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Construction Safety Focus: Hiring Properly Insured Subcontractors

For New York affiliates, please consult local legal counsel regarding New York Labor Law requirements and considerations.

Whether you are having work done to maintain or repair your office space or ReStore, or working at a construction project, hiring contractors and subcontractors is often necessary to get parts of the job done. However, before a contractor or subcontractor begins any work at your building, we strongly recommend that you obtain each of the following to ensure your affiliate is protected:

A Written Contract

It is absolutely critical that the affiliate and the subcontractor sign a written contract. Most reputable subcontractors will provide a written contract for you to sign. If they don’t, ask for one. It need not be complicated but, at a minimum, it should include an indemnity clause that contains wording very similar to the following example:

 [Name of contractor or subcontractor] shall, to the fullest extent permitted by law, defend, indemnify and hold harmless [Name of Affiliate]  from and against any and all liability, claims, judgments, damages, costs, losses, fees and expenses … arising out of or resulting from the subject matter of this Agreement, including but not limited to such sums  attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property ,however caused, except claims or litigation arising through the sole gross negligence or willful misconduct of  [Name of Affiliate] .

Why this is important: An indemnification clause plays an important role in managing the risks associated with construction contracting. Indemnity clauses require one party to take on the obligation to cover the loss or damage that has been or might be incurred by another party. Basically, this clause will require the contractor or subcontractor to assume responsibility for certain liability resulting from third-party claims against your affiliate. Without it, your affiliate may be liable legally to pay damages that, common sense tells you, the contractor or subcontractor should be paying.

Nearly every contract contains an indemnity clause, so look over the written contract carefully to make sure it’s there. These clauses are so common, that many don’t even read them, assuming that they are inconsequential. Nothing could be further from the truth. The existence and scope of an indemnity clause could affect your affiliate’s bottom line, and therefore also potentially affect your affiliate’s ability to serve partner families.

A copy of the Subcontractor’s Certificate of General Liability Insurance

The certificate must name your 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 the 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 the subcontractor’s 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 your affiliate from any incidents that may arise as a result of the subcontractor’s work.

A Copy of the Subcontractor’s Certificate of Workers Compensation Insurance

This gives proof that the subcontractor has proper insurance coverage for itself and its 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 its employees, is injured while working on your job site, the injury will be covered by the subcontractor’s Workers Compensation insurance, not your affiliate’s insurance. If the subcontractor does not have Workers Compensation insurance, your affiliate may be 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 their employees will be placed on your Workers Compensation policy as uninsured subcontractors when your policy is audited, and your affiliate will be charged a premium.

In addition to you owing this extra premium, uninsured subcontractors can have a significant impact on your affiliate’s 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 could have a direct impact on your affiliate’s insurance rates, and will result in higher Workers Compensation premiums.


In order to best protect your affiliate, you should require all hired subcontractors to have (1) a written contract with an indemnity clause, (2) appropriate insurance coverages in place, and (3) a Certificate of Insurance naming your affiliate as an Additional Insured before any work begins.

If you have any questions about this information, please call and speak with your Habitat for Humanity Affiliate Insurance Program Account Manager at ph (888) 553-9002, OR Scott Dunwiddie, Loss Control & Claims Analyst, at ph (913) 652-7633.