Insurance Requirements for Subcontractors
What to require from every subcontractor, what the numbers should be, and the three endorsements that decide whether their policy protects you.
Why your own limits are the starting point
Most guidance on subcontractor insurance opens with a table of numbers. That is the wrong place to start, because a requirement that is lower than your own coverage leaves a gap you personally absorb, and a requirement far above what your trade needs prices small subs out of bidding for no benefit.
Work backwards instead. Look at what your own general liability policy carries, what your contract with the property owner obliges you to pass down, and what the job actually exposes you to. A roofing sub and an office cleaner do not carry the same risk, and requiring identical limits from both is a sign nobody thought about it.
One rule holds regardless of trade: never require less than you carry yourself. If your GL is $1M per occurrence and you accept a sub at $500,000, the difference lands on your policy the day something goes wrong.
The coverages to require, and roughly what to ask for
These are the common starting points for US small and mid-sized contractors. Treat them as a baseline to adjust, not a standard — your contract and your broker decide the real numbers.
- General liability — commonly $1,000,000 per occurrence and $2,000,000 aggregate. See general liability and why the aggregate limit matters as much as the per-occurrence figure.
- Workers' compensation — statutory limits, as required by the state the work is performed in. See workers' compensation.
- Commercial auto — commonly $1,000,000 combined single limit, wherever the sub drives to site or hauls materials.
- Umbrella or excess liability — used to reach a higher total on larger jobs. See umbrella policy.
- Professional liability — only where the sub makes design decisions, such as a design-build electrician or an engineering consultant.
- Pollution liability — for trades that disturb hazardous material, such as demolition or older-building renovation.
The three endorsements that actually decide whether you are protected
Limits are easy to read and easy to check. Endorsements are where the real protection lives, and they are the items most often missing when a certificate is examined after an incident rather than before one.
- Additional insured — without it, the sub's policy defends the sub and not you. Being named as certificate holder is not the same thing and confers no coverage. This distinction is the single most expensive misunderstanding in vendor compliance, and it is worth reading the full explanation.
- Waiver of subrogation — stops the sub's insurer paying a claim and then coming after you to recover it.
- Primary and non-contributory wording — makes the sub's policy respond first, rather than sharing the loss with yours from the outset.
Put it in the contract, not just the certificate request
A certificate is evidence that requirements were met. The contract is what creates the obligation in the first place. If your subcontract agreement does not require the coverage, the endorsements, and a duty to maintain them for the life of the work, then a sub who lets a policy lapse has broken no promise to you.
The insurance clause should state the coverages and minimum limits, name the endorsements required, oblige the sub to provide a certificate before starting and an updated one on renewal, and require notice if coverage changes. Get that clause reviewed once by a lawyer or your broker; it is the cheapest protection on this page.
Requirements should differ by trade, and by risk
A single blanket requirement is simple to administer and usually wrong at both ends. It over-insures low-risk suppliers and under-insures the ones most likely to cause a serious loss.
A workable middle ground is two or three tiers. Low-risk suppliers who never work unsupervised on site sit at your baseline. Trades working at height, with heat, with water, or with electricity sit higher. Anyone making design decisions adds professional liability. Reusable requirement templates make this practical instead of a spreadsheet of exceptions.
Collecting and checking, without it becoming a second job
Setting requirements is the easy part. The work is collecting a certificate from every sub, checking it against the right tier, and re-collecting it before each policy expires — for every sub, on every job, permanently.
This is where manual tracking fails, and it rarely fails loudly. A certificate arrives, it looks official, it gets filed, and nobody re-reads it. The expiry date passes unnoticed. There is a practical guide to asking for certificates in a way that gets them back quickly at how to request a certificate of insurance from a vendor, and a checklist for reviewing each one at the COI requirements checklist.
Two things are worth knowing about what a certificate can prove. It is evidence of cover on the day it was issued and nothing more — a policy can be cancelled mid-term without you being told. And certificates are forged; if you have never checked one for signs of alteration, how to spot a fake certificate of insurance covers what to look for.
FAQ
What insurance limits should I require from a subcontractor?
A common baseline for US small contractors is $1,000,000 per occurrence and $2,000,000 aggregate for general liability, statutory workers' compensation, and $1,000,000 combined single limit for commercial auto where the sub drives to site. Adjust upward for higher-risk trades and larger jobs, and never require less than you carry yourself.
Do I need to be an additional insured on my subcontractor's policy?
In almost all cases, yes. Without the additional-insured endorsement, the subcontractor's policy protects the subcontractor and not you, even though you are named on the certificate. Being listed as certificate holder only means you were sent a copy — it grants no coverage.
Can I accept a subcontractor who has no workers' compensation?
Usually not, and in many states an uninsured subcontractor's injured employee can claim against your own workers' compensation policy. Some states allow exemptions for genuine sole proprietors with no employees, but the exemption should be documented rather than assumed. Confirm the position in the state where the work is performed.
How often should I re-collect certificates from subcontractors?
At minimum before each policy expires, and again whenever the scope of work changes. Bear in mind that a certificate only evidences cover on its issue date, so a longer gap between checks means a longer window in which a policy could have been cancelled without your knowledge.
About the author
Rehan Shah — Founder, CoverSynx
I build CoverSynx, software that helps property managers and contractors keep track of their vendors' certificates of insurance. I'm not an insurance broker or a lawyer. These guides summarise published industry guidance and cite their sources — for advice on your own situation, speak to your broker.
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