Working with subcontractors is standard practice when you’re in the construction, contracting and skilled trades industry, so it’s important that you ask questions about your subcontractor’s insurance. Using subcontractors allows you to take advantage of additional expertise without taking on new permanent employees. But it also brings new risks that could potentially have a significant impact on your business.

In the eyes of your customers, there is little distinction between a general contractor and subcontractor, since they’re mainly concerned with seeing quality work getting done on time and on budget. So choosing a subcontractor to work with is a big decision that requires careful planning.

Risks and your subcontractor’s insurance

Think of subcontractors as an extension of your business. After all, you aren’t just putting your business’s reputation on the line, but also your finances. For example, if your subcontractor isn’t able to complete a job within the agreed-upon timeline, lacks the expertise required to finish the job or simply does poor work, your business could be on the hook for damages.

If your project isn’t completed or has problems due to your subcontractor, your business may still be ultimately responsible. If your subcontractor actually causes damage to a customer’s property, your business may be liable. Depending on the amount of damage, it could have a big impact on your reputation and your bottom line.

4 questions to ask about your subcontractor’s insurance:

There are many questions that may be relevant to ask your subcontractor about its insurance. Here are a few to consider.

1. Do you have a certificate of insurance?

  • Is the certificate and coverage recent?
  • Is the coverage amount enough to match the cost of the project?

2. Do you have work history references?

  • Ask the contractor about at least three similar jobs they’ve recently completed.
  • Verify the quality and timeliness of their work.

3. Do you have any insurance claims history?

  • Review the subcontractor’s claims history from the past three years to get a better sense of their workmanship.
  • If they have a lot of claims, consider using another subcontractor.

4. Do you have financial or credit reports to prove financial stability?

  • Request a financial report on the subcontractor’s business from a company like Equifax or Dun & Bradstreet.
  • Verify the subcontractor’s bonding line of credit (if applicable).

Asking the right questions about subcontractor’s insurance can help make sure your business isn’t exposed to unnecessary risks by working with the wrong subcontractor. Keep following our blog for more advice to help keep your business safe.


This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.

Federated Insurance Company of Canada is the insurer of Federated Insurance policies.