![]() ![]() When a contractor claims that they are bonded, they refer to holding this type of bond. In most cases, performance bonds are simply called contractor bonds. Lastly, ask to be added as an additional insured on their policy. Your subcontractor’s insurance company or agent should have no problem providing an insurance certificate that outlines the type of work he is insured for. So before hiring a subcontractor, even if he is a “good friend”, make sure to check his license status, insurance limits and make sure that he is licensed and insured to perform the work that you hire him for. If the subcontractor isn’t organized and established enough to carry a general liability policy, he isn’t worth taking the risk by hiring. It goes without say that the bigger risk is that any mistake made by the subcontractor that results in a claim and/or lawsuit will ultimately come back to you. If you do not have a Certificate of Insurance for the subcontractor on file, your insurance company will add the value of the subcontractor to your payroll and you will end up paying the premium for the subcontractor who did not have a general liability policy. What happens if your subcontractor does not carry general liability insurance or lower limits than you? One problem that may arise is when your insurance company comes and audits your books at the end of the policy year. Unfortunately, we see it more common when the construction industry is booming and contractors are desperate to find help from anyone that knows how to use a hammer and saw. When you hire a subcontractor to do work for you, he or she must carry General Liability Insurance and must have the same limits of liability as you do.
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