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Subcontractor Insurance and Indemnification Requirements

August 31, 2022
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A recent post on subcontractor safety management while including the need to define contract requirements did not mention either insurance or indemnification. While strictly speaking they are not part of a safety program, proper insurance and indemnification need to be in place if/when something goes wrong. 

Here are a few basic considerations:

  • Subcontractors must provide evidence of workers compensation, liability and if vehicles are used automobile insurance. Depending on the project, professional or pollution liability and possibly specialized coverage may be needed.
  • Limits should be tailored to the size and hazard of the subcontract. Contractors should check their own policies for minimum subcontractor insurance requirements.
  • Usually the owner and contractor, and sometimes other parties, are required to be named as additional insureds. Endorsements confirming these and other requirements such as waiver of subrogation must be attached to a certificate of insurance.  
  • As most insurance policies cannot be cancelled in less than 30 days except for nonpayment, short term projects do not need notice to contractors. For longer projects bear in mind that not all insurers provide notice of cancellation to third parties; for those that don't, subcontractors must be responsible for continuing coverage. 
  • Indemnification clauses must be broad enough to protect against a subcontractor's negligence, but not so broad as to be uninsurable.