# How much insurance should my subs have?



## American (Sep 11, 2003)

I have read through many threads regarding what types of insurance to have, but a question in my mind remains: how much insurance should I require of my subs? If I require my subs to have commercial auto insurance, does coverage for snow plowing need to specified on the certificate of insurance? Do you even require commercial auto insurance versus a standard policy. How much auto liability and physical damage insurance do you require?


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## Adams plowing (Oct 8, 2003)

You'll probaly want your subs to carry both commercial auto and a general liability insurance which specificaly states plowing this way there is both coverage for if they hit something aswell as having the general liability ins. incase of a slip/fall type claim on a plowing job they did.


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## CPSS (Mar 15, 2002)

You might also talk to your own insurance agent and ask him if you should have your subs policy name you as "additionally named insured".


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## wyldman (Jan 18, 2001)

Subs should have their own auto,and basic snowplowing insurance.They don't need any big liabilty stuff,as that would be your responsibility,as you hold the contract for the property.

If they do damage to the property with their truck,or have an accident on site,their insurance takes care of it.If someone slips and falls on the property that you sub out to them,then your insurance company pays.At least that's the way it's done here.


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## American (Sep 11, 2003)

The plot thickens: I just got off the phone with my agent who tells me that my subs cannot purchase a comprehensive general liability policy (CGL) for under $500,000 in coverage. They are also suggesting that I only work with subs that carry their own CGL (to protect me against slip and fall accidents at the customer site) and have workers comp insurance (lest they attempt to be treated as my employee should they have an accident requiring medical attention while snowplowing). They are concerned about independent contractor status for the subs without these coverages at audit time! That means one thing: more insurance money out of my pocket. I have read on this site that some contractors are only requiring 100K from their subs. What is the benefit of having only 100K if I have 1 million? Through what company are the subs able to buy such policies for only 100K in coverage? My agent says insurance company's won't write CGL policies for 100K because they carry too much risk. I have also read that others are not requiring CGL. Based on what I know as of today, it would seem I have little choice in the matter.


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## SnoJob67 (Sep 3, 2001)

Your agent gave good advice. We require our subs to carry $1,000,000 CGL Per occurence...in some cases more. Also, we are listed as an additionally insured party. We are to be informed, in writing, within 10 days if that policy is cancelled. 

A policy such as that is relatively inexpensive in the big picture. If you have someone that can't afford it, split the cost if you know they are dependable, etc. Maybe pay for it and have it come off the top of their earnings? Lots of options, but I don't think subs without proper insurance is one of them.


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## Mick (May 19, 2001)

I would wonder about the purpose of the Workman's Comp, though for someone who doesn't have employees. You can't cover yourself under WC and there are many other ways to demonstrate that a person is a contractor vs employee. At least in this state, the price is based on wages paid. Requiring Workman's Comp for a sub simply makes no sense.


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## American (Sep 11, 2003)

The plot thickens further: My agent now says that if I have a large % of subs that do not have at least 500K in comprehensive general liability insurance, that my company will likely become too much of an underwriting risk for them and I run a huge risk of having them drop me. The insruance company is Secura. Has anybody else had this problem? My agent also says that they have checked and not one of the carriers they deal with will write a 500K general liability policy or even a commercial auto liability policy for snowplowing for a "one-truck" operation (someone who does it for some extra income that is not otherwise self-employed and would have coverage) saying that it is too much risk. How in the world can I ever use a one-truck operator as a sub?


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## BWinkel (Oct 23, 2003)

As a GC in Maine, I am audited yearly by the worker's comp insurance company. They require me to produce certificates for all subcontractors. They pay special attention to subcontractors involved in the same trade as me - carpentry. If I can't produce a certificate for them I can be liable for worker's comp as well as general liability exposure. Sounds to me that you either have to hire independent contractors with insurance or cover your uninsured one truck operators under your general liability and worker's comp.


