Your Subs' Insurance Is Your Problem
A general contractor in Sacramento learned this lesson the hard way. One of his framing subs had a worker fall off scaffolding, resulting in a broken pelvis and six months of rehabilitation. The sub's workers' comp policy had lapsed three weeks earlier. Nobody checked.
The GC's carrier treated the injured worker as the GC's statutory employee and paid the claim, then added a $35,000 surcharge to the GC's renewal premium. That claim followed the GC's experience modification for three years.
This wasn't an unusual situation. It happens across California every month. The GC trusts that subs maintain their coverage, and when they don't, the GC absorbs the consequences.
Building Your Subcontract Insurance Requirements
General Liability Minimums
Require at least $1 million per occurrence and $2 million aggregate from every subcontractor. For higher-risk trades like roofing, demolition, and excavation, bump the requirement to $2 million per occurrence.
Your own contract with the project owner will specify the limits you need to flow down. If the owner requires $2 million from you, require at least $1 million from your subs with an umbrella requirement if their work creates significant exposure.
Workers' Compensation
This is non-negotiable in California. Every sub with employees must carry workers' comp. Period. Sole proprietors who claim exemption should provide a signed Certificate of Exemption from the CSLB, but even then, consider requiring voluntary coverage.
If an uninsured sub's worker gets injured on your project, California Labor Code Section 2750.5 creates a presumption that the worker is your employee. You become responsible for the claim.
Commercial Auto
Any sub bringing vehicles to your job site should carry commercial auto with at least $1 million combined single limit. Personal auto policies exclude commercial use, meaning a sub driving their personal truck to your site may have no coverage if they cause an accident on the way.
Umbrella or Excess Liability
For subs performing high-risk work or working on projects worth $5 million or more, require umbrella coverage. The amount depends on the project scope and the sub's specific trade exposure.
The Certificate Collection Process
Before Work Begins
No certificate, no work. Enforce this without exception. Your project coordinator or office manager should request certificates when the subcontract is executed and verify coverage is active before the sub mobilizes.
Use a checklist to verify each certificate covers the current policy period and shows no gaps, limits meet or exceed your contract requirements, the correct entity names appear for both the sub and any required additional insureds, endorsements match contract requirements (additional insured, primary and non-contributory, waiver of subrogation), and workers' comp is active with California listed as a covered state.
During the Project
Set calendar reminders for every sub's policy expiration dates. If a policy expires mid-project, request the renewal certificate immediately. Don't wait for the sub to send it voluntarily.
Automated certificate management platforms handle this tracking effectively. PINS, myCOI, and similar services monitor your subs' coverage and alert you to lapses, expirations, and non-compliance.
Certificate Red Flags
Limits that don't match your requirements. Policies expiring before the project's expected completion. Different entity names on the certificate versus the subcontract. Missing endorsements. Carriers you've never heard of (verify they're admitted in California or properly filed as surplus lines). Certificates issued by someone other than a licensed insurance agent.
Indemnification and Insurance Work Together
Your subcontract should include an indemnification clause requiring the sub to defend and hold you harmless from claims arising from their work. But indemnification clauses are only as good as the sub's ability to pay.
That's where insurance requirements come in. The insurance backs up the indemnification obligation. If the sub can't pay out of pocket, their insurance carrier steps in. If they have no insurance, your indemnification clause is a piece of paper with no teeth.
California Civil Code Section 2782 limits indemnification in construction contracts. You can't require a sub to indemnify you for your own active negligence. But you can require indemnification for the sub's own negligence and the proportionate share of any joint liability.
Handling Non-Compliant Subcontractors
The small sub who "can't afford" proper coverage. If a sub can't maintain the insurance your contract requires, they can't work on your project. The risk isn't worth the savings. A single uninsured claim can cost more than you'd save using the cheapest sub on every project for a decade.
The sub whose policy lapses mid-project. Stop their work immediately until coverage is reinstated. Document the stop-work order in writing. Some GCs include a right to obtain coverage on the sub's behalf and back-charge the cost. This provides a safety net, but prevention is better.
The sub who provides fraudulent certificates. This happens. A sub lists coverage they don't actually carry or inflates limits on the certificate. If you discover fraudulent documentation, terminate the subcontract immediately, report the fraud to the carrier listed on the certificate, and consider reporting to the CSLB if the sub holds a contractor's license.
Specific Trade Considerations
Demolition Contractors: Require pollution liability in addition to standard GL. Demo work frequently disturbs asbestos, lead paint, and contaminated soil. Standard GL excludes pollution.
Excavation Contractors: Require $2 million GL minimum. Underground utility strikes create expensive damage claims. Add professional liability if they're responsible for locating utilities.
Roofing Contractors: Require completed operations coverage and higher limits. Open roof weather damage exposure (discussed in our open roof coverage guide) can generate substantial claims.
Electrical Contractors: Verify completed operations coverage extends for at least the statute of repose (10 years in California for construction defects). Electrical fires can occur years after installation.
Creating Your Standard Insurance Requirements
Build a tiered system based on trade risk:
Tier 1 (Lower Risk): Painting, flooring, landscaping, fencing. $1M/$2M GL, statutory workers' comp, $1M auto.
Tier 2 (Moderate Risk): Plumbing, electrical, HVAC, concrete, drywall. $1M/$2M GL, statutory workers' comp, $1M auto, additional insured with primary and non-contributory.
Tier 3 (Higher Risk): Roofing, demolition, excavation, structural steel. $2M/$4M GL, statutory workers' comp, $1M auto, $2M+ umbrella, pollution liability where applicable.
Include your standard requirements in every subcontract template. Train your project managers to enforce them without exception.
Common Questions
What if a sub's carrier isn't admitted in California?
Non-admitted (surplus lines) carriers are legal in California when admitted carriers won't provide coverage. Verify the carrier is listed on the California Department of Insurance surplus lines list and that the policy was placed through a licensed surplus lines broker.
Can I require higher limits than my own policy carries?
You can, though it's unusual. Your requirements should be proportionate to the risk and consistent with industry standards for the trade and project type.
Should I require insurance from material suppliers?
Generally, no. Material suppliers are covered under product liability provisions that attach at the manufacturer or distributor level. Focus your insurance requirements on subcontractors performing work on your project site.
How do I handle a sub with an experience mod over 1.0?
A mod over 1.0 indicates worse-than-average claims experience. It doesn't automatically disqualify them, but it should trigger additional due diligence into their safety program and recent claim details.