Subcontractors are skilled professionals who are held to a very high and strict expectation of insurance requirements. These requirements are so strict because these types of professions are generally providing services which could put the client or their property at a risk for significant harm if the work is not completed properly and if the subcontractor does not have the proper insurance coverage. In fact, in order for subcontractors to begin work on a job site, it is not uncommon for them to be required to show proof of insurance coverage before any work can be performed and before they are even allowed to be present on the job site. There are many different types of professional insurance coverages that subcontractors should have.
At the most basic level of insurance coverage, all subcontractors should carry general liability insurance. This is the most popular line of commercial insurance as it provides protection if damage is caused to the property by the subcontractor while they are performing their job duties. This damage can be something that is minor and recognizable immediately, such as scratching hardwood floors while moving appliances and equipment through the home, or something that is more severe and may not be caught until later on such as improper plumbing leading to mold in the home. It is important for subcontractors to carry general liability insurance coverage of their own because the companies they are working for typically have an exception in their own general liability insurance coverage that excludes the subcontractors.
Worker's compensation insurance provides coverage for medical and disability costs associated with job-related illnesses and injuries. Because the work subcontractors perform is physically demanding, it is no surprise that work-place injuries and illnesses are not uncommon within the insurance industry.
Most general contractors will require a subcontractor to show proof of workers' compensation insurance or some type of personal injury coverage before they will hire the contactor, but some general contractors may cover subcontractors under their own policy.
Subcontractors typically rely on their vehicle heavily to get them from one job site to another and to gather supplies for a job. Because those in the construction industry tend to drive significantly more than other industries, the probability of a work-related automobile accident occurring increases significantly.
It is important for subcontractors to make sure they have commercial automobile insurance coverage to cover the costs of any damages to their vehicle, supplies, and tools or injuries resulting from a work-related automobile accident, as these damages typically will not be covered by other lines of coverage such as personal auto insurance coverage.
Property floater insurance is a much more specialized form of insurance coverage that works the same way as a stand-alone property insurance coverage but extends that coverage to property that does not remain in one location—such as a work truck.
Subcontractors typically carry many tools with them in their personal or work vehicles from one location to another, and because these tools are typically very valuable and can be easily re-sold for cash or pawned, these vehicles are strong targets for automobile and personal property theft.
Without this specialty coverage, if a subcontractor’s vehicle is stolen or broken into and their tools stolen, they will be required to replace all of their tools at their own out-of-pocket cost; or face the inability to continue to work until they can replace the tools they need.
Subcontracts have unique insurance needs based on the services they provide and what their project contract dictates. Sitting down with an independent insurance agent well-versed in business insurance options can help a subcontractor determine which coverage options are in their best interest.