Contractors & Subcontractors: Protecting Yourself from Legal Liability of Your Subcontractors
The construction industry has made great strides in protecting its employees. Safety and accident programs. Employee orientation and training. Safer work environments.

Yet, contractors and subcontractors shouldn’t forget to protect themselves. Incorporate these risk management techniques before you hire a subcontractor:

• Certificates of insurance
• Hold harmless/indemnification agreements
• Additional insured endorsements
• Written contracts

Penn National Insurance can protect you against most types of losses, but additional risk management techniques will help round out the protection you need.

Verify Coverage With Certificates of Insurance
The purpose of a certificate of insurance is to provide evidence that the subcontractor has current insurance coverage with adequate liability limits. If your subcontractors don’t have insurance, you could be called upon to pay workers’ compensation, bodily injury or property damage claims resulting from their work.

Any subcontractor you hire should carry their own workers’ compensation, general liability and automobile liability insurance. Make sure your subcontractors have the same liability limits you do and that they’re covered for the entire time they’ll be working for you. Check periodically with the subcontractor to verify that coverage has not elapsed or been cancelled.

If your subcontractors don’t carry their own insurance, many states require you to treat the subcontractors as your own employees for insurance purposes, resulting in increased payroll and higher premiums for you.

Increased Protection With Hold Harmless Agreements
A hold harmless agreement written in your favor and signed by the subcontractor promises to hold you harmless from liability arising out of the subcontractor’s negligence or negligent performance. It’s an indemnity provision written into a contract to provide added protection against loss. Be sure your legal counsel verifies that the contract offers the desired level of protection for you.

Cover Your Business With Additional Insured Endorsement
Protect yourself against claims resulting from the subcontractor’s actions on the job. Ask your subcontractors to name you as an “additional insured” on their primary commercial general liability policy.

Want to know more?
For additional safety information, please contact your independent agent or your local Penn National Insurance loss control consultant at 800.388.4764.