In a recent AGC survey, nearly 75 percent of all construction companies in the United States expect to expand their workforce during 2020. And while it seems that more and more general contractors are hiring subcontractors to do more specialized work, it’s high time that contractors confirm their subcontractors have the right Contractors Insurance or they can end up being responsible for their workers’ compensation claims.
Liability for Subcontractor Injuries
If a general contractor hires a subcontractor to do a specific job on their worksite, it could help the contractor out by giving them some work relief in that specific area. However, it could open the door to potential risks.
If a subcontractor send out a team of workers to take care of framing on a project but fails to provide a certificate of insurance that indicates they have workers’ compensation insurance, any injuries that are incurred rest on the general contractor’s shoulders. This only highlights the need for general contractors insurance for the contractor and the importance of going about hiring a subcontractor with the right coverage.
Contractors should request a copy of a certificate of insurance before they offer up a job to a subcontractor. If the subcontractor is unable to provide one and the contractor ends up hiring them, then the subcontractor is considered an employee.
Any injury that a subcontractor and/or their employees sustain on the job would be the responsibility of the general contractor and the insurance carrier must be notified of any injury.
When is a General Contractor Not Liable?
If a general contractor can prove a number of items that illustrate their role as a party that’s not legally responsible for injuries sustained by a subcontractor, then their workers’ compensation carrier is not responsible for a claim.
This can be proven by:
● Maintaining a separate business with their own office, equipment, materials, and other facilities.
● Holding a Federal Employer Identification Number with the federal internal revenue service or has filed business of self-employment income tax returns.
● Operating under contracts to perform specific services or work for specific amounts of money.
● They receive compensation for work or services performed under a contract on a commission for competitive bid basis and not on any other business.
● Holding continuing or recurring business liabilities or obligations.
If the independent contractor meets all of these conditions then they are not responsible for the injury of a subcontractor.
It’s important for contractors to work with their general contractors insurance provider to see how they can avoid major claims and keep everyone they work with responsible for their own issues. Not having general contractors insurance while also skipping the right steps to ensure their subcontractors have the right insurance of their own can lead to costly legal issues down the road.
About American Team Managers Insurance Services
Founded in 1998 by Chris C. Michaels, American Team Managers Insurance Services (ATM) has provided wholesale and MGA services to more than 5,000 independent insurance agents throughout the United States. Our goal is to establish close, long-term relationships with our agency partners and insurance carriers and provide competitive products for the Exclusive and Non-Exclusive markets that we serve. For more information on our products and services, give us a call at (877) 671-7503 to speak to a representative.