Many contractors assume that if a subcontractor causes damage, the sub’s insurance will automatically step in and handle it. Unfortunately, that assumption can get expensive. Courts often hold the general contractor responsible for damages caused by subcontractors, especially when contracts are vague or risk transfer wasn’t handled properly upfront.
The key issue is control and responsibility. If a subcontractor’s work leads to property damage, injury, or faulty workmanship, claimants commonly pursue the general contractor first — because that’s who they hired and who has the deeper pockets. Without additional insured endorsements, written indemnification agreements, and verified coverage limits, the general contractor’s own policy may be left to respond.
Protecting your business requires more than collecting a certificate of insurance. Every subcontractor should name your company as an additional insured on their general liability policy, sign a solid indemnity agreement, and maintain limits that match your exposure. Done correctly, this shifts risk where it belongs and prevents one subcontractor’s mistake from becoming your company’s financial problem.
Stay Tuned For Other Great Reads In This Month’s Newsletter
- Avoiding Underinsurance and Co-Insurance Penalties
- Business Interruption Insurance: Real-Life Examples in Oklahoma
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