This means that as a subcontractor, you can be held liable for claims of property damage or bodily injury resulting from a defect in your work. It is also critical to maintain this coverage into the future; failure to do so could lead to a breach-of-contract lawsuit brought by the contractor or other party.
It is important to understand this commitment when signing the contract – the insurance commitment doesn’t end with the project. Further, in the event of a large claim, the subcontractor could be faced with a substantial increase in premiums on the policy.
What can you do to reduce the risk of a claim being filed against you for a defect in your completed work? To avoid litigation, it is crucial to know local regulations and adequately document proper performance. Know your company’s documentation practices relative to each subcontract, and carefully keep records of all processes.
Respecting the Contract
It is crucial for subcontractors to respect this requirement if included in the contract. Failure to do so could result in breach-of-contract lawsuits. Naming additional insured parties can be complicated, and it is very important to ensure that your contractual obligations are satisfied.