Many businesses within the construction industry rely on contractors and subcontractors to get projects done. This can increase liability for the general contractor, since there may be multiple teams working on the same site. It is important for you to establish when a subcontractor will and will not be covered under your professional liability insurance to protect yourself from these risks.
Why You Should Know Who Is Covered by Your Insurance
Some contractors are surprised to learn that not everyone working on their projects is fully covered by their liability insurance. When you establish a policy, make sure you talk to the agent. Don’t be afraid to ask them outright, “Are subcontractors covered under contractors insurance with your company?” and be prepared to discuss options if the answer is no.
How You Can Protect Your Contracting Business
There are several ways you can protect your interests when it comes to working with subcontractors. For example, in many cases, having your business added as an additional insured on a subcontractor’s policy is sufficient to protect your interests in their work. You should also look into errors and commissions insurance, which may be required by some clients.
While the use of subcontractors within the construction industry is common, the practice is not without risks. You can manage those risks by understanding how insurance can protect you and who is covered by each policy you maintain.