With today’s depressed oil prices, most companies are looking to rely on consultants more heavily. Don’t get caught with open exposures with using subcontractors on a regular basis! Before you commit to working with any subcontractor follow the following steps to protect your company.
Ask for their Certificate of Liability Insurance (COI).
Don’t be shy about asking the new to be contractor for proof of insurance. Small businesses and independent contractors will not be offended by your request. In fact, they expect it! It’s typical for them to be required to carry specific levels of insurance in order to bid on your company’s work. Review their coverage limits and coverage expiration dates to see if they are covered adequately for your project requirements. If not, you can address that with your subcontractor.
Subcontractors should have their own liability insurance.
Do to the technically challenging nature of the oil and gas industry, your contractors should have their own business insurance. Your general liability insurance or business owner’s policy (BOP) will cover any property damage or personal injury caused by work done by your company. However, issues arising from work done by your subcontractor might not be covered by your company’s insurance.
Require the subcontractor to name your company as an Additional Insured.
It might seem like a tough request, but most subcontractors are accustomed to hearing this request. So go ahead and require it! You will want the subcontractor’s insurance company to cover your company for any claim arising subcontractor damage. To do this, you’ll need to have them name your company as the Additional Insured.
Review your company’s Workers’ Compensation insurance coverage on subcontractors.
Your Worker’s Compensation will cover employees’ disability and medical costs associated with work-related illnesses and injuries. However, some states require that your insurance also cover uninsured 1099 contractors. Ask your current broker or give us a call to see if you are covered properly with regards to workers’ compensation. It’s not a bad idea to ask your subcontractors to carry workers’ compensation on their employees too.
Consider requiring your subcontractors to carry Errors & Omissions insurance.
Just in case a mistake is made by a subcontractor while working on your projects that costs your clients money, you will want to have your subcontractors carry Errors & Omissions insurance. When you are looking at professional liability policies, seek out those that protect your company from claims related to subcontractor work done on your behalf.
Questions or concerns? We’d be happy to discuss your unique business insurance needs.
Caley Van Cleave