What to put in a subcontractor agreement insurance clause

The seven parts of a clear clause

1. Required policies. List each one: commercial general liability, workers’ comp and employer’s liability, commercial auto, and umbrella or excess where needed.
2. Limits. State the minimum per occurrence and aggregate for each policy. Your broker and contract set these numbers.
3. Endorsements. Name the ones you require: additional insured (ongoing and completed operations), waiver of subrogation, primary and noncontributory. See endorsements explained.
4. Who is named. Identify the exact legal names of the parties and the project or property to be listed.
5. Certificates. Say when they are due (before mobilization), what form (ACORD 25 plus endorsements), and that renewals must be delivered before expiration.
6. Lapse and cure. State what happens if coverage lapses: stop work, withhold payment, or terminate. Give a short cure period.
7. Flow-down. Require the sub to put the same insurance terms into agreements with its own subs and to collect certificates from them.

Sample structure, not legal wording

Subcontractor shall carry the insurance listed in Exhibit A for the duration of the work and for the period after completion stated in Exhibit A. Subcontractor shall deliver certificates and the listed endorsements before starting work and before each expiration. If any required coverage lapses, Contractor may stop work and withhold payment until a compliant certificate is delivered.

That is the shape. Put the specifics in an exhibit so you can update limits and endorsements without rewriting the agreement. Law varies by state, so some provisions, especially about indemnity and additional insured coverage, may be limited. See your state’s page under COI tracking by state.

Mistakes that cause trouble later

• Vague phrases like “adequate insurance”. A sub cannot comply with a phrase.
• Listing requirements but not requiring proof before work starts.
• Forgetting completed operations, so coverage ends when the sub leaves site.
• Not requiring notice of cancellation or renewal certificates.
• Leaving flow-down out, so a sub’s sub is uninsured.

Not legal or insurance advice. This is general information. Your contract, your state and your policy decide what applies to you. Ask your broker or attorney.

Turn the clause into an exhibit

Use the requirements builder to create a one-page exhibit your subs can read and your tracking can check against. When certificates arrive, compare each one to the exhibit. Our free audit does this for a list of subs.