Insurance Considerations for Subcontractors in the Construction Industry

In the dynamic realm of the construction industry, subcontractors play a pivotal role in bringing projects to fruition. While they bring specialized skills to the table, it’s essential for subcontractors to consider various aspects of insurance to safeguard their operations and ensure smooth project execution.  

What Kinds of Insurance Do Subcontractors Need? 

The exact insurance needs of subcontractors may vary significantly depending on their own unique circumstances, as well as the job at hand. Still, in many cases, the financial protections of certain policies, such as the following, may be valuable across most situations: 

• General liability insurance—These policies can provide coverage for bodily injury, property damage and personal injury claims arising from third-party losses that may arise during the course of a project.  
• Professional liability insurance—This coverage protects against claims of professional negligence or errors and omissions, offering financial security in case of project mishaps related to design or consulting work. 
• Commercial property insurance—This coverage can financially protect a subcontractor’s own property and physical assets, including business premises, electronics, equipment, inventory and tools.  
• Workers’ compensation insurance—Subcontractors must prioritize the safety and well-being of their workforce. Workers’ compensation insurance is often required by law and may provide coverage for medical expenses and lost wages in the event of a job-related injury or illness.  
• Commercial auto insurance—Commercial auto insurance is vital to cover potential accidents or damages involving company-owned vehicles, including losses a subcontractor may inflict on other parties. 
• Inland marine insurance—If a subcontractor moves equipment, building materials or other property to an off-site location, such as to a job site or a storage area, this type of coverage can provide financial protection from potential losses. 

Additional Steps for Adequate Loss Control Practices 

In addition to ensuring appropriate insurance is in place, subcontractors may also take additional steps to augment or adjust coverage and retain additional loss control measures. The following steps may help further financially protect subcontractors: 

• Acquire bonds. In certain cases, project owners may require subcontractors to obtain performance and payment bonds, which can provide financial relief in case promised goods or services are not adequately delivered.  
• Review contracts. Before signing any contract, subcontractors should thoroughly review the insurance requirements specified by the general contractor or project owner. Understanding the insurance expectations upfront can help subcontractors tailor their coverage to meet project-specific needs and avoid potential disputes. 
• Consider endorsements. Subcontractors should explore policy endorsements that can enhance their coverage, such as to financially protect from additional perils. 
• Review regularly. The construction industry is dynamic and project scopes can change rapidly. Subcontractors should conduct regular policy reviews to ensure that their coverage aligns with the evolving needs of their business.  

Get the Right Coverage 

Contact the agents at Insurance Solutions Center today to learn more about coverage options for subcontractors in the Batesville, Greenville and Grenada, Mississippi, areas. 

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.