General Liability Insurance for Subcontractors

For many businesses, general liability insurance is a crucial component of an adequate insurance portfolio. Regardless of size or sector, the financial protection this type of coverage provides can be an invaluable investment. This holds true for contractors; however, when it comes to subcontractors providing services as part of a larger project, things may become complicated.

What Does General Liability Insurance Cover?

General liability insurance provides a financial safety net across common risks and exposures. In short, this coverage protects businesses from third-party claims alleging bodily injury, property damage or personal and advertising injury.

• Bodily injury—If a third party, such as a client or guest, is injured while on your jobsite or place of business, such as by tripping over equipment or slipping on a wet floor, general liability insurance can help pay for their medical bills and legal expenses.

• Property damage—If a contractor’s operations damage a third-party’s property, such as a neighboring structure being damaged by a fire that started on your job site, this coverage can pay for repairs and legal expenses.

• Personal and advertising injury—If a business is at fault for personal and advertising injury, such as slander, libel, false advertising or wrongful imprisonment, this coverage can provide financial assistance to limit losses and compensate affected parties.

How Does General Liability Insurance Work for Subcontractors?

Subcontractors often play crucial roles in the completion of larger projects. General contractors may enlist the services of many subcontractors, including carpenters, plumbers, electricians and other specialists.

To ensure all contractors working on a job have adequate liability protection, general contractors should not assume their general liability policy provides coverage for subcontractors. In fact, many policies will specifically exclude subcontractors from coverage. For this reason, it is important to double-check the status of subcontractor coverage before a loss occurs. In most cases, the best option is for general contractors to require subcontractors with whom they work to carry their own general liability insurance policies. They can do this by writing it into their contract.

Get the Right Coverage

Regardless of how a contractor chooses to maintain general liability insurance, it’s critical to understand policies’ details and limitations fully. Even the most responsible and reputable subcontractors may eventually commit errors or cause accidents that could lead to significant losses. The resulting out-of-pocket costs could be devastating for all parties without adequate general liability coverage.

We’re here to help. With over 20 years of experience serving clients throughout Texas, the agents at Texas General Insurance are well-equipped to help contractors understand general liability insurance and acquire optimal coverage. Visit our website or call 281-494-4990 to get started.

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.