When deadlines are tight or budgets are stretched, it might be tempting to hire a cheaper subcontractor who doesn’t carry insurance. But that decision can cost you, big time. Hiring uninsured contractors creates significant exposure to liability, safety issues, and legal violations, all of which can jeopardize your project and your business.
Here Are the Top 5 Risks of Hiring Uninsured Contractors:
- Legal Penalties
Many states have laws that require insurance coverage on construction sites. If your subcontractor is uninsured, you could face fines, stop-work orders, or other penalties for noncompliance. - Liability for Injuries
If an uninsured contractor or one of their employees gets hurt on your job site, the cost of medical care and lost wages could fall on you. In some states, the general contractor is considered the “statutory employer” and held responsible under workers’ comp laws. - Property Damage
Without general liability insurance, any damage caused by the subcontractor, whether it’s broken windows, ruined finishes, or structural harm, becomes your problem to fix and pay for. - Third-Party Injuries
An uninsured contractor who injures a visitor or bystander creates a huge liability exposure. Without their insurance to step in, you’ll likely be footing the bill for legal defense and medical settlements. - Safety & Compliance Risks
Uninsured contractors often lack the resources or oversight needed to maintain proper safety standards, increasing the risk of accidents, OSHA violations, and lost time on the job.
Best Practices
- Always request a certificate of insurance before work begins.
- Require subcontractors to carry general liability and workers’ compensation insurance, at minimum.
- Add your business as an additional insured on their policy to protect your interests.
Conclusion
A cheaper contractor may save money today, but it will cost you far more tomorrow. Play it safe: hire insured professionals and protect your project.
Need help vetting your subcontractors or reviewing insurance requirements? Reach out to McHugh Insurance Group.
Posted in Business Insurance