Short answer
A starting list for any subcontractor is commercial general liability, workers' compensation with employers' liability, and commercial auto liability, with an umbrella or excess policy for higher-risk trades. Add professional liability where the subcontractor designs or engineers part of the work, and contractors pollution liability where the work can release pollutants, as excavation and demolition can. The limits and endorsements are yours to set with your broker and attorney, and should never be less than your owner contract requires of you.
The coverages, and what each is for
Seven kinds of coverage come up in subcontractor requirements. The first four are the core. This guide covers the United States and is general information, not insurance or legal advice.
| Coverage | What it pays for | What to know when you require it |
|---|---|---|
| Commercial general liability | Claims by other people for injury or property damage from the subcontractor's operations, and from its finished work. | Requirements set three of its limits, explained below. It does not cover injuries to the subcontractor's own employees. |
| Workers' compensation | The benefits state law sets for the subcontractor's injured employees. | Requirements say statutory in place of a dollar figure, because the state sets the benefits. The state also decides who must carry it. Texas, for example, does not require it of most private employers, but does of those that contract with government entities, for the employees on that project. |
| Employers' liability | A lawsuit over an employee's injury that falls outside the workers' compensation law. | Part Two of the standard workers' compensation policy, with three dollar limits: each accident, disease for each employee, disease for the policy. |
| Commercial auto liability | Injury and damage from accidents with vehicles used in the subcontractor's business. | The certificate shows whether it applies to any auto, or to owned, hired and non-owned autos. The limit is commonly one combined single limit for each accident. |
| Umbrella or excess liability | Loss above the limits of the general liability, auto and employers' liability policies. | Added as the risk rises. See the note under the matrix. |
| Professional liability | Errors and omissions in professional services such as design or engineering. | For a subcontractor that designs, as on design-build work. Typically claims-made: in general, it answers only claims made while it is in force. So say how long coverage must continue after the work. |
| Contractors pollution liability | Injury, damage and cleanup from pollution caused by the subcontractor's work. | For work that can release pollutants, such as excavation, demolition and asbestos abatement. Pollution is among the major exclusions of a general liability policy. |
The matrix below sets three general liability limits. Each occurrence is the most the policy pays for one incident. The general aggregate is the most it pays in the policy period, apart from claims from products and finished work. Those count against the products and completed operations aggregate.
Three tiers of risk
One set of requirements for every trade can ask too much of an interior painter and too little of a steel erector. Three tiers let you ask more where the work can do more harm.
| Tier | Example trades | Why |
|---|---|---|
| Tier 1: lower risk | Interior painting, cleaning, flooring, signage, small finish carpentry | Low injury severity, small contracts, little chance of harm to other people or their property |
| Tier 2: moderate risk | Drywall, plumbing, HVAC, low-voltage electrical, landscaping, concrete flatwork | Moderate severity, near other trades and the public |
| Tier 3: high risk | Roofing, steel erection, excavation, demolition, cranes, high-voltage electrical, scaffolding | Serious injury or damage is possible: work at height or near structures |
Set the tier by the job as well as the trade. A plumber on a 20-story tower is a different risk from a plumber on a single-story fit-out. An occupied building or a large contract moves any trade up.
An example matrix to start from
An example, not a recommendation
| Requirement | Tier 1 | Tier 2 | Tier 3 |
|---|---|---|---|
| General liability, each occurrence | $1,000,000 | $1,000,000 | $1,000,000 |
| General liability, general aggregate | $2,000,000 | $2,000,000 | $2,000,000 per project |
| Products and completed operations aggregate | $2,000,000 | $2,000,000 | $2,000,000 |
| Commercial auto, combined single limit | $1,000,000 | $1,000,000 | $1,000,000 |
| Workers' compensation | Statutory | Statutory | Statutory |
| Employers' liability, each limit | $500,000 | $1,000,000 | $1,000,000 |
| Umbrella or excess | Not required, or $1,000,000 | $2,000,000 | $5,000,000 or more |
| Additional insured, ongoing and completed operations | Required | Required | Required |
| Waiver of subrogation | Required | Required | Required |
| Primary and non-contributory | Required | Required | Required |
Two cells need a note.
