Henry Insurance Service insures many types of businesses.  However, we also have a special focus as a “Construction Agency”. Our team has worked to focus on education and attention toward becoming experts in the construction industry. We insure all types and sizes of Contractor. Generally speaking, these fall into two major categories:  Sub-Contractors (“Subs”) and General Contractors (“GC’s”). We insure both. 

The smart general contractor greatly values the work of the quality Sub, since it would be impossible for him to complete a construction project without them.    

While some GC’s “self-perform” some of their work, it is more common for them to subcontract everything.  Thus, coining the description of “Paper Contractor” for many GC’s. They organize the job as project manager, but aren’t actually executing. Because of this working relationship, the percentage insurance cost for a “GC” will typically be much less than a Sub with equivalent revenue.

Think about it. 

The GC actually does NONE of the work and pays a fraction of the percentage of a subcontractor. The reason for the lower rate is because of “Contractual Risk Transfer”.  This is a fancy term for shifting the risk of loss from the General Contractor to the Subcontractor.   

You might say… ”Wow! That really stinks!” 

However, remember that the Subcontractor is doing all of the work and therefore has the most direct control over quality and safety. Subsequently, it makes sense for the Subcontractor to hold the weight of responsibility.  

Consequently, all insurers of General Contractors require the Contractor to implement these “Risk Transfer” procedures.   The basic components of this are: 

1. Subcontract or Master Service Agreement, including an indemnity- Hold harmless provision in favor of the General. 

2. Certificates of Insurance with:

a. Additional Insured in favor of the General.
b. Waiver of Subrogation endorsement in favor of the General.
c. Primary Non-Contributory wording. 

The most important thing to know is that the GC needs ALL of these things from the Sub to have an effective transfer of risk.  

Is this a process you are currently experiencing in your business? As we’ve discussed, our team is specialized in this industry and experienced in finding insurance solutions for General Contractors and Subcontractors alike. We can take the mystery out of the process and walk you through it step by step. Call 225.927.0451 or email us at info@HenryInsuranceService.com to get more information.