What contractors should know about subcontractor insurance

| Feb 26, 2020 | Construction Litigation |

It isn’t uncommon for subcontractors to be used on residential and commercial building projects in North Carolina. While using subcontractors may be an effective way to get a job done in a timely manner, it could introduce additional layers of risk to the general contractor. However, it can be possible for contractors to transfer that risk to the subcontractor. This can be done through the use of indemnity provisions that require the subcontractor to assume liability for any damages it causes.

If a subcontractor delegates a task to another person or company, it may use these provisions as well. These types of clauses typically require a subcontractor to defend the contractor in the event that an issue arises. The subcontractor may also be required to purchase insurance that helps to pay for any damages the contractor incurs because of a subcontractor’s negligence.

This is referred to as additional insured coverage, and subcontractors may not necessarily carry it on their own. If a subcontractor doesn’t have adequate insurance, the contractor could be liable for paying out claims that other parties may make against that person or company. State law may limit the protection that is offered by indemnity provisions or additional insured coverage. Furthermore, an additional insured policy can’t necessarily be used in the event that the general contractor was the negligent party.

If construction defects lead to property damage or bodily injury, a contractor may be held liable for negligence. An attorney may help a property owner obtain a financial award to help pay for damages that he or she incurred. For instance, the cost of repairing or rebuilding a defective home might be included in a settlement. Construction defect cases may also be resolved in court if a settlement can’t be reached.