F E AT U R E Why Do General Contractors Prefer to Hire Insured Subcontractors? by Hannah Sullivan, Pogo Insurance job, they could be found responsible, as they are the hiring party. Workers’ comp claims include medical bills, lawsuits, and lost wages. If you get injured while working and you do not have workers’ comp coverage, your GC will be responsible for paying for those claims. Additionally, GCs want the subs they hire to have their own insurance because workers’ comp premiums are based on payroll. If they hire you, and you don’t have insurance, they’ll be charged for hiring you when the workers’ comp carrier audits them at the end of the year. If a general contractor hires a subcontractor with their own policy, they won’t get charged for that payroll. One of the great debates among the contractor community is in regard to workers’ compensation insurance. Who’s responsible for providing it -the general contractor (GC) or the subcontractor? In the United States, workers’ compensation coverage is mandatory for W-2 employees once a business has reached a certain size. This number of employees varies by state. As a subcontractor, when you are hired by a GC, you are not technically an “employee.” You work independently “with” the GC, not “for” the GC as a traditional employee. General contractors are not actually required to provide subcontractors workers’ comp insurance, and because of this, they typically prefer to require subcontractors to provide their own workers’ comp coverage.
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Why are subcontractors expected to get their own workers’ comp? General contractors require subcontractors to have their own policy to reduce their own liability. Your policy will pay out if an accident occurs, instead of theirs. Workplace incidents can happen at any time, especially when you’re working with dangerous equipment and tools. Common jobsite injuries include muscle strains, lacerations, or even ladder falls. And most general contractors don’t want to be on the hook, or pay for extra insurance coverage, if something happens. That’s why most require subs to provide a Certificate of Insurance before they start the job. If a GC contracts with an uninsured subcontractor and they get hurt on the
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Can general contractors add subs to their own workers’ comp policy? Although general contractors can technically add subs to their policy, it’s not as common. In some cases, they’ll add subcontractors to their policy as an “additional insured.” An additional insured is a person of entity who may be added to an existing party’s workers’ comp policy with respect to work performed on a specific job. If you’re listed as an additional insured, you’ll get workers’ comp protection while you’re working for the general contractor. This includes medical bills, defense coverage, and third-party lawsuit coverage. Keep in mind, being listed as an additional
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