Sample insurance requirements for subcontractors
An example of what a general contractor might require of subcontractors, in three tiers of risk, with a blank worksheet to fill in with your broker. It is an example to review with a broker and a construction attorney in your state, not a recommendation.
What is in the PDF
Two pages. The first is a blank worksheet: fourteen rows of coverage and endorsements across three tiers, with workers’ compensation already filled in as statutory, and room underneath for what your owner contract asks you to pass down. The second is the example on this page, the three tiers, and a note on what the example leaves out.
An example matrix, by three tiers of risk
An example to review with your broker, not a recommendation
| Coverage | Tier 1: lower risk | Tier 2: moderate risk | Tier 3: high risk |
|---|---|---|---|
| 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 | $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 | Required | Required | Required |
| Waiver of subrogation | Required | Required | Required |
| Primary and non-contributory | Required | Required | Required |
Which trades sit in which tier
| Tier | Typical trades | Risk profile |
|---|---|---|
| Tier 1: lower risk | Interior painting, cleaning, flooring, signage, small finish carpentry | Low injury severity, small contract values, little exposure to third parties |
| Tier 2: moderate risk | Drywall, plumbing, HVAC, low-voltage electrical, landscaping, concrete flatwork | Moderate severity, working near other trades and the public |
| Tier 3: high risk | Roofing, steel erection, excavation, demolition, cranes, high-voltage electrical, scaffolding | Serious injury or property damage is possible, with work at height or near structures |
Set the tier by the job, not only by the trade. A plumber on a 20-story tower carries a different risk from a plumber on a single-story retail fit-out. Contract value, height, occupied buildings and exposure to the public should each move a subcontractor up a tier. The guide to what insurance subcontractors should have goes through each coverage at more length.
What each row is for
| Row | What it is for |
|---|---|
| General liability, each occurrence | The most the policy pays for one occurrence of injury or property damage. |
| General liability, general aggregate | The most it pays in a policy period, apart from products and completed operations claims. Per project means your job has a general aggregate of its own, by endorsement (the ISO form is CG 25 03), so that claims on another job cannot use it up. The completed operations aggregate is not changed by it. |
| Products and completed operations aggregate | The most it pays in a policy period for injury or damage from work that is finished. It is shared across all of the subcontractor's finished work. |
| Commercial auto, combined single limit | One limit for each accident, for injury and property damage together, where a vehicle is used in the subcontractor's business. |
| Workers' compensation | Benefits for the subcontractor's own employees who are hurt at work. Statutory means the amounts state law sets, so there is no limit to choose. |
| Employers' liability | The second part of a workers' compensation policy, for a lawsuit against the employer over an employee's injury. This part does have limits. |
| Umbrella or excess | More limit on top of the general liability, auto and employers' liability policies, for a claim that goes past them. Check how it treats additional insureds: an umbrella that follows form is not made primary and non-contributory by that. If your contract needs the subcontractor's umbrella to pay before your own insurance, ask for the wording or endorsement that says so. |
| Additional insured, ongoing and completed | Makes you an insured under the subcontractor's general liability policy, by endorsement, for injury or damage caused in whole or in part by the subcontractor: one form while the work is under way, another once it is finished. |
| Waiver of subrogation | The subcontractor's insurer gives up its right to recover from you what it paid on a claim. |
| Primary and non-contributory | The subcontractor's policy pays first and does not ask yours to share the cost, where the subcontractor agreed to that in a written contract. |
The endorsements to require
The last three rows of the matrix are endorsements: pages attached to a policy that change its terms. A requirement names each one, and the standard form beside it as an example.
| Endorsement | Example form | What to check |
|---|---|---|
| Additional insured, ongoing operations | CG 20 10, or an automatic form such as CG 20 38 | That it names you, or reaches you through your written contract. |
| Additional insured, completed operations | CG 20 37, or an automatic form such as CG 20 40 | That you hold it as well as the ongoing operations form, unless one insurer form grants both. |
| Primary and non-contributory | CG 20 01 | That your subcontract asks for it in writing. The form applies where a written contract requires it. |
| Waiver of subrogation, general liability | CG 24 04 | That its schedule names you, or covers any party the subcontractor has agreed in writing to waive against. |
| Waiver of subrogation, auto | CA 04 44 | That it reaches you in the same way. |
| Waiver of subrogation, workers' compensation | WC 00 03 13 in most states | Whether the state allows it. A few do not (New Hampshire and Kentucky, and Missouri for employers in construction), and some use a form of their own (California and Texas among them). |
Each number is an example. A carrier’s own form that gives the same protection does the same job, so write “or equivalent” beside it. Ask for the forms themselves: a marked box on a certificate is a statement, and the endorsement page is the evidence.
Never require less than your owner contract requires of you
What you require of a subcontractor must never be weaker than what your owner contract requires of you. Before you settle the requirements for a project, read the owner’s insurance exhibit and pass down what it asks for. The first page of the worksheet has a space for exactly that.
What the example leaves out
The worksheet has rows the example does not fill, because they turn on the job:
- Pollution liability, for work such as excavation and demolition.
- Professional liability, for design-build work.
- A minimum insurer rating, for example A- VII or better from AM Best. If you also write a rule about where the insurer is licensed, word it as admitted, or eligible as a surplus lines insurer, in your state. A surplus lines insurer is not licensed in the state and may still be eligible to write there.
- How many years completed operations cover is kept after the work is finished.
Settle two more with your broker: a cap on deductibles, and the same protection from anyone your subcontractor hires.
How to record an exception
There will be a subcontractor you want on a job who cannot meet one requirement. Decide it in writing, not quietly:
- The project manager asks for the exception in writing, with the reason.
- Someone who answers for the risk, such as an owner of the company or the head of finance, approves or refuses it.
- The decision is recorded with its conditions: an end date, an extra safety measure.
- The subcontractor is reviewed again at renewal, or before the next project.
Once the requirements are settled, WatchMyCover holds them, compares each limit, endorsement and date on a certificate with them, and gives the reason for each verdict.
Related
Check every certificate against your own requirements, not a standard set.
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