Uninsured Subcontractors Can Be Costly

At Marshall + Sterling, we too often hear about property owners and contractors working with uninsured sub-contractors, leaving them with significant exposures in the event of an incident.

With courts generally interpreting the Scaffold law broadly to favor injured workers, it’s critical that sub-contractors be properly vetted BEFORE they initiate work. Once a sub-contractor’s employees are on a job site, you become liable if they do not have the proper, comprehensive coverage. If something happens, property owners and general contractors CANNOT pass along the liability to the sub. There is no such thing as coverage “after the fact.”

Steps to ensure your sub-contractors have the proper insurance

The first step to protecting you and your business is requiring copies of your sub-contractors’ certificates of insurance (COI), including worker’s compensation. Confirm their COI includes the correct company name, insurer name, policy numbers and effectives dates, and that you are clear on the type of insurance they have and their coverage limits.

For Workers Comp, you can be proactive and check on your subs by searching the New York State “Employer Coverage” tool. 

Even if your sub-contractors have no incidents or claims, ensuring that everyone working on your sites have the proper coverage protects you. When your insurer initiates an audit to verify that coverage was in place for every sub-contractor, if they find coverage was not in force, you will incur applicable additional premium charges – and your relationship with your insurer could be negatively impacted.

Marshall + Sterling works with our construction clients to vet your sub-contractors insurance program before you engage the sub. Construction coverage can be complex, so we leverage our experienced client service team to review Certificates of Insurance along with coverage forms from Subcontractor’s policies in comparison to the insurance requirements of your Subcontractor Agreement.

What can happen if your sub-contractors have insufficient insurance coverage?

Having insufficient coverage such as the lack of appropriate policy provisions (Additional Insured, Primary and Non-Contributory, Waiver of Subrogation), or limitations or exclusions related to the Subcontractor’s scope and/or work in New York will be costly in the event of a claim resulting in a negative impact to your insurance program.

Feel free to contact your Account Manager and Stefanie Little to set up time with you to develop a review process of your subcontractors insurance program.

Marshall + Sterling wants to help you complete your contracts on time and on budget using our knowledge and experience working to prevent incidents. If you employ sub-contractors, make certain you are properly vetting their coverage before work begins.