Subcontractor insurance requirements

Checked 2026-10-18, 10 min read

A subcontractor’s insurance is the general contractor’s first line of defence. When a sub’s crew floods a unit or a sub’s worker falls, the claim lands on the GC’s desk first. What decides who pays is what you required before the sub started, and whether you checked it.

§ 1The lines to require

Five lines cover almost every subcontract. The question for each is not just “do they have it” but “does it answer for the risk this sub brings to my job”.

Insurance a general contractor requires of subcontractors
Line	What to ask for	Why the GC cares
General liability	Occurrence form; occurrence, aggregate and completed-operations limits	Property damage and injury to third parties caused by the sub's work
Workers' comp	Statutory cover plus employer's liability	An uninsured sub's payroll can end up on your policy
Business auto	Owned, hired and non-owned vehicles	Trucks and trailers on and off your site
Umbrella / excess	Sits over GL, auto and employer's liability	Serious injury claims outrun primary limits
Endorsements	Additional insured, primary and non-contributory, waiver	They make the sub's policy answer for you, first

§ 3General liability limits

Limits come as a set, and our general liability guide reads each box. From the GC’s side, two details matter more than the headline number.

Per-project aggregate. A sub’s general aggregate is shared by every job it works that year. A per-project aggregate endorsement gives your job its own aggregate, so a claim on someone else’s site cannot use up the cover you are counting on.
Completed operations, for long enough. Most construction claims arrive after handover. Ask for completed-operations cover kept in force for a set number of years after completion, and name that number in the clause.
Occurrence, not claims-made. A claims-made policy that lapses can leave old work uninsured. See occurrence vs claims-made.

Most limits are a contract choice. Some are law.

California is the clear example: a licensed LLC must carry liability insurance of at least $1,000,000 cumulative, plus $100,000 for each person of record past five, up to $5,000,000 (B&P Code § 7071.19). Your subcontract can ask for more, never less.

§ 4Workers' comp and the audit

Workers’ comp is priced on estimated payroll and settled at an audit after the policy year. When the auditor finds money you paid a sub who cannot show its own workers’ comp for that period, the carrier will generally treat that money as payroll on your policy and charge it at the class rate for the work. The bill arrives months after the job is paid out. The workers’ comp guide covers the audit itself, and the premium calculator shows what a sub’s payroll would add to yours.

Florida writes it into statute

Under § 440.10(1)(b), a contractor who sublets work is liable for compensation to the sub’s employees unless the sub has secured it. § 440.10(1)(c) requires the contractor to get evidence of the sub’s workers’ comp, or a copy of a corporate officer’s exemption. § 440.10(1)(d) lets a contractor who paid recover from the sub, unless they agreed in writing that the contractor would provide the cover.

Other states have their own versions of this rule. Read your state’s workers’ comp statute before you rely on a general one.

§ 5Auto and umbrella

Ask for business auto that covers owned, hired and non-owned vehicles. A sub whose crew drives personal trucks to your site has non-owned exposure even if the company owns no vehicles at all.

An umbrella is how a sub reaches the bigger numbers a prime contract may ask for without buying huge primary limits. Two checks: the umbrella must list the sub’s GL, auto and employer’s liability as its underlying policies, and it must carry the same additional insured status. An umbrella that does not follow the form of the GL can leave you outside it. What contractor insurance costs shows how each line is priced.

§ 6The three endorsements

Limits decide how much. The endorsements decide whether any of it is yours.

1Additional insured: the GC and the owner become insureds on the sub's policy for claims arising out of the sub's work.
2Primary and non-contributory: that policy answers first and does not call on the GC's or the owner's policy to share the loss.
3Waiver of subrogation: once it has paid, the sub's insurer gives up its right to sue the GC or the owner to get the money back.

A waiver can run in favour of the owner as well; the dashed line is drawn once to keep the sheet readable.

Each one is an amendment to the policy with its own form, not a sentence on the certificate. For how additional insured and the waiver differ, and which one protects you from what, see waiver of subrogation vs additional insured.

§ 7Tracking certificates

A requirement is only as good as the file that proves it. Three habits keep that file honest.

§ 1No certificate, no start. Collect the certificate and the endorsement copies before the sub mobilises. Our certificate request sheet asks for both.
§ 2Log every expiry date. One row per sub per policy, with a reminder ahead of each date. A policy that lapses mid-job leaves the weeks after it uncovered.
§ 3Check the license on the same day. Verify the sub’s license when you file the certificate.

What each box on the ACORD 25 means is in reading a certificate of insurance.

§ 81099 or employee: insurance does not settle it

Asking a sub for its own insurance is a sign it runs its own business. It does not make a worker an independent contractor. If the facts say employee, a certificate will not change that. The IRS weighs evidence in three categories:

IRS common-law categories
Category	What the IRS looks at
Behavioral	Whether the business controls, or has the right to control, what the worker does and how
Financial	Whether the business controls the money side: how the worker is paid, expenses, who supplies tools
Relationship	Written contracts, employee-type benefits, whether the work continues and is key to the business

If you treat an employee as a contractor with no reasonable basis, the IRS says you may be held liable for employment taxes for that worker. Either side can file Form SS-8 for an official ruling, and the IRS warns that takes at least six months.

Wage law runs its own test. The Department of Labor asks whether the worker is economically dependent on you or in business for themself, weighing six factors: profit or loss from managerial skill, investment, permanence, control, whether the work is integral to your business, and skill and initiative. Since Field Assistance Bulletin 2025-1 (May 1, 2025), its investigators no longer apply the 2024 rule’s analysis and work from the July 2008 version of Fact Sheet 13; the 2024 rule still applies in private lawsuits. States can apply their own tests for workers’ comp.

Checked against

CSLB — Limited Liability Company (LLC) licensesread 2026-10-18
Florida Statutes 2026 — § 440.10, Liability for compensationread 2026-10-18
IRS — Independent contractor (self-employed) or employee?read 2026-10-18
US DOL — Fact Sheet 13: Employment relationship under the FLSAread 2026-10-18
US DOL — Field Assistance Bulletin 2025-1 (May 1, 2025)read 2026-10-18
US DOL — Misclassification of employees as independent contractorsread 2026-10-18

Not legal advice. Fees, bond amounts and deadlines are set by statute and change without notice — confirm with the board that issues your license before you file.