Subcontractor Insurance Requirements Guide 2025: Complete Coverage Guide
Comprehensive guide to insurance requirements for construction subcontractors. Learn about required coverages, typical limits, certificate requirements, and compliance strategies.
Why Insurance Requirements Matter
Construction insurance protects everyone involved in a project. General contractors require subcontractors to carry adequate insurance to transfer risk, meet contract requirements, and ensure claims coverage. Non-compliance can result in losing work or being removed from a project.
Required Insurance Coverages
Commercial General Liability (CGL)
The foundation of construction insurance. Covers third-party bodily injury and property damage claims arising from your work.
- • Premises and operations coverage
- • Products and completed operations
- • Personal and advertising injury
- • Medical payments
Workers' Compensation
Required by law in most states. Covers employee injuries on the job.
- • Statutory limits per state law
- • Employer's liability coverage
- • Required even with few employees
- • Must cover all employees working on project
Commercial Auto Liability
Covers vehicles used in business operations.
- • Owned vehicles
- • Hired vehicles
- • Non-owned vehicles (employee personal vehicles)
Umbrella/Excess Liability
Provides additional limits above underlying policies. Often required for larger projects.
- • Sits above GL, auto, and employer's liability
- • Required when project limits exceed primary policies
- • Typical requirements: $2M-$10M depending on project
Typical Insurance Limits
| Coverage | Standard | Government/Large |
|---|---|---|
| General Liability (Per Occurrence) | $1,000,000 | $2,000,000 |
| General Aggregate | $2,000,000 | $4,000,000 |
| Products/Completed Ops | $2,000,000 | $4,000,000 |
| Auto Liability | $1,000,000 | $1,000,000 |
| Umbrella | $1-2M | $5-10M |
| Workers' Comp | Statutory | Statutory |
| Employer's Liability | $500,000 | $1,000,000 |
Additional Insured Requirements
What is Additional Insured Status?
General contractors and project owners typically require being added as "additional insureds" on your liability policy. This extends your coverage to protect them from claims arising from your work.
- • GC added as additional insured on your GL policy
- • Owner may also require additional insured status
- • Requires endorsement from your insurance carrier
- • Should be "primary and non-contributory"
Waiver of Subrogation
Many contracts also require a waiver of subrogation, which prevents your insurance company from seeking recovery from the GC or owner. Ensure your policy allows this endorsement.
Certificate of Insurance (COI) Requirements
What Must Be on the COI
- ✓Named insured matches your legal business name
- ✓All required coverage types listed
- ✓Limits meet or exceed contract requirements
- ✓Policy dates cover project duration
- ✓Certificate holder information accurate
- ✓Additional insured endorsement noted (if required)
Common COI Problems
- • Certificate holder name/address incorrect
- • Missing coverage types
- • Limits below requirements
- • Additional insured not noted
- • Expired or soon-to-expire policies
- • Named insured doesn't match contract name
Government Contract Insurance Requirements
Federal Contract Requirements
Federal construction contracts have specific insurance requirements outlined in FAR clauses:
- • Workers' compensation as required by law
- • General liability per contract specifications
- • Auto liability for vehicles used on project
- • May require builder's risk on certain projects
- • Contractor responsible for subcontractor compliance
State/Local Requirements
Requirements vary by agency but typically include:
- • GL limits often $1M-$2M per occurrence
- • Government entity as additional insured
- • 30-day notice of cancellation
- • A-rated insurance carriers (Best's rating)
Insurance Compliance Tips
1. Review Requirements Before Bidding
Check insurance requirements in bid documents before pricing. Higher limits or unusual coverages may affect your costs.
2. Maintain Adequate Coverage Year-Round
Don't wait until you win a project to get proper insurance. Maintain standard limits so you're ready when opportunities arise.
3. Work with a Construction-Focused Broker
Use an insurance broker experienced in construction. They understand requirements and can get certificates processed quickly.
4. Keep Certificates Current
Track policy expiration dates. Provide updated certificates proactively before expiration to avoid work stoppages.
Frequently Asked Questions
What if I can't meet insurance requirements?
Work with your broker to obtain necessary coverage. If limits are genuinely unattainable, you may need to pass on that project or request a waiver (rarely granted on government work).
Who pays for additional insured endorsements?
Some carriers include automatic additional insured endorsements; others charge. Factor this cost into your overhead. It's typically a small percentage of premium.
How long should completed operations coverage last?
Many contracts require completed operations coverage for 2-5 years after project completion. Maintain coverage even after the project ends.
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