Finding a Contractor: Subcontractor’s Insurance Recommendations

Scenario: John shows up to work one morning at a construction site and the first thing he does is trip over an extension cord. He hits his head on a concrete floor. He must go to the hospital for stitches, possibly sustains a concussion and might be held overnight for observation for lasting or permanent brain damage.

If John works for a subcontractor, who is liable: the subcontractor, the primary contractor, or the company employed to fix a hole in the wall? Chances are, each of them will be sued. All of them may very well have to pay damages.

Request Certificates of Insurance From The Insurance Companies

If a contractor is hosting any sort of repair, construction, or demolition, the it may be useful to hire subcontractors for the work. There are many qualifications the both the primary contractor and subcontractor must have, and one very important factor is insurance. It’s also best practice for facilities manager employing the contractor and subcontractor to carry insurance as well, for in some instances, the company can be held liable for an accident or injury.

Make sure to request certificates of insurance from all parties involved in the project, and read all of the fine print in the insurance coverage before agreeing to the involvement of a subcontractor (there are serious ramifications for a company held liable for an accident). The facilities manager should take the time to do this prior to a crew even walking onto the property.

Primary contractors and subcontractors alike should be able to provide evidence, in the form of certificates, of the insurance that covers them. These include liabilities for: worker’s compensation, commercial, automobile and umbrella insurance. These certificates should all be sent directly from the insurance companies the contractor and subcontractor name as their carriers. A good rule of thumb for determining if your service providers carry enough insurance is, find a primary contractor or subcontractor who holds as much (or more) insurance as your own company (the employer).

Note Expiration Dates – Do They Cover The End Date Of Construction?

When browsing through these certificates, take note of the expiration dates. Take care that the coverage is not only for the first day the crew will be there, but long past the expected end date of the work to be done.

It’s also imperative that the subcontractor you find be listed as an “Additional Insured” member on the primary contractor’s insurance policies for general liability.

Look For Hold Harmless Statement

Research will tell you that the contractors and subcontractors must all sign a document that releases the business from any liability. Look for specific wording saying “Indemnification” and “Hold Harmless” in the agreement.

Do Not Loan Any Equipment Or Tools

Should there come a time when a contractor or subcontractor wishes to borrow a piece of equipment or a tool from your facility, even if for a few moments, it is best to say no. If any injury happens and the tool is the cause, you as a small business owner or facilities manager may find himself at the wrong end of a law suit.

Be vigilant. Make sure not only that the work will be of excellent quality, but also that the company will not be held accountable for injuries sustained by any member of the crews. All of the above is also true for all vendors.

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