- Per project gives the job a general aggregate of its own. It is done by endorsement: ISO form CG 25 03, Designated Construction Project(s) General Aggregate Limit, or an equivalent form the insurer issues. The completed operations aggregate stays shared across the subcontractor’s finished work. See the guide to CG 25 03.
- Umbrella or excess. An umbrella that follows form takes the terms of the policy beneath it only where its own wording does not say otherwise. Following form does not make it primary and non-contributory. If it must pay before your own insurance, ask for the wording or endorsement that says so.
The sample requirements template has a blank worksheet to fill in, with this example beside it.
The endorsements to require, and why
An endorsement is a form attached to a policy that changes its terms. The last three rows of the matrix are met by endorsements.
| Endorsement | Why you ask for it | Standard form, or an equivalent form the insurer issues |
|---|---|---|
| Additional insured, ongoing operations | Makes you an insured on the subcontractor's general liability policy for injury or damage caused, in whole or in part, by the subcontractor during the work. That is the wording of editions from 2004 on. Without it you are only a certificate holder, and the certificate itself confers no rights. | ISO form CG 20 10, Additional Insured - Owners, Lessees or Contractors - Scheduled Person or Organization |
| Additional insured, completed operations | The same status once the work is finished, when claims over the finished work can arrive. The ongoing operations form does not cover finished work. | ISO form CG 20 37, Additional Insured - Owners, Lessees or Contractors - Completed Operations |
| Primary and non-contributory | The subcontractor's policy pays first and does not ask yours to share. That holds where the subcontractor agreed to it in a written contract and you are a named insured on your own policy. | ISO form CG 20 01, Primary and Noncontributory - Other Insurance Condition |
| Waiver of subrogation | The subcontractor's insurer gives up its right to recover from you what it paid on a claim. It is given policy by policy, so check that the schedule of each form names you. | General liability: ISO form CG 24 04, Waiver of Transfer of Rights of Recovery Against Others to Us. Workers' compensation: NCCI form WC 00 03 13, Waiver of Our Right to Recover from Others Endorsement. |
Additional insured status can also come from a blanket form, where a written contract requires it. CG 20 10 vs CG 20 37 goes through the forms.
Some states limit the workers’ compensation waiver. Kentucky, for example, makes it unlawful to require another employer to waive its right of recovery as a condition of a contract. Ask your broker what applies where the work is, and see the waiver of subrogation guide.
Ask for the endorsement pages as well as the certificate. The ACORD 25, the standard certificate of liability insurance, says a statement on it does not confer rights in place of the endorsement. The one-page sheet for the insurance agent lists each endorsement beside its form number.
Require at least what your owner contract requires
If your contract with the owner sets insurance requirements, it may also say what you must require of subcontractors. Ask for less and you have promised the owner something your subcontractors were never asked to provide. Your attorney can tell you what the contract obliges you to pass down. Before you settle a project’s requirements:
- Read the owner contract's insurance requirements before the subcontracts go out.
- Line by line, take the higher of its limit and your tier's.
- Name everyone it wants as an additional insured, such as the owner's lender or property manager.
- Carry over what else it sets: endorsements, an insurer rating, years of completed operations coverage.
Other requirements to write down
Settle each of these with your broker before it goes into a subcontract.
- An insurer rating. A minimum from AM Best, for example A- VII or better. A- is the financial strength rating. VII is the size category: capital and surplus from $50 million to under $100 million.
- Insurer licensing, if you add a rule about it. Write it as admitted in your state, or eligible there as a surplus lines insurer. A surplus lines insurer is not admitted, so a rule that demands a licensed carrier would turn away every surplus lines policy. Those policies are not backed by a state guaranty fund.
