If you work as a subcontractor in California, you've probably received a subcontract agreement with an insurance section full of terms like "additional insured," "primary and non-contributory," and "waiver of subrogation." Here's what all of it actually means — and how to make sure your policy satisfies it before you sign.
Why GCs Require Sub Insurance
General contractors require subs to carry their own coverage for a simple reason: legal exposure. Under California law, GCs can be held vicariously liable for a subcontractor's work, and California Labor Code Section 2750.5 creates a presumption that workers on a licensed contractor's job are employees — unless the sub holds their own contractor's license and their own workers compensation. Beyond the law, GCs simply want your carrier paying for your mistakes, not theirs. Requirements that flow down from the project owner or lender get passed along to every sub on the job.
Standard GL Requirements From California GCs
| Coverage | Residential GC | Commercial GC | Public Works |
|---|---|---|---|
| GL per occurrence | $1,000,000 | $1,000,000 – $2,000,000 | $2,000,000 |
| GL aggregate | $2,000,000 | $2,000,000 – $4,000,000 | $4,000,000 |
| Products/Completed Ops | $2,000,000 | $2,000,000 – $4,000,000 | $4,000,000 |
| Auto liability | $1,000,000 CSL | $1,000,000 CSL | $1,000,000 CSL |
| Workers comp | Statutory | Statutory | Statutory |
| Employers liability | $1,000,000 | $1,000,000 | $1,000,000 |
| Umbrella | Sometimes | $1M – $5M | $2M – $5M |
Beyond limits, most contracts also require specific endorsements: Additional Insured status naming the GC (both CG 20 10 for ongoing operations and CG 20 37 for completed operations), primary and non-contributory wording, a waiver of subrogation on GL and workers comp, and 30 days' notice of cancellation.
Decoding the Contract Language
This sets your minimum GL limits — your policy needs to meet or exceed both numbers, not just one.
This requires three things at once: AI status, primary/non-contributory wording, and coverage for both active work and work you've already finished. Missing any one of the three means you're not in compliance.
Your carrier gives up the right to sue the GC to recover a claim payout, even if the GC contributed to the loss.
You need to keep your policy (or a tail) active for years after the job ends — construction defect claims often surface late.
What Happens If Your Policy Doesn't Comply
- The GC may remove you from the job site until you fix it
- You can forfeit unpaid draws until you're compliant
- The GC may buy "contingent insurance" on your behalf and charge it back to you
- In a lawsuit, if your coverage doesn't respond because of a non-compliant policy, you're personally exposed
How to Verify Your Policy Meets Requirements
Send the insurance section of your subcontract to your broker before you sign. We review it line by line and confirm your policy has the right limits and endorsements — and if it doesn't, we add what's needed, often the same day, then issue a certificate of insurance showing compliance. Never assume your existing policy automatically meets a new requirement; the details matter.
Common Issues We See
- Policy is missing completed operations coverage, or it's sub-limited well below the general aggregate
- AI endorsement is only CG 20 10 (ongoing) and missing CG 20 37 (completed operations)
- COI says "primary and non-contributory" but the actual policy doesn't have that endorsement
- Limits too low for the specific project
- Umbrella doesn't "follow form" — it doesn't actually extend GL and auto coverage the way the contract requires
Frequently Asked Questions
Talk to your broker before declining the job. Often a small umbrella policy is far cheaper than raising your primary GL limits, and can satisfy a $2M-$5M requirement at a fraction of the cost.
Usually your current policy can be endorsed to meet the requirement — added limits, additional insured status, or specific wording can typically be added to an existing GL policy rather than requiring a brand new one.
It's the part of your GL policy that covers claims arising from your finished work, not just while you're actively on site. Construction defect claims often surface years after a project is done, so this coverage matters as much as your active-operations limits.
It's common on larger commercial projects and public works. The underlying GL is usually $1M-$2M, with a commercial umbrella layered on top to reach the total requirement — that's typically more affordable than raising primary GL limits that high.
Many subcontracts require 3+ years of completed operations coverage after project completion, reflecting California's statute of limitations for construction defect claims (4 years patent, 10 years latent).
If you have any employees, no — it's legally required under CA Labor Code 3700. Even as a sole proprietor with no employees, most GCs require proof of workers comp or a signed exemption waiver before letting you on the job site.