An important part of signing on to do a construction project is making sure everyone working for you has proper GL coverage. Your employees are rated for payroll and covered by your insurance policy. But what about the subcontractors you hire – electricians, plumbers, excavators, etc.? They need to carry their own GL coverage. These Subcontractors are rated on your GL policy as Contractors-Subcontracted Work based on the cost of hire including the cost of their materials.
Insurance companies have the right to audit insureds’ accounting records. Contractors need to maintain current Certificates of Insurance from all Subcontractors. If not, those costs could be charged as Employee Payroll on
your premium audit. Before you sign on the dotted line of that Contract taking responsibility for all work to be performed, make sure your Subcontractors carry their own Commercial GL, including you as an Additional Insured with Waiver of Subrogation. You’ll be glad you did!