Contractors generally are able to hire subcontractors who don’t have their own insurance. Doing so, however, can expose a contractor to potential risk. If you run a contracting business in Massachusetts, here’s why you might want to avoid hiring subcontractors who don’t carry contractors insurance.
Is My Contracting Business Able to Hire Subcontractors Who Don’t Have Contractors Insurance?
Uninsured Subcontractors Can Expose Your Business to Risk
Hiring uninsured subcontractors can leave your contracting business unnecessarily exposed to risks, for your business might be held financially responsible for any accidents they’re involved in. There are two specific ways your business might be exposed to additional risks.
First, your business may be held responsible for damage that an uninsured subcontractor causes. For instance, your business might have to repair a bathroom floor if the subcontractor drops a bathtub they’re installing. Or, your business may need to pay for damage caused by a fire that resulted from substandard work that an electrical contractor did.
In both these situations, the subcontractor would likely be sued for any property damage they cause. If they don’t have insurance to pay a claim, through, your business could also be asked to provide compensation.
Second, a subcontractor who doesn’t have adequate insurance may sue your business if they’re injured on one of your job sites. If they don’t have their own insurance policy, they might blame any work-related injury on you -- and ask your business to pay for their medical bills and lost wages. Just defending your business in a personal injury case is often expensive, and settlements in these cases can reach extremely large sums.
The risk that work-related injuries poses is especially real, for injuries are fairly common in the construction industry. The Bureau of Labor Statistics reports that there were 3.5 work-related illnesses and injuries for every 100 construction workers in 2015, and there were also 985 deaths in the industry that year. (At the time of writing, 2015 was the most recent year for which data was available.)
Ask Subcontractors for Proof of Contractors Insurance
You can help protect your Massachusetts contracting business from these risks by simply asking subcontractors for proof of contractors insurance before you hire them. Just as this is a fair question for customers to ask you, it’s a fair question for you to ask the subcontractors you pay.
Subcontractors who have contractors liability insurance shouldn’t have any problem providing a Certificate of Insurance or copy of their policy. They might not have the necessary documentation on them, but they should be able to easily get it for you.
Advertise That You Only Hire Subcontractors Who Are Insured
Deciding to only hire subcontractors who have their own contractors liability insurance doesn’t just protect your business. It can also help distinguish your business from competitors in the area.
By advertising that you only hire subcontractors who carry contractors liability insurance, you have a chance to educate potential customers -- and share with them why they should only consider hiring contracting businesses that are properly insured. As they learn about the importance of insurance, they’ll likely think twice before hiring one of your competitors who isn’t insured or hires uninsured subcontractors.
Make Sure You Understand Your Massachusetts Contracting Business’ Insurance Protections
If you have questions about contractors insurance or what coverages subcontractors should carry, contact your indepedent insurance agent. They’ll be able to answer your questions and help you make sure your Massachusetts contracting business is properly protected.