Small Business Owners – Ensure that Your Subcontractors Carry Their Own Insurance Policies

general liability policy. When you are an Additional Insured, your company is protected by the subcontractor’s policy, just as they are. That way, if you are sued as a result of damage the subcontractor causes, the subcontractor’s insurance company is required to cover your company for the claim.

Are you an independent contractor? Click here to see a sample liability insurance quote

There’s another good reason why you want your subcontractors to be insured: If your own general liability carrier determines that you’re using an uninsured subcontractor, the carrier often has the right to consider that subcontractor part of your company and to increase your premium accordingly. That’s right – even if there’s not a claim, you can be stuck paying for the general liability coverage your subcontractor should have had in the first place.

Workers’ Compensation

Workers’ compensation insurance covers employees’ medical and disability costs related to work-related illnesses and injuries. Many states mandate workers comp insurance for W2 employees, but some states can also require that you cover your uninsured 1099 contractors. So be sure you’re familiar with the laws of the state(s) where you and your clients do business, and ask your agent or broker for clarification if you need it.

Regardless of state law, it’s always a good idea to require that your subcontractors carry workers’ compensation insurance. Why? Because if your