Sub Contractor With Lower Insurance Than Me

Mike Finley

I just got an insurance certificate from a sub-contractor that is substantially lower than mine. I'm under the impression that my insurance company will bill me at the end of the year with a suplimental premium for the difference between the coverages of any sub-contracter we hire with lower coverage than us, since my insurance basically has to make up the difference between the gap between us if something happened.

The job is coming up and the payout is pretty small so I would probably just eat it if I had to just to keep the job on schedule, but was wondering how this is handled. Do you just tell the sub to get more insurance if he want to continue working for you? Do you deduct the extra premium from his bill? Does he get a one time rider? Or do you just pay it at the end of the year and not worry about it?

Mike Finley

Just got off the phone with my insurance company turns out now that the difference would be out of my pocket about $2.00. They charge $6.00 for every $1000 of billing by the sub and I'm only looking at like $300 of work.

But the kicker is they said if you hire him, to start looking for a new insurance company because they wouldn't renew my policy after the audit!

PipeGuy

??? I've never heard of such a thing. I've been involved in looking at policies and premiums since 1991.

My GL premium is based on a projected annual subcontractor $$. An annual 'year end' audit results in the final premium amount. No consideration is given to the subcontractor's policy coverages and limits.

Mike Finley

You haven't heard of your premium being adjusted for subcontractors with limits smaller than yourself or you haven't heard of an insurance company refusing to let you even hire a sub contractor with limits smaller than yourself?

Grumpy

I have heard of premium adjustments for subs with a lower coverage, but I have never heard of an insurance cancelling for it. My insurance company will allow me to hire subs with no insurance but I pay for it at audit, and the insurance company will consider them to be employees. I will even pay for any materials they purchased, as payroll, if not properly classified in my accounting software.

Mike Finley

Well, this sucks. I'm going to be looking for new insurance if I keep running into issues with them. They are of the mind that I am a criminal and they are the warden and they seem to think that punishing you today doesn't matter because I will probably do something tomorrow anyways to justify it.

Unfortunately, now I am over a barrel, this sub is scheduled tomorrow and I don't have time to get a replacement. I will probably work out a financial arrangement with him to avoid any issues on this job because of this insurance issue, but he will have to upgrade his insurance or no more work.

Grumpy

I am in the same boat as you when it comes to insurance. Because I was starting up I went with the cheapest. Now that it's renewal time I renewed witht hem but haven't even been audited yet. After my audit it is likley i will be finding someone else to work with my insurance coverage.

I plan to simply take my subs insurance certificates and contact their agents for quotes. I really want to work with someone who works with or specilizes with contractor's insurance.

Mike Finley

Well, Duh!

You are smarter than the average bear aren't you!

Never thought of that one, good idea.

Lighting Retro

I believe all companies are a little wary of claims right now, and we're seeing tighter standards all the way around. Just curious, do you sub everything, or are some guys on payroll? Our company didn't want to touch us if we did more than 10% subcontracting. (Liability)

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Bob Kovacs

Very simple solution- state the required insurance limits in your subcontracts- if they can't meet those requirements, they don't work for you.

HusqyPro

Back in 2005...

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jtpro

I try to look at the dates NOW.

But used to jump right in if someone ELSE brought it from beyond.



I'm such a Lem!

genecarp

This thread is so old the last time i read it i fell of my dinasaur.

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