In the construction world, subcontractors are often hired based on one key factor: price. But what many subcontractors do not realize until it is too late is that winning the bid is only part of the equation. General contractor agreements almost always include strict insurance requirements, and failing to meet them can lead to being removed from a project or being held personally liable for a loss.
So how do you know if you have enough coverage? Let us break down what general contractors actually require and why it matters more than you think.
The Core Coverages General Contractors Expect
Most general contractor contracts require subcontractors to carry several key types of insurance:
- General Liability (GL)
- Workers’ Compensation (WC)
- Commercial Auto
- Umbrella or Excess Liability
These policies form the baseline of protection on any jobsite. If you are missing even one, it could immediately disqualify you from a project.
Limits Matter More Than You Think
Many subcontractors carry the state minimum coverage or a basic $1M / $2M General Liability policy. However, general contractor contracts frequently require higher limits, often $2M / $4M or more, especially for larger commercial projects.
If your limits do not meet the contract requirements, you may be forced to increase them quickly and often at a higher cost, or risk losing the job altogether.
The Fine Print That Trips Subcontractors Up
Beyond basic coverage types and limits, there are several critical policy endorsements that are commonly overlooked:
Additional Insured Status
This is one of the most frequently missed requirements. General contractors typically need to be listed as an Additional Insured on your General Liability policy. In many cases, they also require this coverage to be on a primary and non contributory basis.
Without this, your policy may not respond the way the general contractor expects, which can put both you and your working relationship at risk.
Waiver of Subrogation
Another commonly missed endorsement is the Waiver of Subrogation. Without it, your insurance carrier has the right to pursue the general contractor for recovery if they are partially at fault for a loss.
This can create serious friction, damage your reputation, and cost you future opportunities.
Per Project Aggregate vs. General Aggregate
Some general contractor contracts require a per project aggregate, meaning your full policy limit applies to a single project rather than being shared across all your jobs.
If you only have a general aggregate, claims from other projects could reduce the coverage available for that job, which most contractors will not accept.
Completed Operations Coverage
Your liability does not end when the job is finished. If faulty work causes injury or damage after completion, you need completed operations coverage that extends beyond the policy period.
Without it, you could be exposed to claims long after you have left the site.
The Real Risk of Being Underinsured
Not having the right coverage does not just mean losing a contract. If an uninsured loss occurs on a jobsite, you could be held personally responsible, even if the general contractor’s policy responds first.
That kind of exposure can have serious financial consequences and long term impacts on your business.
Do Not Wait Until It Is Too Late
One of the biggest mistakes subcontractors make is waiting until the general contractor requests a certificate of insurance to review their coverage.
Instead, always read the insurance requirements in your subcontract agreement before signing. Understanding what is required upfront gives you time to make adjustments, avoid surprises, and protect both your business and your reputation.
Having the right insurance is not just about checking a box. It is about staying on the job, protecting your livelihood, and positioning yourself as a reliable professional that general contractors want to work with again and again.
Each month, Swarts Manning insurance experts cover relevant topics for your business. Stay tuned for more discussions about managing your insurance and industry-specific tips.
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