Construction Insurance Requirements for Subcontractors

The complete guide to what insurance your subcontractors need, minimum coverage amounts, required endorsements, and how to verify compliance before they step on your jobsite.

Automate Insurance Verification

The Real Cost of Inadequate Insurance

Average construction liability claim: $82,000. Average workers comp claim: $41,000. If your subcontractor is underinsured or uninsured, those costs fall on you. A single incident with an uncovered sub can exceed your annual profit on a project.

Commercial General Liability (CGL)

Minimum: $1,000,000 per occurrence / $2,000,000 aggregate

Covers bodily injury and property damage from subcontractor operations. The most critical policy for GCs.

Key Endorsements to Require

  • Additional Insured endorsement naming your company
  • Waiver of Subrogation in your favor
  • Primary and Non-Contributory wording
  • Per-project aggregate (for multi-project subs)

Red Flags to Watch For

  • Occurrence limit below $1M
  • Sunset clauses on completed operations
  • Exclusions for your type of work
  • Missing Additional Insured endorsement

Workers Compensation

Minimum: Statutory limits (state-mandated) + $1M Employer's Liability

Covers injuries to the sub's employees on your jobsite. Without it, the GC becomes liable for medical costs and lost wages.

Key Endorsements to Require

  • Waiver of Subrogation endorsement
  • All States coverage (if sub works across state lines)
  • Voluntary Compensation endorsement

Red Flags to Watch For

  • Sub claims sole proprietor exemption but has crews
  • Policy from state fund with gaps in coverage
  • EMR (Experience Modification Rate) above 1.2
  • Missing Waiver of Subrogation

Commercial Auto Liability

Minimum: $1,000,000 combined single limit

Covers accidents involving the sub's vehicles on or around the jobsite. Includes owned, hired, and non-owned autos.

Key Endorsements to Require

  • Hired and Non-Owned Auto coverage
  • Additional Insured endorsement
  • Motor Carrier endorsement (for hauling)

Red Flags to Watch For

  • Liability-only with no Physical Damage (risky fleet)
  • Coverage gap for hired equipment/vehicles
  • Missing MCS-90 for interstate haulers

Umbrella / Excess Liability

Minimum: $2,000,000 - $5,000,000 (varies by trade risk)

Sits above GL, auto, and WC. Provides catastrophic loss protection. Essential for high-risk trades.

Key Endorsements to Require

  • Follows form over underlying policies
  • Drop-down coverage for exhausted underlying limits
  • Additional Insured status flows up

Red Flags to Watch For

  • Umbrella doesn't cover all underlying policies
  • Self-insured retention above $25K
  • Restrictive coverage compared to underlying

Manually Checking All This? There Is a Better Way.

VendorShield reads COI PDFs with AI, verifies coverage against your requirements, and alerts you when something is missing, expired, or below your minimums.

Seconds, Not Hours

Upload a COI PDF. AI extracts every detail and checks it against your rules in under 10 seconds.

Your Rules, Enforced

Set minimum coverage by trade category. Electricians need $2M? Painters $1M? Set it once, enforce always.

From $49/mo

Less than one hour of admin time per week. Flat pricing, no per-vendor fees, no per-project charges.

Start Free Trial

14-day free trial. No credit card required.

Related Resources

Construction Insurance TrackingConstruction Compliance SoftwareSubcontractor Compliance ChecklistGeneral Contractor Compliance Checklist