How it works — step by step
Proper risk transfer ensures that when a subcontractor causes damage or injury, their insurance responds — not yours. It requires three documents working together: the sub-contract, the COI, and the actual endorsements. If any link breaks, the risk flows back to the GC.
The Risk Transfer Flow
Before any work begins, the sub-contract must define exact coverage the subcontractor is required to carry. Everything else is verified against it.
Commercial GL · Auto Liability · Workers' Comp · Employers Liability · Excess/Umbrella
GC named as Additional Insured · Primary & Non-Contributory · Waiver of Subrogation
The COI is proof of insurance — but it is not the policy and does not guarantee coverage. Every field must be checked against contract requirements.
↶ COI must loop back to the Sub Agreement. Every coverage type, limit, and named insured on the COI must match exactly what the contract requires. Any mismatch means the sub is out of compliance.
This is where most risk transfer fails. Without the endorsement attached to the policy, Additional Insured status is unenforceable at claim time.
Covers claims from the sub's work while actively on the job site. Required from day one.
Covers claims after work is finished. Required for years post-completion. Frequently missed.
↶ Endorsements loop back to the Sub Agreement. The endorsement language must satisfy the exact terms written in the contract. If P&NC is required and the endorsement doesn't reflect it, risk transfer is incomplete.
The COI and endorsements only tell part of the story. Exclusions and GL rating pages reveal hidden gaps that won't appear anywhere else — and could leave your client fully exposed at claim time.
A sub's policy may exclude the exact type of work being performed. None of this appears on the COI.
If the sub's actual scope isn't listed, the insurer may deny the claim even if the policy appears active.
Compliance must be maintained continuously. Policies expire, subs change insurers, and projects run long.
Request updated COIs and endorsements 30 days before any policy expiration.
Confirm the sub maintains completed operations AI for the full contract period — typically 2–5 years post-completion.
When all documents are in place, verified, and current — the subcontractor's policy responds first. The GC's policy is protected and claims are handled by the party responsible for the work.