You or the sub ABSOLUTELY have to have workers comp on the sub. unless you are rolling the dice and risk everything you have worked for.
I have been a residential contractor for 27 years.
General liability is one thing, and cheap compared to workers comp (WC)
My clients all require me to be fully insured, liabilty and WC.
I have no employees, only about 15 subs.
A few of my subs have WC - My roofer, glazier, Tub refinisher, etc)
My carpet guy, HVAC, 3 painters, etc do not have WC.
Each year an auditor from the WC company comes to my office for an audit.
They go through my books and make a list of all the subs I paid (and the amounts) for that year.
I then present the WC insurance certs for the subs that have WC.
The rest of the subs (and there dollar amount) are placed under my policy.
If these subs did not provide receipts breaking out material vs labor, I have to pay WC on the entire receipt, including material.
There is NO trick to getting out of WC,, I have never had an accident/claim in 27 years, I pay over 28k a year in WC, and it goes up every year.
Also, dont even think about having "personal" auto coverage on your business vehicle, you would just throwing money away and leaving yourself exposed.
One last thing, I have never witnessed 2 guys going in as "partners" to start a construction business that did not end in disaster.
You do not need to have work comp for contractors. That is why you sub things out. You do need it for your employees. Any employee on your payroll, otherwise not contracted.
Each person you subcontract to should provide you with a declaration page of their liability ( if they cause damage ) and health insurance ( if they get hurt ). If someone gets hurt or killed on your job without the insurance. The property can be sued and/ or a lien may be able to be placed on the property. As a contractor you do not want this and you want to protect yourself and especially your reputation from this. You want to be known as doing everything right. I strongly suggest you check with your local laws, state laws, and consult an attorney. Also your local chamber of commerce can help you. Also check with some of the biggest contractors in your area. Give them a call and ask what they do. They are people just like you. Everyone starts somewhere. Looking into this due diligence can save your business and your reputation (which is more important). You should have your own insurance as well, in the event that there is not enough coverage or someone lapses on their insurance. It is not uncommon for people to make the first payment to get documentation and then not pay the rest having no coverage later on.
There is a way that you can be informed if this happens you would have to contact insurance and get permission from the contractor, there are forms to fill out.
As your business grows you learn more things that become necessary, and some things that did not know that you should be doing. What if...?
