Hiring a Sub-Contractor?
Hiring a sub-contractor is common as it keeps the bottom line expense down. A temporary increase in business or a short term job may require additional personnel. Keeping in mind, the sub-contractor is still an extension of the business and will reflect on the company’s performance. A client is not aware a sub-contractor was hired just that the work is being done. Hence the law suit in your company name for damages the sub-contractor may have caused.
1) Know the background and work ethics of the sub-contractor.
2) Have a contract with a hold harmless in place with between your company and the sub-contractor.
3) Obtain verification of insurance from the sub-contractor naming your business as an additional insured.
4) Know what exclusions are in the sub-contractors policy before they perform work. If a type of operation is excluded, there may be no coverage on your company’s behalf.
5) Review and inspect the work completed by the sub-contractor.
6) Use the same sub-contractor(s) and build the relationship with them. Using different sub-contractors can open up an issue with quality of work performed.
7) Prior claims which could decrease the limit of coverage shown on the certificate of coverage.
8) Liens or open law suits which could affect the performance of the sub-contractors work and/or decrease the policy coverage limit.
9) Is the sub-contractor using their auto for business? You need to ensure verification of their auto limits are shown on the certificate of insurance. These limits should be no less than $300,000 to ensure your company is protected. Most professionals will advise these limits should equal the occurrence limit for the liability.
Last revised: Date 04/30/2008