How to Navigate Insurance Requirements for General Contractors and Subcontractors 

In the construction industry, managing risk is just as critical as managing timelines and budgets. One of the most important tools for risk management is insurance. For both general contractors and subcontractors, understanding and meeting insurance requirements is essential to protect their businesses and maintain compliance with project contracts.

What Types of Insurance Might Be Required for Contractors?

Contractors may be required to carry several types of insurance to operate legally and satisfy client requirements. The following types of policies are often needed:

• General liability insurance may cover third-party injuries or property damage and may be required by law.

• Workers’ compensation insurance is required of many contractors in most states and can cover losses arising from employee injuries on the job.

• Commercial auto insurance is typically required by law and may financially protect vehicles used for business purposes.

• Builder’s risk insurance can cover damage to a construction project while it’s in progress and may be required by clients.

• Professional liability insurance, also known as errors and omissions insurance, may offset losses arising from accusations of negligence or mistakes. Clients may require this coverage before agreeing to work with a contractor.

How Might Requirements Differ for General Contractors and Subcontractors?

General contractors often carry broader insurance policies because they oversee entire projects and are liable for the work of all subcontractors. Subcontractors, on the other hand, may only need coverage specific to their trade. However, general contractors frequently require subcontractors to carry certain minimum coverage limits and name them as additional insureds on their policies. This can help account for situations in which a subcontractor causes a loss that might have consequences for the general contractor.

How Can I Make Sure My Business Has the Right Coverage?

Start by reviewing contract requirements carefully. Consult with an insurance broker who specializes in construction to tailor your coverage to your specific risks. Regularly update your policies as your business grows or takes on new types of work. Keeping accurate records and certificates of insurance can also help avoid project delays and legal issues.

We’re Here to Help

Contact AIC Insurance Agency - Medford in Medford, OR today to learn about applicable requirements, identify appropriate coverage options and secure ideal policies.

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.