Contractor Insurance You Can Trust
Subcontractor Insurance Requirements
If you hire subs, every one of them needs to carry their own insurance with you named additional insured. Skip the checks and your premium triples at audit — or worse, an uninsured sub’s claim lands on your policy. Here’s the playbook.
- ✓Why GCs (including you) require subs to carry insurance
- ✓Minimum sub limits and required endorsements by trade
- ✓What happens at audit if you can’t produce sub COIs (premium added back)
- ✓Indemnification clauses and how to verify sub coverage continuously
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Why You Need to Require Insurance From Every Sub
If you’ve ever been on the GC side of a project, you know the drill: before any sub steps on site, they have to send a current Certificate of Insurance naming you as additional insured. The requirement seems bureaucratic. It isn’t. The minute you bring a sub on a project without verified insurance, two bad things happen. Learn more about general liability insurance for contractors or scroll down for the details on this question.
First, if the sub causes property damage or bodily injury — and they have no GL of their own — the claim flows up to YOUR policy. You’re the GC, you brought them on, you’re on the hook. Your GL pays, your loss history takes the hit, your premium goes up at next renewal. The cost-savings you got by hiring the cheap uninsured sub vanishes within one policy cycle.
Second — and this surprises most contractors — when your carrier audits your books at the end of the policy year, they ask for a sub list. For every sub you can’t produce a COI for, the carrier ADDS THEIR PAYROLL AND REVENUE BACK INTO YOUR RATING BASIS. In other words, the carrier treats them as if YOU had performed the work yourself. You pay GL premium on revenue you never collected. We routinely see contractors hit with $3,000–$15,000 audit invoices because they didn’t keep clean sub COIs.
The third reason is the silent one: when you collect a COI from a sub, you also collect an indemnification trail. That’s the legal mechanism by which their carrier ultimately bears the cost of their own mistakes — instead of your carrier shouldering it indefinitely. The clean-sub-tracking habit is the single most valuable insurance discipline any GC can build.
Bottom line: Require COIs from every sub, every project, with proper limits and AI endorsements. The discipline saves you thousands at audit and protects your loss ratio from someone else’s mistake.
What to Require From Every Subcontractor
General Liability — Matching Your Limits
Subs should carry GL limits equal to or higher than the limits your own client requires of you. If you’re carrying $1M/$2M, subs should too. If your GC requires $2M/$4M of you, push the same down to your subs. The rationale: if a sub causes a loss that exceeds their limit, the excess flows up to your policy. Match limits, match protection.
Workers Compensation
In Ohio, sub workers comp is administered through the Ohio BWC. If a sub’s employee gets hurt on YOUR jobsite and the sub doesn’t have BWC coverage, your BWC account is on the hook. Require proof of an active BWC certificate from every sub with employees. For one-person LLCs claiming exemption, get a signed exemption affidavit on file.
Commercial Auto (When Applicable)
Subs operating trucks, trailers, or vehicles on the jobsite should carry commercial auto with at least $1M CSL. Personal auto policies exclude business use almost universally — and if a sub’s personal-policy truck causes a wreck on your job, the personal carrier denies and the claim chases you.
Additional Insured Endorsement
YOU named as AI on the sub’s GL (and ideally umbrella) with CG 20 10 + CG 20 37 endorsements. Without this, the sub’s policy doesn’t extend to you — and a claim arising out of the sub’s work could still land on your policy because the injured party will sue everyone.
Primary, Non-Contributory and Waiver of Subrogation
Same language you’d require if you were the upstream GC. The sub’s policy responds first; the sub’s carrier waives its right to chase you for reimbursement. Standard requirement.
Specialty Coverages by Trade
Painters and abatement subs: pollution liability. Crane operators: rigger’s liability. Demo subs: pollution and contractor’s pollution liability. Don’t accept a generic GL COI from a specialty trade — verify the specific endorsements their work demands.
