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December 8, 2022

Your Guide To Subcontractor Insurance

At a construction site, both general contractors and subcontractors play a key role in the success of the project. General contractors oversee the project itself, and subcontractors typically handle specific tasks during each phase such as plumbing, electrical, or flooring.

Since both have so many responsibilities, contractors and subcontractors should be aware of their legal liabilities and contract requirements for each project. This includes insurance policies. Preparation is key to any business or project, and in the event of a mishap or an unfortunate accident, having the protection of subcontractor insurance can go a long way.

But what are the types of insurance policies that you need? When can you be held liable for damages? Keep reading and you’ll find out.

Who is Responsible for Subcontractors Insurance?

The short answer is both. The general contractor and the subcontractor must be responsible for their insurance policies, and it’s in everyone’s best interest to ensure they have their own insurance before construction on a project even begins.

Contractor insurance provides full coverage for full-time employees but does not usually include subcontractors. If needed, however, they can be added. Hiring subcontractors that already have their own liability insurance ensures that everyone at a construction site is protected against financial liabilities. For contractors, if a subcontractor causes injuries or damages to others, legal claims may be made against them and not the subcontractor.

For subcontractors, liability insurance, for example, ensures that you always have the coverage you need for medical fees—even when your employer can’t cover you. Subcontractor insurance can protect you from legal risks that could result in a lengthy court battle. Even if it’s not your fault, you may still be held liable for these incidents.

The Liabilities of a Contractor or Subcontractor

First and foremost, written contracts must be in place to document the details related to contractor and subcontractor insurance. These will compel a contractor to assume responsibility for damages or injuries they cause.

A contract might also require subcontractors or independent contractors to get an additional insured on their insurance policies.

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What Is an Additional Insured Endorsement?

This extends some of the original policyholder’s insurance coverage to another, whether it’s another group, company, or individual. 

For example, an electrician is hired by a general contractor to install wiring in a building. Before construction began, the general contractor required the electrician to add them as an additional insured. If the wiring causes harm in any way, and the subcontractor and contractor are sued, the general contractor’s legal fees will be covered by the electrician’s insurance policy.

However, the primary insured individual (in this case, the electrician) will receive the broadest level of coverage. Additional insured groups have limited coverage, so it’s best to clarify this information with the insurance company.

Contractors and Subcontractors Insurance

Contractors and subcontractors should have their own policies for their protection. Here are some of the insurance policies that they may need:

Commercial General Liability Insurance

For any business owner, commercial general liability insurance (CGL) should be one of the first policies that they purchase. This insurance policy protects contractors and subcontractors from nearly all kinds of unforeseen circumstances. In Ontario, the following incidents are covered by CGL:

  • Third-party bodily injuries: This pertains to when an accident occurs at a job site and it physically injures a third party. Commercial general liability covers your business from legal and medical expenses.
  • Third-party property damage: This occurs when someone else’s property gets damaged because of a construction mishap. CGL will cover repair or replacement costs and legal costs involved.
  • Advertising or reputational injury: These incidents are related to slander, libel, intellectual property issues, or copyright infringement. 

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Tools and Equipment Insurance

A contractor’s and subcontractor’s tools are vital to their jobs, therefore losing even just one can delay a construction project. Having tools and equipment insurance protects their assets by covering repair costs for damaged equipment or replacing the tools or accessories. 

Pollution Liability Insurance

Construction sites produce more pollution than what most people may be aware of. Neglect of the impact this causes on the environment is a surefire way to stop any project for the foreseeable future. Not to mention the damage this causes to the area and, subsequently, the health impact it imposes on people living near the construction site. 

Pollution liability insurance covers clean-up costs, bodily injuries, and property damage caused by toxic substances.

Get a Customized Insurance Plan with Contractors Insurance

As the top-class and award-winning commercial insurance brokerage in Ontario, Contractors Insurance is ready to provide you with a personalized insurance plan for your business’s needs.

We tailor our plans without unnecessary riders, so you save on premiums in the long run.

We also offer the utmost transparency on coverage and limitations—you’ll know everything about your policy’s coverage, limits, and exclusions.

Contractor and subcontractor insurance education is made simple: we make our insights and expertise readily available for you. If there’s anything you need to be clarified, we’re only one call away.

For more assistance or detailed inquiries, get started with a free insurance quote!


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