Paying for Your Subcontractor’s Back Strain
An Owner/Operator hires a carpenter to perform light trim work. While on a ladder, the carpenter spots a bee’s nest and is startled and falls, severely injuring himself. The claim, which totaled in excess of $300,000, is then filed with the Owner’s insurance carrier, and not with the carpenter’s business insurance carrier. The Owner is then shocked to find out that not only is he responsible for the medical bills and lost wages, but their insurance company also asks for back premium for the carpenter – even though he is not employed by the owner, but just hired for that one job. Why is this?
When hiring contractors to perform work on your building or property, it is your responsibility to verify that they have adequate insurance. If they do not have full insurance coverage, then any injuries or damage to property will be your responsibility. What is worse is, should their work injure one of your customers, such as through a trip and fall, or damage a customer’s vehicle, you will be responsible for your customer’s damages as well. So how does an owner protect their business and profits?
When screening a subcontractor, one must think of what can happen to them while they are on your property, what they can do, and also even off property, if they are still working for you. This means that it must be verified that they have Workers’ Compensation Insurance, General Liability Insurance, and Commercial Auto Insurance. Again, think if they have a motor vehicle accident on your property, or driving to the hardware store for additional materials, or if they strike a patron, the Owner could be held liable for the damage to their vehicle, the customer’s vehicle, or the injury to the customer.
Keep in mind that insurance can be costly, and as such, fraud is prevalent and there are many fake certificates of insurance in circulation. When a subcontractor produces a certificate of insurance, this certificate should be verified with their insurance company, or the insurance company agent listed on the certificate.
Once you have verified that the insurance is valid, then a file should be created so these subcontractors can be tracked throughout the year. At the end of the year, the process needs to be repeated to ensure that the subcontractor continues to be insured. Work should not be contracted until an updated certificate can be produced.
The process may seem involved for a landscaper or sidewalk repair job, but we all know of the high costs of a single slip and fall, as well as the damage to your reputation and profits should something like this occurs. Knowing who your subcontractors are, being aware of their work, and verifying that they have proper insurance helps to protect you, your customers, and your business.