# Uninsured Sub-Contractors



## Lesgofishn (Dec 28, 2009)

Hi great site here! I have an important question regarding using uninsured contractors. My brother-in-law has a small construction company and after talking with him a little bit, I found out he uses uninsured sub-contractors. This seems quite risky to me, but I know for certain that this is the way most companies around here do it. My question is would having his subs sign a waiver actually hold up in court if a sub got injured and sued? I see waivers for all sorts of things (summer camps etc) so would the same apply here?

Please don't grill me. I'm just trying to help out my friend without trying to tell him how to run his business. I do not plan to ask him to do things differently than he is now and I don't plan to lecture him. I would just like to suggest a simple solution (a waiver) to minimize his risk if it's possible.

Thanks in advance


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## thom (Nov 3, 2006)

Around here? Here being where, the US, the world, a state, a city, a neighborhood, your dreams?

Country's laws differ as do states and municipalities. Liability is pretty general though. If his subs are uninsured and there is a claim, neither the sub nor the gc are protected and both will be sued and held fully responsible.


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## bwalley (Jan 7, 2009)

Lesgofishn said:


> Hi great site here! I have an important question regarding using uninsured contractors. My brother-in-law has a small construction company and after talking with him a little bit, I found out he uses uninsured sub-contractors. This seems quite risky to me, but I know for certain that this is the way most companies around here do it. My question is would having his subs sign a waiver actually hold up in court if a sub got injured and sued? I see waivers for all sorts of things (summer camps etc) so would the same apply here?
> 
> Please don't grill me. I'm just trying to help out my friend without trying to tell him how to run his business. I do not plan to ask him to do things differently than he is now and I don't plan to lecture him. I would just like to suggest a simple solution (a waiver) to minimize his risk if it's possible.
> 
> Thanks in advance


If you are really a general contractor you would know the answer to your question.

Using uninsured subs is like playing russian roullette, you may get away with it for awhile, but it will cost you dearly when something goes wrong.

Why don't you just hire legally licensed and insured subs?


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## Framer53 (Feb 23, 2008)

thom said:


> Around here? Here being where, the US, the world, a state, a city, a neighborhood, your dreams?
> 
> Country's laws differ as do states and municipalities. Liability is pretty general though. If his subs are uninsured and there is a claim, neither the sub nor the gc are protected and both will be sued and held fully responsible.


 
And the homeowners also!:thumbsup:


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## CarpenterRN (Dec 3, 2009)

I ran into a roofing contractor from out of state about 7 or so years ago who had used uninsured subs for years. Luckily, no one was hurt on his jobs, but that didn't stop the insurance company from suing him for about $300,000 in back comp and liability insurance.


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## Cjeff (Dec 14, 2009)

Can he carry workers Comp for his subs?

In Canada I think it may be possible, but ask workers comp to be sure.


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## wellbuilthome (Feb 5, 2008)

I have a few subs that have worked for me for years and don't have WC or liability insurance now . 
Ive been paying them on the books and taking the taxes out like they are employee's , But paying them a bit extra to make up the difference . We've never had a claim . In years past i could pay a % for WC if some one lost there policy during the Year but the insurance company has been getting real twitchy the last 8 or 10 years . John


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## kubie (Oct 19, 2008)

in WI is is illegal to hire a subcontractor without ins


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## MagicPoolSvcs (Sep 27, 2009)

In Central Florida, new construction has slowed down so code enforcement is cracking down on unlicensed and uninsured contractors.


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## bwalley (Jan 7, 2009)

wellbuilthome said:


> I have a few subs that have worked for me for years and don't have WC or liability insurance now .
> *Ive been paying them on the books and taking the taxes out like they are employee's* , But paying them a bit extra to make up the difference . We've never had a claim . In years past i could pay a % for WC if some one lost there policy during the Year but the insurance company has been getting real twitchy the last 8 or 10 years . John


Sounds like they are employee's and not subs.


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## user55991 (Dec 28, 2009)

yeah the second you take taxes out for them at least in PA they are considered employees..have to be 1099 all the way to be considered subs...alot of companies try to get away with treating people like employees....taking out taxes..low hourly wage, wearing their uniforms and company vehicles but try to say their subs...its a risk...have them get their own insurance and pay them more for that


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## mikebooth (Dec 12, 2009)

*mikebooth*



Lesgofishn said:


> Hi great site here! I have an important question regarding using uninsured contractors. My brother-in-law has a small construction company and after talking with him a little bit, I found out he uses uninsured sub-contractors. This seems quite risky to me, but I know for certain that this is the way most companies around here do it. My question is would having his subs sign a waiver actually hold up in court if a sub got injured and sued? I see waivers for all sorts of things (summer camps etc) so would the same apply here?
> 
> Please don't grill me. I'm just trying to help out my friend without trying to tell him how to run his business. I do not plan to ask him to do things differently than he is now and I don't plan to lecture him. I would just like to suggest a simple solution (a waiver) to minimize his risk if it's possible.
> 
> Thanks in advance


 In Tennesse WC is required by state law. The GC has to have copy of cert. of ins. on file with city for permit to be issued. Most subcontractors do have insurance. The ones that don't swhould not be used under any conditions. I18 forms are not accepted any longer. The roofers are the ones that seem not to have insurance and the reason is they have to pay 40% for their rate. This is very high and hard to overcome.


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## CarpenterRN (Dec 3, 2009)

Nebraska is trying to crack down right now on trade specific contractors that use subs, i.e. window contractors using sub window installers, roofers, etc., to make the "GC", if you will, pay for insurance on these one or two men shows that aren't required by law to carry comp.


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## cbfx3 (Aug 25, 2009)

Around here my main competition is Mexican framers that carry a 850$ "certificate" apparently that is all the GC's need to not have to cover it themselves. The sub has a policy that doesnt cover anything basically.


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## wellbuilthome (Feb 5, 2008)

bwalley said:


> Sounds like they are employee's and not subs.


 Ya , a sub one day and a part time employee the next .


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## AustinDB (Sep 11, 2006)

with my carrier in Delaware, an in person audit was conducted where I provide all info on labor costs including subs. if the sub WC cert is not on file, a charge will be assessed to my policy.


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## FremontREO (Sep 30, 2009)

So true! The audit person for us lost most of the Certs and we got an audit premium of $59,000. I dang near had a heart attack Resent all the certificates and all was good and was able to buy food.:no:


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