Vendor Insurance Requirements

Insurance requirements for subs feel like paperwork until they aren't. Then they feel like the most important document you never collected. Every GC who has been through a serious on-site incident, a property damage claim, or a homeowner lawsuit involving a sub's work knows exactly how much they wished they had verified that COI before work started. This article covers what coverage to require, how to read the document, what to watch for, and how to build a system that keeps you current across your entire sub roster.

Why You're Liable for Your Sub's Mistakes

A sub's worker falls off scaffolding on your job site. Their plumber causes a pipe to burst during rough-in, flooding framed walls that have to be torn out and dried. Their electrician's wiring work fails 8 months after completion and causes a fire. In all three scenarios, the GC is in the claim. You are the prime contractor, the party on the homeowner's contract, the entity responsible for everything that happens on that job site. A homeowner's first call is to their homeowner's insurance carrier. Their carrier's first call, often, is to an attorney. The GC who has properly documented sub insurance requirements — and verified them — is in a fundamentally different position than the GC who took a sub's word for it and kept no record.

Requiring proof of insurance doesn't eliminate your exposure entirely. You can still face negligent supervision claims regardless of sub coverage. But it does three important things: it shifts primary financial responsibility back to the sub's carrier, it gives you a defense in coverage disputes, and it filters out the subs who are operating so informally that they can't maintain basic business insurance. That last point matters more than people realize. A sub who can't afford or won't maintain general liability coverage is a sub operating without a meaningful financial backstop. If their work damages your homeowner's property, you're the one with assets the homeowner can pursue.

The other dimension that gets underestimated is workers' compensation. If a sub's worker is injured on your site and the sub has no workers' comp, some states make the general contractor the statutory employer — meaning your workers' comp carrier pays the claim, your experience modification rate goes up, and your premiums increase for years. The specifics vary by state, but the exposure is real. Requiring workers' comp from every sub who has employees is one of the clearest risk management moves available to a residential GC.

The Four Coverage Types Every Sub Needs

There are four coverage types you need to understand and require. They're not interchangeable — each covers a different category of risk, and a gap in any one of them leaves you exposed in a specific way.

General liability is the foundational coverage. Every sub, no exceptions. If a sub's worker drops a tool through a homeowner's finished floor, GL pays. If a sub's work causes water damage to the adjacent unit on a multi-family project, GL pays. The $1M per occurrence minimum is a floor, not a ceiling — larger scopes and higher-risk trades warrant higher limits.

Workers' compensation is required by law in most states for any employer with employees. The "I only use independent contractors" claim is the most common way subs try to avoid this requirement, and it is almost never legally sound. The IRS and state labor boards use multi-factor tests to determine worker classification, and many workers who are called "independent contractors" on construction sites would fail those tests. You are not insulated from this by the sub's classification decision. Require WC from any sub whose scope involves employees on your site, and get a documented owner's exclusion in writing if a sole proprietor is genuinely the only person working.

Commercial auto is often overlooked because people assume GL covers vehicle incidents. It doesn't — GL policies specifically exclude auto liability. If your HVAC sub's truck backs into the homeowner's car in the driveway, that's an auto claim. Require it from any sub who uses vehicles in the course of their work, which is essentially every trade sub.

Umbrella coverage is the coverage that feels optional until it isn't. For your major scope subs — framing, concrete, roofing, plumbing, electrical, HVAC — an umbrella policy that sits above their primary GL extends their limits meaningfully. If a significant structural failure or fire causes damage that exceeds a $1M GL policy, the umbrella is what bridges the gap. Some construction lenders require umbrella coverage from GC and major subs as a loan condition. Check your loan documents.

How to Read a Certificate of Insurance

The standard COI form used in the industry is the ACORD 25. Most insurance agents issue this form, and once you know how to read it, you can review a COI in about two minutes. Here's what to check, section by section.

The top section identifies the insured. The name here should match exactly — or very closely — the entity you've contracted with. If your sub contract is with "Martinez Tile LLC" and the named insured on the COI says "Carlos Martinez," you may have a problem: the policy may cover Carlos Martinez personally but not the LLC's operations, or vice versa. Flag mismatches and ask the sub to clarify.

The certificate holder box, usually at the bottom left, should name your company as the holder. If it's blank, addressed to the sub themselves, or names a different entity, the COI was not generated for you. This doesn't void the underlying insurance, but it means the document in your hand wasn't produced to evidence coverage for your project. Ask for a corrected COI naming your company specifically.

The coverage section lists each policy type with the insurer, policy number, effective date, expiration date, and limits. Check every date: is the policy currently active, or is it expiring in two weeks? Check the limits against your minimums. A GL policy showing $500K per occurrence when you require $1M is deficient — the policy covers less than you require, and in a claim scenario, you may be left exposed above that limit.

The description of operations box is where additional insured language and project-specific endorsements often appear. Read it. This is also where agents note project-specific coverage or restrictions. A box that says "Certificate holder is additional insured per endorsement CG2010" is meaningful — more on this in the next section.

Coverage Limits: What's Enough?