- Occurrence form for general liability, which covers injury or damage that happens in the policy period whenever the claim arrives. A claims-made policy, in general, answers only claims made while it is in force.
- How long completed operations coverage is kept. The number of years after completion that the subcontractor keeps the policy, and your additional insured status, in force. State law sets the deadline for a construction defect claim, so settle the number with your attorney.
- A cap on deductibles, the part of a loss the subcontractor pays itself.
- Flow-down. The same requirements of anyone the subcontractor hires for the job.
How to write an exception down
There will be a subcontractor you want on a job who cannot meet one line. If your owner contract requires that line, ask your attorney before anyone approves an exception. Whatever the line, decide it on paper, not quietly:
- The project manager asks in writing, with the reason.
- Someone who answers for the risk, such as an owner of your company or the head of finance, approves or refuses.
- The record carries the conditions and an end date.
- It is reviewed at renewal, or before the next project.
Subcontractor: a drywall firm, Tier 2.
Not met: umbrella of $2,000,000. Carries $1,000,000.
Reason: interior partitions on one floor, eleven working days on site.
Approved by: the controller, October 9, 2026.
Conditions: this project only. Review before any new award.
Once the requirements are settled, WatchMyCover holds them and compares each limit, endorsement and date on a certificate with them. It gives the reason for each verdict.
Key takeaways
- The core is general liability, workers' compensation with employers' liability, and auto. The rest depends on the trade and the job.
- Without the additional insured endorsement you are only a certificate holder. Ask for the endorsement pages.
- Never require less than your owner contract requires of you.
- The matrix is an example. Your broker and a construction attorney settle the real one.
Common questions
Should a subcontractor's limits match the general contractor's own?
They do not have to match the limits on your own policies. They do have to meet whatever your owner contract tells you to require of subcontractors. Beyond that the figure is a judgment about the trade and the job, made with your broker.
Is $1 million per occurrence enough for a subcontractor?
No single figure is enough for every job. The example matrix on this page keeps $1,000,000 for each occurrence in all three tiers and adds an umbrella or excess policy above it as the risk rises. A serious injury claim can exceed a primary limit. What is enough depends on the work, the owner contract and what the trade can buy, so settle it with your broker.
Does a sole proprietor with no employees need workers' compensation?
It depends on the state and on your subcontract. State law decides who must carry it, and the rule for construction can be stricter. Tennessee, for example, generally requires construction businesses to cover everyone, the owners included. What the state allows and what your subcontract requires are separate questions. Before you accept a sole proprietor with no policy, ask your broker what your state requires in construction. Ask also how your own insurer treats that subcontractor at premium audit.
What is the difference between an umbrella and an excess policy?
Both add a further limit above the primary policies. An excess policy adds it within the scope of the policy beneath it. An umbrella can also respond to some claims the primary policies do not cover. The names are used loosely, which is why requirements say umbrella or excess. Whatever the policy is called, read its limit, which policies it sits over, and how it treats additional insureds.
Sources
- Commercial Insurance Guide (California Department of Insurance)
- ACORD 25 (2025/12), Certificate of Liability Insurance (New York State Department of Financial Services)
- The Right Endorsement: Additional Insureds (Construction Executive, Associated Builders and Contractors)
- When Is an Umbrella Primary and Noncontributory? (Independent Agent magazine, Big I Virtual University)
- WC 00 03 13, Waiver of Our Right to Recover from Others Endorsement (New York Compensation Insurance Rating Board)
- Guide to Best's Financial Strength Ratings (AM Best)
- Guide to Best's Financial Size Category (AM Best)
- Surplus lines (NAIC)
- Glossary of insurance terms (NAIC)
- Workers' compensation insurance guide (Texas Department of Insurance)
- Who must carry workers' compensation insurance (Tennessee Department of Labor and Workforce Development)
- KRS 342.700, subsection 3 (Kentucky General Assembly)