Key points
- Read the insurance section before you sign or bid, not when the certificate is due.
- Higher limits are usually met with an umbrella or excess policy.
- Endorsements like additional insured and waiver of subrogation must be on the policy, not just the certificate.
You win a commercial job, and the general contractor sends a subcontract with an insurance exhibit: $1,000,000 per occurrence, $2,000,000 aggregate, $5,000,000 umbrella, additional insured on a primary and non-contributory basis, waiver of subrogation, completed operations for several years. Now what?
Step 1: Read the requirements early
Send the insurance exhibit to your agent before you sign — ideally before you bid. Requirements are easier to price or negotiate up front, and some endorsements are not available from every insurance company.
Step 2: Understand each requirement
Limits. Usually met with primary limits plus an umbrella. The umbrella must schedule the required underlying policies.
Additional insured. Extends coverage under your policy to the general contractor (and often the owner) for liability arising from your work. Contracts may require it for ongoing operations, completed operations, or both.
Primary and non-contributory. Your policy responds first without seeking contribution from the general contractor’s insurance.
Waiver of subrogation. Your insurance company gives up its right to recover from the general contractor after paying a claim. Often required on general liability, auto, workers’ compensation, and umbrella.
Notice of cancellation. Some contracts require advance notice if your policy cancels. Insurance companies have their own rules on what they’ll provide.
Step 3: Price the options
Adding an umbrella is often more efficient than raising primary limits. Endorsements may be included in your policy already, available for an additional premium, or not available at all from your current insurance company.
Step 4: Keep track
Maintain a list of active contracts and their requirements. Check it at every renewal, so a policy change doesn’t quietly drop an endorsement a contract depends on.
When your current program can’t meet it
If your current insurance company can’t provide the limits or endorsements, it may be time for a broader review. See request a plumbing insurance review.
Contract interpretation is ultimately a legal question. Your agent can explain how insurance responds; your attorney should advise on contract terms.