Understanding Workers' Comp for Subcontractors

Do Subcontractors Need Workers’ Comp? Here’s What Home Builders Should Know

If you’re a general contractor or home builder, you’ve probably asked: “Do subcontractors need workers’ compensation insurance?” The short answer is: yes—usually. But the details can get tricky, depending on your state laws, contract terms, and the type of subcontractor you hire.

In this post, we’ll break it down and help you stay legally compliant while protecting your business.

✅ Why Workers’ Comp Matters for Subcontractors

Workers’ compensation insurance (commonly called workers’ comp) covers medical expenses and lost wages if a worker gets injured on the job.

For home builders and general contractors, hiring subcontractors without proper insurance creates huge financial risks, including:

• Lawsuits for on-site injuries

• Liability for medical bills or lost wages

• Higher insurance premiums

• Fines and legal penalties for noncompliance

Even if you assume subcontractors carry their own coverage, it’s your job to verify it.

🏗️ When Do Subcontractors Need Workers’ Comp?

Here’s a general rule of thumb:

• If they have employees: Subcontractors must carry their own workers’ comp policies.

• If they’re solo (no employees): Some states allow exemptions, but many still recommend coverage.

• If they’re uninsured: The general contractor (you) may be held responsible for injuries on your site.

👉 Pro Tip: Always check your state’s workers’ comp laws. For example, Florida requires all construction subcontractors to carry workers’ comp, even if they have only one employee.

📋 What Should Home Builders Do?

1. Request a Certificate of Insurance (COI)
   Ask every subcontractor to provide a COI showing active workers’ comp coverage.

2. Verify coverage with the insurance carrier
   Don’t just file the COI—call and confirm it’s valid.

3. Include insurance requirements in your contracts
   Clearly state in writing that all subcontractors must carry workers’ comp and liability insurance.

4. Stay informed on state rules
   Laws vary widely between states. For example:

   • Florida: Workers’ comp required for all construction subcontractors.

   • Texas: No requirement, but contractors can still be held liable.

   • California: Required for all subcontractors, even sole proprietors.

💬 Common Questions About Subcontractor Insurance

Q: What happens if a subcontractor doesn’t have workers’ comp?
A: The general contractor could be financially responsible for any injuries or lawsuits.

Q: Can subcontractors waive workers’ comp?
A: Some states allow exemptions for solo subs, but it’s risky. Check your state laws.

Q: How can contractors protect themselves?
A: Require COIs, check state regulations, and update contracts to require proof of insurance.

📞 Need Help Protecting Your Contracting Business?

At MDI Custom Homes LLC, we work only with insured, licensed subcontractors—protecting your investment and keeping your project on schedule.

⚡ Takeaway for Home Builders

Don’t take chances. Always verify that your subcontractors carry workers’ comp insurance. It’s the smartest way to avoid lawsuits, delays, and costly mistakes.

📢 Need a licensed, fully insured contractor for your next home build or remodel?

Contact MDI Custom Homes LLC today for a free consultation:
👉 Visit Our Website | 📞 Call Us

Do Subcontractors Need Workers’ Comp? A Guide for Home Builders

If you’re a home builder or general contractor, one of the most common—and critical—questions is:

👉 Do subcontractors need workers’ compensation insurance?

The short answer: Yes, usually. But there’s an important exception you should know about: workers’ comp exemption.

In this post, we’ll explain when subcontractors need workers’ comp, how exemptions work, and why it all matters for protecting your business.

✅ Why Workers’ Comp Matters for Contractors

Workers’ compensation insurance (often called workers’ comp) covers medical bills, lost wages, and rehabilitation if a worker is injured on the job.

For general contractors, hiring uninsured subcontractors can create major problems:

• Personal injury lawsuits

• Paying out-of-pocket medical expenses

• Legal fines or penalties

• Job site shutdowns

Even if you assume subcontractors have insurance, it’s your responsibility to check.

🔧 When Do Subcontractors Need Workers’ Comp?

1. If they have employees → YES, they need workers’ comp.
Most states require subcontractors with employees to carry their own workers’ comp policy.

2. If they are solo / no employees → It depends.
Some subcontractors can apply for workers’ comp exemption if they work alone.

3. If they are exempt → They need to show proof.
An exempt subcontractor must provide a certificate of exemption from their state workers’ comp board.

⚖️ What Does Workers’ Comp Exempt Mean?

Being workers’ comp exempt means:

• The subcontractor has filed paperwork with the state.

• The subcontractor acknowledges they have no employees and are not covered by workers’ comp.

• The subcontractor accepts liability for their own injuries.

👉 Example: In Florida, sole proprietor subcontractors can file a workers’ compensation exemption certificate with the Division of Workers’ Compensation.

But here’s the catch:
If a subcontractor without an exemption gets injured on your job site, you as the general contractor could be liable.

Construction subcontractors at work on a home build

Contractor reviewing insurance certificates and paperwork.

Safety First….

🏗️ What Home Builders Should Do

✅ Request a Certificate of Insurance (COI) — or a certificate of exemption if applicable.
✅ Verify coverage with the insurance carrier or state website.
✅ Update your contracts to require proof of insurance or exemption.
✅ Know your state laws.

For example:

• Florida: Requires workers’ comp for subcontractors with 1+ employees; solo subs can file for exemption.

• Texas: Workers’ comp is optional, but contractors may still face liability.

• California: Requires coverage for all subcontractors, including sole proprietors.

Workers’ Comp & Subcontractors

Q: What if a subcontractor tells me they’re exempt?
A: Ask for their official state-issued exemption certificate. Without it, treat them as uninsured.

Q: Can I be held liable if a subcontractor gets hurt and they’re exempt?
A: Usually no, but only if they’ve filed a valid exemption. Always check state laws.

Q: Should I require all subcontractors to have workers’ comp even if they’re exempt?
A: Many contractors do, to protect themselves from unexpected liability.

📞 Need Help Finding Insured Subcontractors?

At MDI Custom Homes LLC, we only work with licensed, insured, or properly exempt subcontractors — so your project stays protected from start to finish.

MDI Custom Homes Subcontractor team standing in front of a new home build.

⚡ Takeaway for Home Builders

Don’t assume subcontractors are covered — verify it.
Whether they carry a workers’ comp policy or hold an exemption certificate, protecting your business starts with due diligence.

📢 Build with Confidence

For quality builds with fully covered subcontractors, trust MDI Custom Homes LLC.

👉 Visit Our Website | 📞 Call Us