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Why You Should Know If You Have An Uninsured Subcontractor

Are You Working With An Insured Or Uninsured Subcontractor?

Why Is Important To Know If You Have An Uninsured Subcontractor?

If you are in the construction industry, or are hiring for your real estate or small business project, then you need to know if you are dealing with an uninsured subcontractor.  Here's why this is important.

Are You Dealing With An Insured Or Uninsured Subcontractor?

The best way to find out if you have an insured or uninsured subcontractor is to simply ask.  If you are not comfortable asking directly then there are many websites and review boards that would help you determine what type of insurance the subcontractor may have, if any.  Do not be afraid  to open up a line of communication to determine what type of insurance they might have, as it would directly affect you.

In addition, it is also important to know what type of insurance they may have, as insurance types can differ from industry to industry, and from specialization to specialization.   For example, you must know if they are a general contractor or a sub, or artisan contractor.  An artisan contractor typically refers to those in specialized fields, such as HVAC, plumbing, etc.

What Happens If You Have An Uninsured Subcontractor?

If you do subcontract all of your work, then you need to know whether or not your subcontractors are insured or uninsured.  This is because insured subcontractors, who can show proof of insurance, will allow you to get a better rate.  Whereas, uninsured subcontractors will not only mean that you will have higher rates, but if anything were to happen on the premise, even if it is solely their fault, you may still be held liable.

Remember, this is important no matter what scope of industry your business might fall into.

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Why General Liability Insurance Isn’t Enough

General liability insurance is, as the name suggests, extremely general.  It essentially covers the basic needs and requirements set forth between the insurance company, and as agreed upon by the policy holder.   Exclusions, then, are what would not be covered by  general insurance, and as such, could potentially leave the policy holder at risk.

Why Isn't General Insurance Enough?

As mentioned, general liability insurance only covers a specific amount, as set forth by the insurance company.  This would not cover any exclusions that might apply.  For example, if you are in the real estate industry and you want to flip a property and therefore need to hire a contractor, general insurance will not cover contractor lawsuits or injuries.  This is because you need a separate contractor liability insurance policy to ensure coverage.

In another example, if you are in the food and beverage industry and you sell liquor liability, then you may need liquor liability insurance, especially if you sell more than 50% alcohol.  General liability insurance simply may not offer coverage.  Thus, if you have a patron that leaves leaves your facility drunk, and then gets into a car accident, you may be liable.

What Do You Need Beyond General Insurance?

In short, general liability insurance is extremely broad and, as mentioned, it may not be enough to offer enough coverage, should a discrepancy occur.   This means that you need specific additional coverage that would maintain coverage for your specific industry.  As mentioned, if you are in the food and beverage industry, you may need liquor liability and so forth.  No matter what commercial industry your business resides in, we can find the right insurance for you.