There's no universal right answer, because limits should be proportional to the scope and the risk profile of the trade. A painter doing interior finish work on a $400,000 remodel presents different risk than a roofing sub on a $1.2M new construction project. Here are working guidelines that fit most residential construction contexts:

• Framing, concrete, roofing, excavation: $2M GL minimum. These are high-injury-risk, high-consequential-damage trades. A framing error can be a structural failure. A roofing penetration done wrong can be years of water damage behind the walls.
• Plumbing, electrical, HVAC: $1M GL minimum plus commercial auto. MEP failures are often discovery-delayed — a plumbing connection that leaks slowly, wiring that fails under load months later. GL needs to be in place for the long tail of these claims.
• Finish trades (tile, cabinetry, paint, flooring): $500K–$1M GL minimum. Lower risk profile, but still real exposure — a tile sub who floods a subfloor during setting, a cabinet sub who damages counters on a neighboring project.

Don't negotiate limits down to save a sub money on their premiums. A sub who can't afford adequate coverage for the scope they're taking on is either too small for the job, financially distressed, or cavalier about risk. All three are problems that will show up somewhere on your project. If a sub comes in with a strong price but inadequate coverage, the options are: they increase their limits (at their cost), you adjust the scope to something proportionate to their coverage, or you use a different sub. What's not an option is proceeding with inadequate coverage and hoping nothing goes wrong.

What "Additional Insured" Actually Means

Being named as an additional insured on a sub's general liability policy gives you direct rights under their policy. In practical terms: if a homeowner sues both you and your sub for property damage caused by the sub's operations, you are defended under the sub's GL policy — not just your own. The sub's carrier handles the claim (up to policy limits), which keeps the claim off your own policy and protects your experience modification factor and premium rates.

Requiring additional insured status is standard practice and should be a written requirement in your sub contract. The COI should confirm it explicitly. There are two common forms: a blanket additional insured endorsement (which covers all parties who require it by contract, without listing them specifically) and a named endorsement (which lists your company by name). Named endorsements are slightly stronger — they eliminate any ambiguity about whether you qualify — but blanket endorsements are widely accepted and usually sufficient. What is not acceptable is a COI that says "certificate holder only" in the description of operations box without any additional insured language. Certificate holder status gives you the right to be notified of policy cancellation. It does not give you any coverage rights under the policy.

Some sub contracts and COIs include "primary and non-contributory" language in the additional insured endorsement. This means the sub's policy responds first to a covered claim before your own policy is called upon, and your policy doesn't have to contribute to a shared claim. This is worth requiring for your major scope subs. It prevents a scenario where both policies are triggered simultaneously and your carrier ends up sharing costs for something that was entirely the sub's fault.

Red Flags and Common Problems

Most COI problems fall into a handful of recurring categories. Knowing these patterns in advance means you catch them in a two-minute review rather than after a claim is filed.

The most common real-world problem isn't any one of these in isolation — it's a combination of a rushed project start and a sub who says "I'll get you the updated COI later." Later becomes never, the project is underway, and the moment anything goes wrong you discover you have a COI that expired six months ago. The rule is simple: no current COI, no work. This sounds harsh until you explain it to a homeowner whose property was damaged by an uninsured sub and watch their expression.

Be especially cautious with COIs from subs who work across state lines. Licensing and workers' comp requirements vary by state. A sub licensed and insured in one state may not be covered for work performed in a neighboring state — the policy may have territorial restrictions. If you're working with out-of-state subs, verify that both the license and the insurance policy are valid in the project jurisdiction. Ask the sub's insurance agent directly if you're uncertain.

Building a COI Tracking System

The most common insurance failure mode for GCs isn't refusing to collect COIs — it's collecting them once at the start of a relationship and never tracking renewal dates. A sub whose GL was current when you first brought them on two years ago may have let their policy lapse since then. You may not know this until you use them on a new project and assume coverage is in place. By the time a claim surfaces the gap, you're in a difficult position with your own carrier.

The system doesn't need to be elaborate. What it needs to be is consistent. Record each sub's COI expiration date — GL, WC, and auto separately, since they may renew on different schedules — when you collect the document. Flag anything expiring within 60 days. At the 60-day mark, send the sub a renewal reminder: "Your GL expires on [date]. Please send a current COI before then." At the 30-day mark, follow up if you haven't received it. On the expiration date, if you don't have a current COI, no further work assignments until it's in hand. This is a policy, not a negotiation.

If you're running multiple projects with overlapping sub rosters, the tracking overhead can add up. A sub you use across three active projects has one COI, but it matters on all three of them. A centralized contact and insurance record — rather than per-project filing — is more efficient and less prone to gaps. The goal is one authoritative record per sub that all projects reference, rather than multiple copies in different project folders that may be at different states of currency.

In Baulit

Baulit's Contact Directory includes insurance expiration date fields for each sub and vendor in your roster. When you collect a COI, log the GL, WC, and auto expiration dates directly on the contact record. This ties the insurance data to the sub's profile rather than a separate spreadsheet — so when you're looking at a sub's contact record before assigning them to a new project, the expiration date is right there, not in a different file you have to go find.

The Overdue & Insurance Report surfaces contacts with expiring or expired COI dates across your entire sub and vendor roster. Instead of manually reviewing your tracking spreadsheet every week, the report does the flagging for you — showing which subs are approaching expiration and which are already past it. If you're running several active projects with different subs on each, this cross-project visibility is where the system earns its keep. You see the full picture in one report rather than project by project.

The combination of contact-level insurance tracking and the portfolio-level report gives you a closed loop: collect the COI, log the date, let the report tell you when to chase renewal. It won't call the sub's insurance agent for you — that part is still yours — but it removes the most common failure point, which is simply losing track of when something expired. In a business where a lapsed COI can mean your exposure on someone else's mistake, the overhead of maintaining that record is worth it every time.