Insurance Risks When Using Subcontractors

Many businesses across Denmark, WI rely on subcontractors for various projects to increase efficiency, but it can also create added exposure. When subcontractors work on a job, their actions, work quality and level of preparation can influence the hiring company’s financial and legal risk.

Common Issues When Working with Subcontractors

Subcontractors can introduce many types of liability concerns. Property damage caused during a project may fall back on the hiring business if the subcontractor does not have proper coverage. Injuries on the job can also create disputes about responsibility, especially when documentation is unclear. There is also the possibility of unfinished or incorrect work that leads to additional costs for the primary business. Each of these situations can increase expenses and create delays that affect overall project timelines.

Essential Insurance for Businesses with Subcontractors

Here are some essential types of insurance for businesses that utilize subcontractors:

• General liability insurance can financially protect against third-party claims of bodily injury, property damage or personal and advertising injury. It is your main line of defense against lawsuits stemming from accidents on a job site.
• Workers’ compensation insurance can pay for medical costs and lost wages if a subcontractor or their employee gets injured while working for you. Without it, you might be forced to pay these expensive medical bills out of your own pocket.
• Professional liability insurance may cover financial losses caused by a subcontractor’s poor advice or technical mistakes. It can financially protect you when a project fails due to errors in design or professional judgment rather than physical accidents.
• Excess liability insurance can provide extra funds if a claim exceeds your standard policy limits. It can help make sure that one massive lawsuit does not completely bankrupt your company.
• Hired and non-owned auto insurance may cover liability if a subcontractor has an accident while driving their own vehicle for your business errands. It fills the gap because your standard commercial auto policy usually only covers vehicles that you officially own.

Contact Us

Associates Insurance Agency Ltd helps businesses in Denmark, WI or nearby communities secure optimal coverage. Contact our team to explore your options.

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.