When you hire a subcontractor to complete a job, typically you hire someone you know. Someone who has a reputation for getting the job done well and on time. Still, there may be moments over the course of your career as a general contractor where you have to hire subcontractors that you are not familiar with. In those instances, you will need to be especially careful because, without the proper coverage, you could be found liable for the actions of your subcontractors. Here’s what you need to know about an indemnity policy.
What is an Indemnity Policy?
Contractors indemnity insurance was designed back in the 1990’s to combat certain limitations in liability insurance that left contractors exposed to unnecessary risk. Granted this risk was a little out of the ordinary as contractors began to take on more design build projects. Subjectivity, frustrated consumers and poor work by subcontractors all contributed to the creation of contractors indemnity insurance.
An indemnity policy will protect you, the general contractor, from liability that stems from an action or omission taken by your subcontractor. Long story short, if your subcontractor doesn’t follow through on their contractual obligations, you will not be held financially accountable. These policies aren’t entirely infallible and still have certain limitations that you will want to be aware of. Policy limitations are typically a result of negligence or failure to provide time notice of a claim but, such restrictions are usually dependent on your provider.
Who Needs an Indemnity Policy?
If you work as a General Contractor you will likely need some sort of contractors indemnity insurance. Construction jobs are very rarely a one man effort. It takes a team to get your project completed but, there is that saying that a team is only as strong as its’ weakest link. And your weakest link could ultimately end up costing you much more than just a game. An indemnity policy will keep you from having to bear the financial burden of your subcontractors when they manage to get into trouble.
If you have any further questions about an indemnity policy or if you would like to schedule a consultation please feel free to give us a call at 1-800-649-9094. We look forward to hearing from you!