In most cases your insurance will not cover your subcontractors. In some cases it may be found that both you and your subcontractor are responsible for a property damage or personal injury claim. This is known as shared responsibility, and generally a percentage will be allotted to each of you.

What happens if a contractor does not pay a subcontractor?

If a subcontractor doesn’t get paid, they can file what is known as a “mechanic’s lien” against the property they’ve been working on. The first thing they’ll need to do is notify the owner of the property. If the owner then fails to pay, the subcontractor can then file the lien.

Can a contractor withhold payment to a subcontractor?

You can withhold payments from a subcontractor if he does not perform the job in the time frame specified by contract. You cannot withhold payment from a subcontractor for work performed, but you can withhold time penalties and the cost of your damages until the issue is resolved in court.

Do subcontractors require public liability insurance?

If you work as a subcontractor, your employer is under no obligation to include you in their Public Liability Insurance Policy. If you work as a subcontractor, even if you only work for one employer or company, you’re considered to be running your own small business and are therefore responsible for your own actions.

Can a general contractor use subcontractor default insurance?

Subcontractor default insurance does have some flaws as well. First, it is not acceptable on projects with public money involved. The reason is that SDI only benefits the general contractor and not the project owner. If the general contractor gets in trouble, there is no protection to the owner against mechanics liens.

Who is liable for the negligence of a subcontractor?

Thus, the courts developed theories under which owners or general contractors could be held liable for the negligence of subcontractors. These theories usually were grounded on the amount of control retained by the owner or general contractor over the work being done.

Why is SDI important for subcontractor default insurance?

Due to sharing/self-funding a portion of the costs of a subcontractor default, SDI does provide a financial incentive to improve a general contractor’s subcontractor prequalification process. There are some concerns for a subcontractor participating in an SDI program or the sub of a subcontractor that is enrolled.

What is subcontractor default insurance for surety bonds?

Subcontractor default insurance is an agreement between you and the insurance company. Subcontractor surety bonds are a three-way agreement, between you, the surety bond company, and the subcontractor. With subcontractor default insurance, you decide if the subcontractor breached their contract.