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As a general contractor does my liability insurance cover my subs

I have a signed contract from a homeowner I have liability insurance . The home owner now wants to pay my subs direct ,wants them to sign a W-9 and have liability insurance naming the home owner as insured. My liability co. requires me to make sure my subs have insurance.

2 replies

Feb 3, 2021

Unless you have a special program for your project (which is unlikely), such as an OCIP (Owner Controlled Insurance Policy) or CCIP (Contractor Controlled Insurance Policy), a general liability insurance policy will not typically cover your subcontractors. If your subcontractors have a liability insurance policy, they can ask their insurance agent to provide a certificate of insurance that names the owner and your company as additional insureds. What the homeowner is proposing to do is contrary to your contractual relationship. Offering a certificate of insurance from your subcontractors should be all you need to address the concerns of your homeowner client.

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Feb 4, 2021

There are so many landmines in this scenario. If the homeowner wants your subs to get paid directly, then it is no longer a subcontract relationship and instead a direct to owner contract. This will invalidate or lessen your ability to make a claim against the subcontractor's insurer in the event that you need to tender a claim to the sub's insurance. typically, your subcontract agreement must have wording to the effect that subcontractor agrees to indemnify and defend contractor (and the scope of how much subcontractor is obligated to indemnify & defend). Also subcontractor must carry general liability insurance, etc. Without those conditions, the carriers are not obligated to do more than what is contractually stated in the subcontract. Next, if the homeowner wants to be a named insured on the sub's policy, then that is an entirely whole new set of rights homeowner is asking for. Homeowner is asking the subcontract and their carriers to give homeowner the right to make claims directly to the carrier regardless of whether subcontractor wants to or not. We dont see that typically happening. Further, if homeowner wants to pay subs directly, but at the same time, keep you on the liability hook because you are the general contractor, that increases your potential liability for claims yet at the same time, imposes a greater risk to you because your carrier as well as the carrier for the subcontractor may reject your claims because you are not the contractual employer.

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