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## Joey D (Jan 6, 2002)

If your plowing only consists of subbing for another , why have liability? I have high comm. coverage ploicy because I do plow and a normal fender bender can be far greater just from the plow on the truck. Where would a seperate liabilty ploicy come into effect?


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## Mick (May 19, 2001)

"Completed Operations" ie: you finish plowing and leave. A person slips on this property and incurs several thousands in medical bills. This person will sue the property owner, the GC and you for direct medical bills and punitive damages.

A judgement will create a debt against current and future assets. Without GL insurance you stand to lose everything you have or will have.


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## Joey D (Jan 6, 2002)

On my plow contact it states I must have 100/300 thousand coverage for damages to any property by my truck. How can I cover myself from this happening? I didn't want to buy liability iss. so thats why I sub.


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## CARDOCTOR (Nov 29, 2002)

cant you just raise your truck insurance policy





cardoctor


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## American (Sep 11, 2003)

Thanks guys for all the replies. As it turns out, my insurance company says that the rule of thumb they will use to determine if a sub is truly independent is how much insurance coverage they have. If they have a minimum of 500K in COMMERCIAL AUTO liability insurance AND 500K in GENERAL LIABILITY insurance, then all I have to pick up is about a 1% premium for gen. liability ins. on the subcontractor expenses, regardless of the extent of their coverage. However, if they do not have general liability ins. and/or lack the 500K in comm'l auto liability coverage, for worker's comp purposes, they are considered an employee and I MUST pay workers comp (about 8%). It also means that my one-truck operators will get paid less because they will be taking a deduction for insurance. I have subs that have been plowing for me for years who will not be happy. Until this point, the insurance company never asked for certificates of insurance nor charged me for the subs who lacked the needed coverage. I frankly didn't know that I owed premium in these situations. Does anyone have any further experience with snow subs and how to legally avoid paying for or deducting workers comp for my under-insured subs?


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## CPSS (Mar 15, 2002)

Mick made a point I think many are missing. "Completed Operations" in the GL policy is the most important part of the policy. If you damage someones property while plowing, any regular vehicle policy will cover the damages. It's just like you causing an accident, the damage will be covered. The *REALLY BIG* exposure is the slip and fall accident after you have plowed, salted, or didn't plow. I mentioned earlier about a woman i know who slipped in a parking lot during an ice storm, broke her elbow, sued and got thousands.

If you were the plow guy who didn't "clear" the pavement bare, you will also be named in the suit, or brought into the action by the company that insures the property. Even if you win in court, which you probably won't, you will be responsible for your own legal fees. Around here even small law firms charge $150 per hour. Thats for all billing, phone calls, meetings, brief preparations, court and travel times.


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## American (Sep 11, 2003)

I agree with CPSS 100% on the emphasis on GL insurance. But what then is the benefit of having a commercial auto liability policy versus a regular, run-of-the-mill auto liability policy if you are covered in terms of customer property damage anyway?


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## Adams plowing (Oct 8, 2003)

the reason to have commercial auto instead of regular auto is because if you are using a vehicle for business purposes especially in our business that means you are frequently using your vehicle and have a better chance of having a claim against your insurance therefor you pay a higher rate that a normal auto driver would pay seeing as he only maybe spends say 1 hour a day in his car vs working a 24 hr day plowing basically its a way for the ins company to make more money. but if ya think thats stupid and ya want to just switch to a reg auto policy to pay less $ in premiums ya would probably want to think again because if they find out the vehicle was being used for a business and was not properly insured as such they can refuse to pay the claim to repair damage and they'll prob drop ya at the same time.


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## BWinkel (Oct 23, 2003)

I don't believe a regular run of the mill auto policy would cover anything that happens during commercial snow removal activities. I had a regular policy until I had to insure employees to drive my work vehichles. When I checked into getting my current business auto, my agent told me my old regular policy would not cover snowplowing.


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