Here's what keeps general contractors up at night: you hire a subcontractor, they get hurt on your job site, and their insurance turns out to be expired, insufficient, or full of exclusions you never checked. Now you're facing a lawsuit that could bankrupt your business. The good news? This nightmare is entirely preventable if you know what insurance requirements to enforce and how to verify them properly.
Managing subcontractor insurance requirements isn't just paperwork—it's your financial firewall. When you require the right coverage and actually verify it exists, you're transferring risk away from your company and onto the insurance carriers where it belongs. But the devil is in the details, and those details are changing fast in 2025-2026.
Core Insurance Requirements for Subcontractors
Every subcontractor working on your projects needs to carry their own insurance—period. The two non-negotiables are general liability and workers' compensation. For general liability, the standard used to be $1 million per occurrence with a $2 million general aggregate. But that's changing. In 2025-2026, more general contractors are requiring $2 million per occurrence instead of $1 million as litigation costs rise and settlement amounts increase.
Workers' compensation is mandatory in most states for construction trades, and for good reason. If a subcontractor's employee gets injured on your site and the sub doesn't have workers' comp, that injured worker can sue you directly. Even in states where it's not technically required for very small operations, you should still require it. The risk isn't worth the savings.
Beyond the basics, many GCs now scrutinize the insurance carrier itself. If your subcontractor's carrier has an A.M. Best rating below A-, some general contractors won't accept it. Others maintain approved carrier lists based on claims-paying history and state licensing. This isn't about being difficult—it's about ensuring the insurance will actually pay when you need it.
Additional Insured Endorsements Explained
Here's where it gets technical but critically important. When you're named as an additional insured on a subcontractor's general liability policy, their insurance covers you for claims arising from their work. This is massive. If a subcontractor's faulty electrical work causes a fire, you could be named in the lawsuit. But if you're an additional insured on their policy, their carrier defends you and pays settlements or judgments.
The industry standard endorsements are ISO Form CG 20 10 for ongoing operations and CG 20 37 for completed operations. Many contracts now specify these exact forms. There's also CG 20 32, which provides blanket additional insured status for any party you're contractually required to add. This blanket approach is convenient because you don't need a separate endorsement for each project—the coverage automatically applies wherever your contract requires it.
But here's the catch: just because additional insured status is listed on the certificate of insurance doesn't mean the endorsement actually exists on the policy. Certificates can be inaccurate, outdated, or even forged. Best practice in 2026 is to require a copy of the actual endorsement, not just trust the certificate. When a claim happens, the insurance company pulls the actual policy—and if that endorsement isn't there, you're not covered, regardless of what the certificate said.
One important limitation to understand: additional insured coverage doesn't protect you from your own sole negligence. If you're 100% at fault, your own insurance pays. The additional insured endorsement only covers you for liability arising from the subcontractor's work or their contribution to the loss.
Waiver of Subrogation: Why It Matters
Subrogation is the legal right of an insurance company to go after third parties who caused a loss after they've paid a claim. In construction, this creates a problem. Let's say your subcontractor's employee gets hurt because of something you did. The subcontractor's workers' comp pays the claim—but then their insurance company sues you to recover what they paid. Now you're in litigation with a company you want to keep working with.
A waiver of subrogation solves this. When subcontractors add a waiver of subrogation endorsement to their policies, their insurance company agrees not to sue other project participants. This keeps claims simple, prevents cross-litigation between contractors who need to work together, and maintains business relationships. In 2025-2026, general contractors are increasingly verifying that the waiver of subrogation endorsement is actually attached to the policy, not just checking a box on the certificate.
Waivers come in two flavors: scheduled and blanket. A scheduled waiver names specific parties for specific projects. A blanket waiver automatically applies to anyone the subcontractor is contractually required to provide a waiver to. Blanket waivers are more convenient but typically cost more—adding around 15% to the premium in some cases. Scheduled waivers run about $25 to $100 per endorsement.
One critical warning: before signing any contract that requires your subcontractor to waive subrogation rights, have them check with their insurance agent. Waiving subrogation without the proper endorsement can invalidate their coverage entirely. A quick phone call prevents a catastrophic mistake.
Certificate Tracking and Verification Systems
Collecting certificates of insurance is one thing. Keeping them current is another battle entirely. Policies expire mid-project, subcontractors don't always send renewal certificates proactively, and tracking dozens of expiration dates in a spreadsheet is a recipe for coverage gaps. That's why automated certificate tracking systems have become essential for contractors managing multiple projects and subs.
Modern tracking platforms monitor expiration dates, send automatic renewal reminders, and flag when vendors fail to provide updated certificates. The best ones escalate non-compliance and can even suspend site access if coverage lapses. This isn't overkill—it's risk management. Manual tracking fails at scale, and one missed expiration can cost you everything.
The smartest GCs go beyond certificate collection. They verify certificates directly with the insurance carrier, either by phone or through online verification portals. This catches forged or fraudulent certificates before they become problems. They also request copies of actual policy pages and endorsements, not just the ACORD certificate form. Remember: when a claim happens, the insurance company adjudicates based on the policy language, not what the certificate says.
Keep detailed records for every subcontractor: policy numbers, coverage limits, expiration dates, and copies of all endorsements. Store everything in organized electronic files by project and by vendor. When an incident happens, you need to put your hands on this documentation immediately. The middle of a crisis is not the time to be searching through emails.
How to Implement These Requirements Effectively
Start by building insurance requirements directly into your subcontractor agreements. Specify exact coverage amounts, required endorsements (like ISO CG 20 10 and CG 20 37), waiver of subrogation requirements, and minimum carrier ratings. Don't leave room for interpretation. The contract should spell out that no work begins until you've received and verified acceptable certificates.
Create a prequalification process for new subcontractors. Before they even bid, verify they have the financial stability, claims history, and coverage capacity to meet your requirements. Check licensure, review their current insurance, and confirm their carrier is acceptable. This weeds out problems before you're committed to working together.
Train your project managers and superintendents to understand the difference between certificate holder and additional insured, the importance of endorsements, and when to escalate non-compliance. Even with software handling the tracking, your team needs to know what they're looking at and why it matters. A certificate that lists you as certificate holder but not additional insured provides zero protection.
Managing subcontractor insurance requirements isn't glamorous work, but it's the foundation of running a sustainable contracting business. The time you invest upfront in proper verification and tracking pays dividends by keeping you out of courtrooms and protecting your assets. As requirements continue tightening in 2025-2026, the contractors who stay on top of these details will be the ones still standing when claims happen.
