Subcontractor Insurance Clause: Sample Language for Your Subcontract
Most disputes about subcontractor insurance trace back to the subcontract: limits that were never written down, an additional insured requirement that stopped at ongoing operations, or no right to hold payment when a policy lapsed. Below is a sample insurance clause with each part explained, so you know what to ask your attorney to include.
A subcontractor insurance clause should set the coverages and minimum limits, require additional insured status for ongoing and completed operations, primary and non-contributory wording and a waiver of subrogation, require the endorsements and not just a certificate, give notice of cancellation, flow the same requirements down to lower tiers, and let you withhold payment if the subcontractor does not comply.
Key Takeaways
- Write limits, endorsements and the completed operations period into the subcontract itself.
- Require the endorsement forms; a certificate alone does not prove coverage.
- Include a failure-to-comply section, which is what lets you hold payment.
- Treat the sample as a starting point. Have your attorney and broker adapt it to each state.
1. Before You Copy Anything
This is sample language to show what a complete clause covers. It is not legal advice and it is not a substitute for a subcontract drafted for your company. Indemnity and additional insured rules vary by state, your prime contract may impose its own requirements that must flow down, and your broker should confirm the limits fit your projects. Bracketed items are choices you need to make.
2. Sample Subcontractor Insurance Clause
Article [X]: Insurance
1. Required insurance
Subcontractor shall obtain before starting the Work, and maintain at its own expense until final completion and for any longer period stated below, the following insurance from insurers authorized to do business in the state where the Project is located and rated A- VII or better by AM Best: (a) Commercial General Liability on an occurrence form, with limits of not less than $1,000,000 each occurrence, $2,000,000 general aggregate applying per project, and $2,000,000 products-completed operations aggregate; (b) Business Automobile Liability covering owned, hired and non-owned autos, with a combined single limit of not less than $1,000,000; (c) Workers’ Compensation as required by statute, and Employer’s Liability of not less than $1,000,000 each accident, $1,000,000 disease each employee and $1,000,000 disease policy limit; and (d) Umbrella or Excess Liability of not less than $[amount] each occurrence and aggregate, following form over the policies in (a), (b) and (c).
2. Additional insureds
Contractor, Owner and [other parties required by the Prime Contract] shall be included as additional insureds under the Commercial General Liability policy for ongoing operations and for completed operations, using ISO forms CG 20 10 and CG 20 37 or their equivalent, and under the Automobile and Umbrella or Excess policies. Additional insured coverage for completed operations shall be maintained for [number] years after final completion of the Project.
3. Primary and non-contributory
The insurance required of Subcontractor shall be primary to, and shall not seek contribution from, any insurance or self-insurance maintained by the additional insureds.
4. Waiver of subrogation
Subcontractor waives, and shall require its insurers to waive by endorsement, all rights of subrogation against the additional insureds under the General Liability, Automobile, Workers’ Compensation and Employer’s Liability, and Umbrella or Excess policies, to the extent permitted by law.
5. Certificates and endorsements
Before starting the Work, and on each renewal, Subcontractor shall deliver a certificate of insurance together with copies of the additional insured, primary and non-contributory, and waiver of subrogation endorsements. Contractor’s receipt or acceptance of any certificate shall not waive any requirement of this Article.
6. Notice of cancellation
Subcontractor shall give Contractor at least 30 days’ written notice before any required policy is cancelled, non-renewed or reduced, and 10 days’ notice for cancellation for non-payment of premium, and shall request that its insurers provide the same notice by endorsement where available.
7. Deductibles and self-insured retentions
Subcontractor is responsible for all deductibles and self-insured retentions. Any self-insured retention above $[amount] requires Contractor’s written approval.
8. Lower-tier subcontractors
Subcontractor shall require each of its lower-tier subcontractors to carry insurance and provide additional insured status, primary and non-contributory coverage and waivers of subrogation equal to those required of Subcontractor, unless Contractor agrees otherwise in writing, and shall collect their certificates and endorsements before they start work.
