In commercial construction, subcontractors are an essential part of getting the job done — from framing and plumbing to electrical and finish work. But with every subcontractor that steps onto your job site, your liability exposure increases. One of the simplest yet most effective ways to protect your business is by ensuring your subcontractors are properly added as additional insureds on your insurance policy — and that you’re added to theirs when appropriate.
What Does “Additional Insured” Mean?
An Additional Insured endorsement extends coverage under one party’s liability policy to another party.
In other words, if a subcontractor’s work causes a loss or injury, and your company is named in a lawsuit, their policy can help defend and indemnify you — reducing the claim exposure on your own insurance.
For example, if a plumber accidentally floods a new build and the general contractor is sued, the plumber’s general liability insurance (with the GC listed as an additional insured) would respond to the claim first.
The Benefits of Being an Additional Insured
- Protects Your Company from Third-Party Claims
If a subcontractor’s work results in property damage or injury, their insurance can help cover legal costs, settlements, and judgments — saving your own policy from being used first. - Preserves Your Loss History
When claims are paid out under your subcontractor’s policy, they don’t affect your company’s loss record. This helps maintain lower premiums and better insurability over time. - Encourages Quality and Accountability
Requiring subcontractors to add you as an additional insured helps ensure they carry valid insurance and take their risk management responsibilities seriously. - Meets Contractual and Legal Requirements
Many project owners, municipalities, and general contractors require proof of additional insured endorsements before work begins. It’s not just smart risk management — it’s often a condition of doing business. - Simplifies Claims Handling
Having the proper endorsements in place streamlines the claims process when something goes wrong. There’s no confusion about which policy applies or who should respond first.
What to Ask For
- When reviewing your subcontractors’ insurance, always request:
- • A Certificate of Insurance (COI) naming your company as Additional Insured
- • CG 20 10 and CG 20 37 endorsements (or their equivalents), covering both ongoing and completed operations
- • A Waiver of Subrogation endorsement, when applicable
- • Evidence of Primary and Non-Contributory wording
Protect Your Business Before the Work Starts
At Falcon & Associates Insurance Services, we work with contractors every day to help them manage subcontractor risk. Our team can review your contracts, certificates, and policy endorsements to ensure that your coverage — and your relationships — are properly protected.
Questions about adding subcontractors as additional insureds?
Contact our office at (323) 869-0780, email us at steve@faisinc.com, or visit www.faisinc.com to learn more about how we help California contractors build safely and confidently.