Minimum Sub Insurance Requirements by Trade
| Sub Trade | GL Minimum | Auto Minimum | Specialty |
|---|---|---|---|
| Painter / Finish | $1M / $2M | $500K CSL | Pollution if exterior/abatement |
| Drywall / Plaster | $1M / $2M | $500K CSL | — |
| Electrical | $1M / $2M | $1M CSL | Per project AI if commercial |
| Plumbing | $1M / $2M | $1M CSL | Water damage endorsement |
| HVAC | $1M / $2M | $1M CSL | Refrigerant pollution endorsement |
| Concrete / Masonry | $1M / $2M | $1M CSL | — |
| Framing / Structural | $1M / $2M – $2M / $4M | $1M CSL | — |
| Roofing | $1M / $2M – $2M / $4M | $1M CSL | High-limit completed ops |
| Demolition / Excavation | $2M / $4M | $1M CSL | CPL + utility damage |
| Crane / Lifting | $2M / $4M | $1M CSL | Rigger’s liability |
The Indemnification Clause — Your Subcontract’s Most Important Paragraph
What Indemnification Does
The indemnification clause in your subcontract is the legal mechanism that says: “Sub, if your work causes a loss, you defend us, you pay us back, and your insurance is the primary source of those funds.” It’s the legal counterpart to additional insured status on the COI. Both work together.
Ohio’s Anti-Indemnity Statute
Ohio Revised Code §2305.31 prohibits indemnification clauses that require a sub to indemnify a GC for the GC’s OWN sole negligence in construction contracts. So you can require a sub to indemnify you for THEIR negligence — but not for YOURS. Draft your subcontract within these limits, or the entire clause may be unenforceable.
“Hold Harmless” vs. “Defend and Indemnify”
Hold harmless says the sub won’t sue you. Defend and indemnify says the sub will pay your legal defense AND any settlement or judgment. The defend obligation is hugely valuable — it shifts the cost of fighting frivolous lawsuits onto the sub’s carrier from day one, before fault is determined.
Insurance-Only vs. Contractual Liability
An “insurance-only” indemnification clause limits the sub’s obligation to the amount of insurance they carry. This is a defensive move for the sub, but it caps your recovery. Most well-drafted subcontracts include both contractual indemnification (uncapped, but limited by statute) AND insurance requirements — so you have multiple recovery paths.
Why Contractors Trust Trade Safe
20+ Years
Two decades of sub-tracking advice — we help GCs build the discipline that protects them at audit.
Independent Agency
We can also place insurance for your subs — quoting them helps you keep your own loss ratio clean.
Fast COI Turnaround
For you AND your subs. Same-day certificates keep projects moving.
Hard-to-Place Risks
Tough trades — roofers, demo, abatement — placed where they can actually buy coverage.
Frequently Asked Questions
What happens if I hire an uninsured sub?
Two things — both bad. At audit, your carrier adds that sub’s payroll and revenue to YOUR rating basis, often resulting in a four- or five-figure audit invoice. And if the sub causes a claim, your policy responds — driving up your loss history and future premiums.
How do I verify a sub’s insurance is real?
Three steps. First, get the COI directly from the sub’s insurance agent — not the sub themselves. Second, verify the policy effective dates cover your project. Third, for important projects, call the carrier directly using the producer phone number on the COI to confirm the policy is active.
What if a sub’s policy gets cancelled mid-project?
You usually won’t know unless the carrier notifies you. Most carriers no longer provide cancellation notice. Mitigation: include a contractual requirement that the sub immediately notify you of any cancellation or material change, and re-collect COIs at long-running projects every 90 days.
Can I require subs to use specific carriers?
You can require A-rated (or A-) carriers per AM Best. Requiring a specific carrier is unusual and may invite legal challenges; specifying minimum AM Best ratings is the industry-standard approach.
What about 1099 workers — are they subs?
Insurance carriers treat them as subs for audit purposes if they’re truly independent and have their own businesses. If they’re effectively employees (you direct their work, they use your tools, they work only for you), the carrier treats them as employees and assesses payroll-based premium. The IRS has its own test — both matter.
Do residential remodelers really need to track sub insurance?
Absolutely yes. Residential remodelers are the contractor segment hit hardest by audit surprises. The discipline applies regardless of project size.
Is there a software for tracking sub COIs?
Yes — myCOI, JDi Data, and Procore all have certificate-tracking modules. For smaller GCs, a Google Drive folder named by sub with expiration-date reminders works fine. Whatever you use, build the habit.
What if my sub claims they’re exempt from workers comp?
In Ohio, sole proprietors and most single-member LLCs are exempt from BWC. Get a signed exemption affidavit on file before the sub starts work. If they bring on helpers mid-project, the exemption no longer applies — they need active BWC coverage immediately.
Build a Clean Sub Program — Avoid the Audit Surprise
Trade Safe helps GCs build sub-tracking discipline and quotes coverage for the subs themselves. The single best move you can make before your next audit.