The Short Answer: Yes, Every Time
If you are a subcontractor working in California, Nevada, Texas, or Arizona, you need your own insurance. The general contractor's policy does not cover you. Their workers comp does not cover your employees. And if something goes wrong on the job, the GC's first call is to their attorney, not yours.
What Happens When a Sub Has No Insurance
Here is a real scenario we dealt with last year. A framing subcontractor in Orange County was working under a GC on a custom home project. One of the sub's laborers fell from scaffolding and broke his collarbone. The sub had no workers comp.
The GC's carrier paid the medical bills under their policy because California law holds the GC responsible for uninsured subs. Then the carrier turned around and sued the sub for reimbursement. The sub owed $67,000 he did not have. His personal assets were exposed because he operated as a sole proprietor.
This happens more often than you would think.
What the General Contractor Requires
Before you set foot on most commercial job sites, the GC will ask for:
- General liability with minimum $1 million per occurrence and $2 million aggregate
- Workers compensation with statutory limits (required by law if you have any employees in California)
- Commercial auto if you are driving to job sites with tools or materials
- Additional insured endorsement naming the GC on your GL policy
- Waiver of subrogation on your workers comp policy
If you cannot produce certificates showing all of this, the GC will find a sub who can.
California Law Is Clear
California Labor Code Section 2750.5 presumes that anyone providing services for a contractor is an employee unless proven otherwise. If you are working as a sub without your own coverage, the GC's workers comp carrier can classify your crew as the GC's employees and charge them accordingly. That blows up the GC's experience mod and premium.
This is why every serious GC requires proof of insurance from every sub, no exceptions.
What Coverage You Actually Need
General Liability covers third-party claims. A homeowner trips over your tools. Your work causes water damage to the floor below. A neighbor's car gets hit by debris from your demo. GL handles all of it.
Workers Compensation covers your employees when they get hurt on the job. California requires it the moment you hire your first employee. Even if you are a sole proprietor with no employees, many GCs still require you to carry it or sign a waiver.
Commercial Auto covers your work vehicles. Your personal auto policy excludes business use in most cases. If your van full of tools rear-ends someone on the way to a job site, your personal carrier will deny the claim.
Inland Marine covers your tools and equipment. If your $15,000 in power tools gets stolen from your truck overnight, your auto policy will not cover them. Inland marine does.
The Cost Is Less Than You Think
A sole proprietor electrician in California can get GL coverage starting around $500 to $800 per year. Workers comp for a small crew runs $1,200 to $5,000 depending on trade and payroll. Commercial auto starts around $1,200.
Compare that to a single uninsured claim that could cost you $50,000 or more. The math is not complicated.
How to Get Set Up
Call us at (949) 200-7171. We can typically bind GL and issue certificates within 24 hours. Workers comp can be bound the same day in many cases. We work with over 50 carriers so we can find competitive rates for your specific trade.