We at Schulz Brundage stress the importance of using a “Subcontractor Agreement”. General Contractors should always use one. Subcontractors should always ask for one.
From a general contractor perspective, the agreement is important because:
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A sub agreement eliminates misunderstandings by presenting the requirements prior to bidding.
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If a subcontractor fails to live up to the agreement, you can sue the uninsured sub for breach of contract.
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Use of the agreement ensures that the subcontractors’ policies will pay for the subcontractors’ mistakes, while defending you.
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The agreement guards against additional premium charges, due to uninsured subs, at audit.
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Asking for endorsements like Additional Insured & Waiver of Subrogation (See our blog on needed contractor insurance policies HERE) in writing often triggers automatic coverage on the subcontractor’s policy. If you don’t ask for the endorsements in writing, no additional coverage is provided.
Securing a sub agreement is equally important when you’re working as a subcontractor. Here’s why:
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You need to know what the requirements are, before you can determine whether or not you meet the standard and at what cost.
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If you don’t meet the requirements, Schulz Brundage will quote the cost to add coverage, so that you can determine if the project is worth it. Like any other overhead expense, insurance costs must be charged to your customer.
