Subcontractors & GL

Does General Liability Cover Subcontractors?

Partially. Your GL can respond when work performed by a sub causes a covered loss — but if your sub is uninsured, your carrier will charge you for their payroll at audit and may exclude their work entirely.

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How Subcontractors Interact With Your GL Policy

Subcontractor coverage is one of the trickiest topics in contractor insurance, and getting it wrong is the single most common source of “surprise” premium bills at year-end audit. Here is what actually happens. Learn more about general liability insurance for contractors or scroll down for the details on this question.

When your sub has their own GL: Their carrier responds first to any claim caused by their work. You collect a COI showing $1M/$2M coverage, name yourself as additional insured, get a waiver of subrogation, and your policy sits behind theirs. Your premium does not increase, and at audit, their payroll is excluded from your rating.

When your sub is uninsured: Three bad things happen at once. (1) Your GL policy treats their payroll as your labor at audit — meaning your premium gets recalculated based on the higher payroll figure, often producing a four- or five-figure audit bill. (2) Many GL forms contain a “subcontractor warranty” exclusion that removes coverage for claims arising from uninsured subs entirely. (3) If the uninsured sub is hurt on your jobsite, state law typically treats them as your employee — meaning your workers’ comp gets hit too.

The fix is the same one every experienced GC uses:

• Require every sub to carry their own GL with $1M/$2M minimum limits.
• Collect a current COI before the sub starts work, not at the end of the year.
• Require additional insured endorsements (CG 20 10 / CG 20 37) naming you on their policy.
• Get a waiver of subrogation endorsement to prevent their carrier from coming back at you.
• Use a written subcontractor agreement spelling out insurance, indemnity, and hold-harmless terms.

Some carriers offer an “uninsured sub” surcharge endorsement that explicitly covers uninsured subs at a higher rate. It’s expensive but available if your business model truly cannot avoid uninsured day labor. For most contractors, the right answer is to never let uninsured subs on the job in the first place.

Real Cost of an Uninsured Sub on Your Audit

Here is a concrete audit example we see every year. A general contractor reports $500,000 in payroll at policy inception and pays $7,500 in GL premium. During the year, they use uninsured subs who perform $200,000 worth of work and cannot produce GL certificates.

At audit, the carrier adds the $200,000 in uninsured sub cost to the contractor’s payroll basis, recalculates premium against the higher number, and issues a back-bill. In this scenario, the GC owes an additional $2,800–$3,200 in audit premium on subs they never employed — on top of the original $7,500. And that’s just the GL audit. The workers’ comp audit will do the same thing.

The fix isn’t complicated. A simple folder of current sub COIs, collected before each sub mobilizes, eliminates the back-bill entirely. Trade Safe provides a one-page sub-insurance compliance template every client can use.

Subcontractor Insurance Checklist

• Current GL certificate — $1M/$2M minimum, in force through the project completion date.
• Additional insured endorsements — CG 20 10 (ongoing) and CG 20 37 (completed operations).
• Waiver of subrogation — CG 24 04 in favor of you.
• Primary and non-contributory wording — their policy pays before yours.
• Workers’ compensation certificate — required by Ohio law for any sub with employees.
• Written subcontractor agreement — insurance, indemnity, and hold-harmless clauses signed before mobilization.

The Trade Safe Difference

Why Contractors Choose Trade Safe

You Might Also Find Helpful

• → Subcontractor Insurance Requirements
• → Additional Insured Endorsements for Contractors
• → Certificate of Insurance (COI) for Contractors

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