9. Failure to comply
If Subcontractor fails to obtain or maintain the required insurance or to provide the required documents, Contractor may, without waiving any other right, withhold payment until Subcontractor complies, stop Subcontractor’s Work on the Project, or obtain the insurance and deduct its cost from amounts due to Subcontractor. Failure to maintain the required insurance is a material breach.
10. No limitation
The limits required are minimums. They do not limit Subcontractor’s liability or its indemnity obligations under this Subcontract.
3. Why Each Part Matters
| Part of the clause | Why it is there |
|---|---|
| Per-project aggregate | Without it, a sub working several jobs can use up one aggregate limit on someone else’s project. ISO endorsement CG 25 03 is a common way to provide it. |
| Completed operations term | Construction defect claims often arrive years after the job. Pick a period with your attorney that reflects your state’s statute of repose. |
| Endorsements, not certificates | An ACORD 25 says it confers no rights. The endorsement forms are what actually extend coverage to you. |
| Notice of cancellation | The standard certificate does not oblige the insurer to tell you about a cancellation. See our guide to notice of cancellation endorsements. |
| Failure to comply | This is what gives you the right to hold payment. Without it, a payment hold for expired insurance is harder to defend. |
For the endorsements in sections 2 to 4, see CG 20 10 vs. CG 20 37 and primary and non-contributory vs. waiver of subrogation. For section 6, read our guide to notice of cancellation endorsements.
4. Choosing the Limits
The numbers in section 1 are a common baseline for trade subcontractors on commercial work, not a rule. Raise them for high-risk trades such as roofing, structural steel or demolition, for large projects, and wherever your prime contract requires more. Many GCs keep two or three tiers and attach the right schedule to each subcontract. Our guide to subcontractor insurance requirements by trade has typical ranges.
5. Checking Certificates Against the Clause
A clause only protects you if someone checks each certificate against it, at the start and at every renewal. That is where most programs break down: the requirements live in the subcontract and the certificates live in an inbox.
- Enter the clause’s coverages, limits and endorsement requirements as a requirement template, one per risk tier.
- Each subcontractor uploads their certificate from one link, and their broker can send it directly.
- SubDoc reads the certificate, flags limits below your minimums and missing additional insured, waiver or primary and non-contributory, and your team approves.
- Your team is alerted before policies expire, and invoices from a non-compliant sub cannot be scheduled for payment, which is section 9 in practice.
Frequently Asked Questions
Required coverages and minimum limits, insurer rating, additional insured status for ongoing and completed operations, primary and non-contributory wording, waiver of subrogation, how and when certificates and endorsements are delivered, notice of cancellation, responsibility for deductibles, flow-down to lower tiers, and what happens if the subcontractor fails to comply.
Long enough to cover the period in which a claim about the finished work can still be brought. Many contracts require additional insured coverage for completed operations for a set number of years after final completion, often three to ten, chosen with your attorney with the state's statute of repose in mind.
No. A certificate summarizes coverage, and it says on its face that it confers no rights. Your clause should require the endorsements themselves, such as the additional insured and waiver of subrogation forms, and say that accepting a certificate does not waive any requirement.
Not safely. Anti-indemnity statutes in many states limit what an indemnity clause, and in some states additional insured coverage, can require, and workers' compensation rules differ by state. Keep one template, and have counsel adjust it for each state you work in.
A common baseline is general liability of $1,000,000 per occurrence and $2,000,000 aggregate, auto liability of $1,000,000, statutory workers' compensation with $1,000,000 employer's liability, and an umbrella sized to the trade's risk. Higher-risk trades and larger projects need more. Our guide to requirements by trade has typical ranges.
Related Guides
Turn your insurance clause into a checklist
Enter the clause's limits and endorsements once as a requirement template, and SubDoc checks every subcontractor's certificate against it. Free for up to 3 vendors.