Who’s responsible when there is a claim involving a Subcontractor?
During the Winter, many Snow and Ice Removal professionals use Subcontractors to plow snow, apply salt and move snow. So, who is responsible for claims caused by subcontractors who are tasked with the above responsibilities?
Here are some common scenarios involving a Snow Removal Subcontractor:
Snow Removal by Truck Owned by Subcontractor - If a subcontractor is using their own truck and have a claim involving injury or property damage, the owner of the truck is usually “Primary” and the Subcontractors insurance will be triggered first in a claim for a third party. The Commercial Auto Liability insurance of the contractor that hired them could be “excess” and triggered second.
Snow Removal by Truck Owned by Contractor - If a subcontractor is using a contractor’s vehicle to plow snow and has a claim involving injury or property damage, the contractor is responsible as the owner of the truck. The contractor would be the “Primary” and the Subcontractors Commercial Auto Liability insurance as driver is “Excess”.
Snow Removal by Equipment Owned by Your Subcontractor - If a Subcontractor is using their own equipment and causes Injury or Property Damage to your client or their property, again, the Subcontractors General Liability insurance is triggered first as “Primary” and the contractors insurance is secondary as “Excess”.
Snow Removal by Equipment Owned by Contractor - If a Subcontractor is using a contractor’s equipment and causes Bodily Injury or Property Damage to your client or their property, the Subcontractors General Liability insurance is triggered first as “Primary” and the contractors insurance is secondary as “Excess”.
Often Subcontractors are needed quickly and immediately for the snow season or a snow event, especially if another subcontractor is a “No Show” a few hours before they are needed. When that happens the owners of landscape companies often overlook their guidelines for Subcontractor insurance requirements just to get the job done. However, this comes with great risk. Too many times, subcontractors cause property damage to cars, gates, canopies and more on your clients premises while using vehicles or equipment, whether owned by them or you. If they have no insurance, the responsibility falls back on your company and your insurance carrier.
The constant challenge is how to juggle requiring Subcontractors to have proper limits for Commercial Auto Liability insurance, as well as Commercial General Liability insurance, and not enforcing the requirements to save them the extra cost. But the saving to your subcontractor could be soon forgotten when claims on your policy from uninsured subcontractors cause your premium to be increased or your insurance to be cancelled.
Commercial Auto Liability protects your business while you or your subcontractor are plowing your customers lot during the day or night. It protects you from the property damage or bodily injury that you could be legally liable for causing.
Commercial General Liability protects you or your subcontractor if a person trips or falls the next day after the snow event and you or your subcontractor are no longer plowing at the jobsite.
To avoid larger increases in your business insurance, it is a good practice to make sure all subcontractors have proper Commercial Auto Liability and Commercial General Liability and name your insurance company as an Additional Insured.
Having a Subcontractor Management Plan in place also makes it easier to gather required documents from your subs before they start working for your company.
For questions concerning Snow Plow & Ice Removal Risk or to learn how you can save on your premiums, please contact me at 440-537-2292.