Writing insurance requirements in a subcontract
A checklist for a subcontract insurance section: coverages, limits, endorsements, certificate holder, evidence timing, and what happens on non-compliance.
A good insurance section in a subcontract or vendor agreement names each coverage and its minimum limit, lists the endorsements you need, says who must be shown as the certificate holder, and states when evidence is due and what happens if it is not. The clearer the wording, the easier it is to check a certificate against it. This page is a checklist, not legal advice: have an attorney and your insurance broker review the final language.
Start with the coverages and limits
List each coverage on its own line with a minimum limit. Commonly required coverages include:
- Commercial general liability (CGL)
- Commercial auto liability
- Workers' compensation, with employer's liability
- Umbrella or excess liability
- Professional liability, for design or advisory work
- Pollution liability, for trades with environmental exposure
Limits are set by contract, project size, and the trade's risk. A common starting point for general liability is $1 million each occurrence and $2 million general aggregate, but many contracts ask for more, and small vendors may be asked for less. Write each limit as a separate number so nobody has to interpret it. The general liability limits guide explains each line. If you rely on an umbrella to meet a total, say so explicitly. See umbrella vs excess liability.
Name the endorsements
Do not write "named as additional insured" and stop. Be specific:
- Additional insured. List who must be covered (owner, GC, property manager, and others), and require coverage for both ongoing and completed operations. Many contracts name the ISO form editions they accept, such as CG 20 10 and CG 20 37, or equivalent. See CG 20 10 vs CG 20 37.
- Waiver of subrogation. State that it applies to general liability, auto, workers' compensation, and any umbrella, as your contract requires. See waiver of subrogation.
- Primary and non-contributory. Say the subcontractor's policy responds first and the GC's own insurance does not share. See primary and non-contributory.
- Per-project aggregate. If you want the aggregate not to be shared with the subcontractor's other work, require it.
Some states restrict how far additional insured and indemnity provisions can go on construction contracts. That is a question for counsel.
Certificate holder wording
State the exact legal name and mailing address that must appear in the certificate holder box. Vendors cannot guess this, and a misspelled entity is a frequent reason for rejection. Also say that the certificate holder is not the same as additional insured, which is its own endorsement. See certificate holder vs additional insured.
Other terms to include
- Notice of cancellation. Require advance written notice of cancellation or non-renewal, and state how many days. Be aware that a certificate alone often cannot create this obligation and carriers differ, so ask your broker how to get it in practice.
- Completed operations duration. Require that additional insured coverage and completed operations coverage continue for a stated number of years after the work is done. The number is a contract decision and may be affected by state law.
- Carrier quality. Many contracts require insurers with a minimum financial strength rating and that are authorized in the state.
- Claims-made policies. If you accept them, require a retroactive date and an extended reporting period.
- Flow-down. Require the subcontractor to impose the same requirements on its lower-tier subcontractors, and to provide evidence on request.
- Deductibles and retentions. State who is responsible and any maximum you accept.
Evidence delivery and timing
Say what must be delivered and when:
- Before work starts or the first payment, a certificate and the required endorsement copies.
- At every renewal, a new certificate, before the old policy expires.
- On request, full policy copies or declarations pages.
Define a response time, such as a number of business days, for fixing a deficient certificate.
What happens on non-compliance
State the consequence plainly. Options include withholding payment, not allowing the vendor on site, treating it as a default, or the right to buy coverage and charge the vendor. Choose what you will actually enforce, and enforce it the same way each time. Consistency matters more than severity.
A checklist to adapt
- Each coverage and limit listed separately
- Additional insured: parties, ongoing and completed operations, form editions
- Waiver of subrogation: which policies
- Primary and non-contributory
- Certificate holder legal name and address
- Cancellation or non-renewal notice
- Completed operations period
- Carrier rating and state authorization
- Flow-down to lower-tier subcontractors
- Evidence timing: start, renewal, on request
- Consequences of non-compliance
Scale it to the job. A small repair vendor needs a shorter list than a subcontractor on a multi-year project.
Check this automatically
Once the wording is settled, ComplySub lets you enter the requirements one time and checks every vendor certificate against them. Vendors upload through a link, with no account, and ComplySub flags gaps such as low limits, missing additional insured, waiver of subrogation, or primary and non-contributory wording, a wrong certificate holder, or an expired policy. It reminds the vendor and their insurance agent, and GCs can start free with up to five vendors.
This guide is general information, not legal or insurance advice. Insurance and licensing rules vary by state, carrier, and contract; confirm what applies to you with your insurance professional, attorney, or licensing board.