Insurance requirements for subcontractors: common limits by trade

Most general contractors start from the same baseline: $1 million per occurrence and $2 million aggregate in general liability, $1 million in auto liability, statutory workers compensation with employer's liability, and an umbrella sized to the risk of the trade. Then they raise limits for riskier work and add coverages a trade specifically needs.

These are common starting points, not rules. Your own contracts, your client's contract and your insurer may require more. The right limits for your business are a question for your broker.

Start from what you owe upstream

Before setting limits for your subs, read the contract with the owner or client above you. It often lists insurance you must carry and require from everyone below you. Your own insurer may also have conditions, such as requiring that all subcontractors carry insurance with limits at least equal to yours. If your subs carry less, the gap can become yours.

The common baseline

• Commercial general liability: $1,000,000 each occurrence, $2,000,000 general aggregate, $2,000,000 products and completed operations aggregate. Additional insured status for you (ongoing and completed operations), waiver of subrogation, primary and non-contributory.
• Business auto liability: $1,000,000 combined single limit, covering any auto or at least all owned, hired and non-owned autos.
• Workers compensation: statutory limits for the state where the work happens.
• Employer's liability: often $500,000 each accident, disease per employee and disease policy limit, or $1,000,000 for each.
• Umbrella or excess liability: depends on the trade, from none for low-risk work to several million for high-risk work.

A common way to tier by trade

Many contractors sort their trades into a few risk tiers and set one requirement set per tier. A typical split looks like this:

• Lower risk (interior painting, cleaning, low-voltage, flooring, finish carpentry): the baseline above, often with no umbrella or a $1 million umbrella.
• Moderate risk (framing, drywall, HVAC, plumbing, electrical, landscaping, concrete flatwork): the baseline plus a $1 million to $2 million umbrella.
• Higher risk (roofing, excavation, demolition, steel erection, crane work, work at height or on occupied buildings): the baseline plus a larger umbrella, often $5 million or more, depending on the project.

Coverages some trades need on top

• Professional liability for anyone providing design: engineers, architects, design-build trades.
• Contractors pollution liability for abatement, environmental, demolition and sometimes plumbing or mechanical work.
• Inland marine or installation floater where the sub is responsible for materials or equipment before they are installed.
• Aircraft or drone liability for anyone flying drones over the site.

Property managers and venues

The same idea applies outside construction. Property managers usually ask cleaning, landscaping, snow removal, HVAC and maintenance vendors for the baseline general liability, auto and workers compensation, naming the owner and the management company as additional insured. Venues often ask caterers and event vendors for liquor liability where alcohol is served, and for limits set by the venue's own lease or insurer.

The endorsements matter as much as the limits

A $2 million policy that doesn't cover you is worth less to you than a $1 million policy that does. Along with limits, most requirement sets ask for:

• Additional insured status for you and anyone else your contract names.
• A waiver of subrogation on general liability, auto and workers compensation.
• Primary and non-contributory wording, so their policy pays before yours.
• Notice of cancellation, where the insurer offers it.

Sole proprietors and workers compensation

Owner-operators with no employees often don't carry workers compensation, and many states allow that. Some contractors accept a signed exemption or the state's own exemption certificate. Others require coverage anyway, because an "owner-operator" who brings a helper is an uninsured employer. Decide your rule up front and write it into your requirements.

Write it down once

Whatever you choose, put it in a short written requirement set per tier, attach it to every subcontract, and check each certificate against it. Consistency is what protects you: the same rules for every vendor, checked the same way, every time a policy renews.

To save time, start from our free requirements template by tier, which you can download and edit.