Contractors Who Hire Subcontractors

Contractors have a lot to worry about it. In addition to their customers needs, rising material costs and their own employees, they need to worry about subcontractors who they hire to help perform a job. A subcontractor is an individual, or in some cases a business, that signs a contract to perform part, or sometimes all, of the obligations of another’s contract.

Contractors who hire subcontractors are particularly vulnerable to lawsuits from subs for claims of an unsafe workplace. This is what the Labor Law is all about. If a subcontractor fails to maintain adequate insurance coverage, their actions on the jobsite, as well as injuries to their employees, can become the responsibility of the contractor who hired them.

There are a number of ways a Contractor can protect themselves from being pulled into a lawsuit as a result of the actions of a subcontractor. The first would be to obtain a written, signed contract prior to hiring a sub for a job. By taking this simple step, the Contractor can better safeguard their business and assets in the event that a loss does occur.

Secondly, verify the Subcontractors Insurance. This can easily be done by obtaining a Certificate of Insurance prior to the work being started. Make sure the subcontractor has equal liability limits to yours and if they have employees, that Workers Compensation coverage is in effect. (If not, the subcontractor will be classified as your employee on audit, and you will be charged an additional premium.)

The Contractor should also be named as an “Additional Insured” on the subcontractors General Liability Insurance, and there should be language indicating that the subcontractors policy is “Primary and Non-Contributory” in favor of the Insured Contractor.

And finally, each subcontractor should have a “Hold Harmless” agreement in favor of the Insured Contractor prior to the start of any work. These are all components that are designed to help protect Contractors against lawsuits for damage caused by a subcontractor or injuries to their employees or to others.

Check with your Independent Insurance Agent to make sure you are properly covered and make sure to contact your Attorney, who can help to develop and implement a written contract for you.

Written by Kevin Connors. Kevin Connors is a Certified Insurance Counselor and licensed Property/Casualty and Life Insurance Agent with The Connors Insurance Agency in Mechanicville, NY. Mr. Connors can be reached at (518)664-7307 or This email address is being protected from spambots. You need JavaScript enabled to view it.