What insurance obligations does a contractor have to his subcontractors?

Simple summary for complex issue

In theory when a PRIME contractor hires a SUBCONTRACTOR, and the SUBCONTRACTOR causes a loss, damage, injury, etc., then the SUBCONTRACTOR's insurance should pay the expenses related to that loss. If the PRIME contractor causes the loss, then the PRIME contractor's insurance will pay for the loss.

If the SUBCONTRACTOR does not have insurance (lapsed, fake certificates, etc.), then the PRIME contractor's insurance will have to pay for the loss even when caused by the SUBCONTRACTOR.

In the real world, all parties get sued after a damage or injury loss. Later they sort out which party or parties were at fault. Most Prime-Contracts now contain language that makes the PRIME CONTRACTOR indemnify and holdharmless the owner, meaning pay for their costs also. Likewise, most SUB-CONTRACTS now contain a language that makes the SUBCONTRACTOR indemnify and holdharmless the other parties.

These are important and tricky legal concepts and should not be taken causually.

Proffessional advice is always recommended.

Some insurance companies will try to deny coverage if the PRIME contractor did not have an "indemnity/holdharmless" agreement in the sub-contract.

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