What Insurance Is Needed When Hiring Subcontractors? 

Hiring subcontractors is a common practice in the construction and business sectors. However, bringing subcontractors onto your projects introduces financial risks and legal responsibilities. At Chainfruit Insurance Services, we help Arizona business owners and contractors understand business insurance requirements and key practices when working with subcontractors.

Essential Insurance Coverages for Subcontractors

When hiring subcontractors, it’s important to confirm that your business and subcontractors are properly insured. Here are the key types of insurance to consider:

General Liability Insurance

General liability coverage may help cover claims of bodily injury or property damage caused by subcontractors’ work. In Arizona, many project owners and general contractors require subcontractors to carry their own liability insurance and show proof of coverage before starting work.

Workers’ Compensation Insurance

Arizona law generally requires businesses to carry workers’ compensation coverage for employees. However, the rules can be complex when it comes to subcontractors. If a subcontractor does not have their own workers’ compensation policy and is injured on the job, your business may be held responsible. Verifying that subcontractors have their own workers’ compensation coverage is a key risk management step.

Additional Insured Status

Requesting to be added as an “additional insured” to a subcontractor’s liability policy can provide your business with additional coverage. This means your business may be covered under the subcontractor’s policy if a claim arises from their work.

Other Important Coverages

Consider these additional coverages as well:

• Commercial auto insurance: If subcontractors use vehicles for work, confirm they have appropriate auto coverage.
• Professional liability insurance: For subcontractors offering design or consulting services, this coverage may help cover errors or omissions.

Risk Management Practices

Consider these practices when working with subcontractors:

• Always request and review certificates of insurance from subcontractors.
• Set clear insurance requirements in your contracts.
• Work with an insurance advisor to address compliance with Arizona laws and project needs.

Our team at Chainfruit Insurance Services is here to help you navigate the considerations involved in hiring subcontractors.

Ready to review your business insurance needs or have questions about hiring subcontractors? Contact us today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.