is, an independent contractor or an employee, your business is covered by Errors and Omissions insurance.


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