Understanding the need for general liability insurance for subcontractors in North Carolina is essential if you are going to work in the state as a 1099 independent subcontractor. Be aware of its limitations and that you should review your policy with an insurance expert who can help you find the most appropriate plan for your needs. Here are some key issues that you should know about subcontractor insurance.
It’s important to get the right insurance coverage as a subcontractor because, in several states, businesses will only hire subcontractors with specific coverage. Some companies allow you to work for them if you sign an agreement saying you won’t sue them if you are injured on the job. In general, the main reasons for subcontractors to purchase their own insurance are to get access to work and to avoid litigation, but there are other options to consider as well.
Does General Liability Insurance Cover Subcontractors?
With some exceptions, most insurance agencies do not include subcontractors in their general liability policy plans for the business. You can add policy extensions to meet the NC subcontractor insurance requirement for extra fees. Usually for a worker to be covered by a company’s general liability insurance plan, they must be on the payroll. If you outsource to subcontractors, you may be held liable for any damages that result from their work. That is why it’s wise to ensure that your subcontractors have their own insurance.
Another option for a contractor if the work is for a one-time or short-term project is to purchase subcontractor coverage to add on top of a general liability policy so that the plan expires with the project. This approach helps contractors save time and money with peace of mind that potential disasters will be mitigated. When contractors post notices for job opportunities, they should mention whether insurance is provided. When your company does provide insurance to subcontractors, you can use the coverage as a bargaining chip for lower labor costs.
One of your requirements for signing to hire a subcontractor should be that they present proof of insurance. In most states, this document is known as a “Certificate of Liability Insurance.” It includes an expiration date to indicate if the policy is still in effect. By obtaining this certificate, you can protect your business against complaints that might arise over the subcontractor’s professional legitimacy.
Potential Solution to Subcontractor Insurance Issues
At a low monthly cost, many subcontractors choose to get their own subcontractor liability insurance in NC to avoid disruptions that can slow down work opportunities. It is sometimes worth it for a general contractor to extend its own insurance coverage to certain subcontractors who deliver high-quality performance and are conveniently available for a certain project. When there is a shortage of construction workers, the easiest way to proceed is to work with available subcontractors and provide insurance.
You may also want to extend coverage to subcontractors if they work for you regularly. Recruiting the right workers helps build a contractor’s reputation for reliability and consistency, leading to more contracts. Building a supply chain that you can count on can be incredibly challenging, and it can impact your company’s image. It is better to be known as a contractor that covers subcontractors than one that does not bother to check.
If you run a construction company, you can use your general liability insurance for subcontractors in North Carolina. At the same time, you can pick and choose which subcontractors to report as add-ons versus those who need to provide their own coverage. Contact the experts at Pittman Insurance Group for all your coverage needs. Our dedicated team is eager to assist with all your insurance questions and needs.