What You Need to Know About Subcontractor Workers Comp Risks

February 2019
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If you’re employing workers for your business, you’re likely required by law to carry workers compensation insurance to protect them in the event of a work-related illness or injury.

But what about subcontractors?

They are working for you but not for you. Is it your responsibility to be sure they’re insured or is it theirs?

Don’t Let Subcontractors Put You at Risk

In short, if you’ve got subcontractors working for you, you’ll want to be sure they’re covered.

In most states, employers are liable for their own employees’ workers compensation coverage, but not the coverage of a subcontractor’s employees.


If a subcontractor does not obtain workers compensation insurance coverage for its employees, the general contractor could then qualify as the “statutory employer” of the subcontractor and its employees.

This means that the subcontractor’s employees become employees of the general contractor for purposes of workers compensation coverage.

It’s also possible for a general contractor to be the “statutory employer” of a subcontractor brought onto its job by another subcontractor. That’s why it’s so important for a general contractor to be diligent about being aware who is working on its jobs and to verify insurance coverage for your subs… and your sub-subcontractors, as well.

How to Protect Yourself Against Subcontractor Workers’ Comp Risks

You don’t want your own workers’ comp premiums to soar after an uninsured subcontractor gets injured and makes a claim against your policy.

Here’s how to keep this situation from happening to you:

  • Require subcontractors to provide proof of coverage showing workers compensation coverage.
  • Confirm the policy is current.
  • Require subcontractors to provide a valid Workers Compensation Coverage Waiver if they qualify (some sole proprietors who work alone may qualify for a waiver).
  • Look at the insurance coverage of all subcontractors hired by the subcontractor - liability may come up the employment ladder to the general contractor.

Don’t Forget to Verify

Spending time verifying insurance certificates sounds tedious. It’s definitely not at the top of your to-do list when you’re starting a new project.

But it’s an essential step, even for subcontractors that you have a solid relationship with.

You may have worked with the same subcontractor for years. He gives you certificates of insurance when you request them and you set them aside to go over later. But then one day you misplace his cert and call up his insurance company to verify. It turns out, he hasn’t had coverage for the past three years. You find out that he’s been in a tough financial spot and has been forging his proof of insurance, hoping there’s no accidents and that he doesn’t get caught.

That means you’ve been at risk of being liable for his employees’ injuries for years.

Sounds far-fetched, but this sort of thing can and does happen.

Take the time to verify your subs proof of insurance, even the ones you’ve worked with for a long time.

Hit a Snag? Ask Your Insurer.

When all else fails – or right off the bat – contact your insurance agent with questions about subcontactors and workers’ comp. They may be able to help you take the steps to verify that your sub carries adequate coverage.

Don’t find yourself in a pickle when an uninsured subcontractor gets injured on your job site. Preemptively take steps to verify that they are covered for the duration of the project before work starts.

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