Are you getting screwed by your sub-contractor?

If your business depends on work performed by sub-contractors, without proper risk transfer your company could be screwed and held responsible for the work performed by a sub-contractor.

The two items that affect your sub-contractor relationship the most are the certificate of insurance and the sub-agreement.

In this brief article we will discuss each and what to look out for so you don’t get screwed over.


Part 1 – Sub-Contractor Agreement aka Legal Document

The sub-agreement is a legal document that you should have an experienced construction attorney review. We have a sample that we provide, but it is always recommended to consult an attorney.

The sub-agreement is a critical piece as it outlines the legal requirements for the sub-contractor to indemnify and hold you harmless. Without this document the sub-contractors own policy might not activate fully to protect you.

The sub-agreement typically consists of two sections, the legal jargon of the indemnity portion. This is critical to making sure the sub-contractors policy and sub-contractor directly is held responsible for their work.

The second portion is the insurance requirements. While most general contractors have a sample certificate they pass around to request certs, having it outlined on the sub-agreement is once again very important.

This is the legal document saying you require the sub-contractor to have certain limits. Proper legal review by legal counsel is critical as laws and courts change the interpretation of these documents.

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Part 2 – Certificate of Insurance aka proof of coverage

The other critical piece is the certificate of insurance or COI’s as they are commonly called. The certificate of insurance gives a basic outline of the coverage provided by the sub-contractor to you.

This document while helpful is not a complete picture as it is not designed to show all the exclusions applicable to the policy.
Proper review and acceptance of certificates prior to starting the job will prevent catastrophic problems down the line. Often times General Contractor’s policies will have limitations if the sub-contractors policy does not provide proper coverage.

The simplest way to review certificates properly is with our COI requirement checklist.

Our COI checklist is designed to help you or your staff quickly and easily review the policies of your sub-contractors.
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Keep in mind the COI is a representation of coverage not a guarantee.

Key components of COI review:
Contractual Liability Box Checked under CGL.
No action Over / Labor Law Exclusion.
Additional Insured for On Going and Completed Operations.
Residential Exclusions.
Effective and Expiration Dates.

Depending on the job you are requesting your sub-contractor to do also depends on the limits and exclusions you can accept.

For example, if you are only doing commercial work you can select a sub-contractor with a residential exclusion. However, be sure to not include that sub-contractor on a future residential job.

However, an action over / labor law exclusion should never be accepted here in New York.

The last thing you want is to start a job with an improperly insured sub-contractor.

If you need help managing the risk associated with sub-contractors please use the link below to get in touch.


For Immediate Help Call 845.205.0769

Agents Available 24/7

We will be in contact with you as soon as possible.