Hiring subcontractors is often necessary to get parts of the job done—just be sure the subcontractors you hire are appropriately insured. Before the work of any subcontractor begins on your building projects you must obtain the following certificates to be sure your affiliate is protected:
1. A copy of the subcontractor’s certificate of General Liability insurance. The certificate must name your Habitat for Humanity affiliate as an Additional Insured on the policy. There is space on the certificate where the Additional Insured Status should be marked. If it is not marked correctly, the Additional Insured status will not be in force. The certificate should also show the coverage limits and effective dates of coverage.
Why this is important: By requiring a proof of coverage certificate, you have evidence that the subcontractor has liability insurance in place. Requiring that your affiliate be named as an Additional Insured on their policy insulates the affiliate from financial responsibility if there is an accident and the subcontractor is deemed negligent for any injuries or damage. You are protecting the affiliate against incidents that may arise as a result of the subcontractor’s work.
2. A copy of the subcontractor’s certificate of Workers’ Compensation insurance. This gives proof that the subcontractor has proper insurance coverage for themselves and their employees. Again, there is a place on the certificate where the Additional Insured status must be marked.
Why this is important: If the subcontractor, or one of their employees, is injured while working on your job site, the injury would be covered by the subcontractor’s Workers’ Compensation insurance, not the affiliate’s insurance.
If the subcontractor does not have Workers’ Compensation insurance, the affiliate could become liable for damages and expenses incurred by the injured person. Be aware that if your subcontractors do not have their own Workers’ Compensation coverage, the exposure of the subcontractors’ employees will be placed on your Workers’ Compensation policy as uninsured subcontractors when your policy is audited, and you will be charged a premium.
In addition to you owing this extra premium, uninsured subcontractors can have a significant impact on your loss history and Workers’ Compensation insurance rates in the future. Many states have deemed that a general contractor is responsible for the losses (expenses) of any injured employee of an uninsured subcontractor. Therefore, if a subcontractor’s employee is injured on your job site and the subcontractor does not carry Workers’ Compensation insurance, the medical bills and lost time wages could be picked up by your affiliate’s Workers’ Compensation policy. These losses can have a direct impact on your insurance rates, and will result in higher Workers’ Compensation premiums.
In order to best protect your affiliate, you should require all hired subcontractors have the appropriate insurance coverages in place, and that you have a Certificate of Insurance as proof before they begin work.
If you have any questions about this information, please call us at (888) 553-9002.