The Hidden Risk of Hiring Uninsured Workers
When you bring in someone to help on a project, it might seem like a simple arrangement: you hire them, they do the work, and you pay them. But here’s the big catch—if they get injured while on the job, your insurance company is the one on the hook.
Because these individuals don’t have the proper insurance or licensing to perform the work as true independent contractors, liability falls back on you. In the eyes of the law, you’re the licensed contractor authorizing the work. That means if something goes wrong, you’re responsible for paying for their injuries.
Why Your Insurance Company Gets Involved
Your insurance company doesn’t just step in out of goodwill—they’re legally required to defend you. When a claim arises, the injured worker will sue, and your insurer will work to protect you. But here’s the problem: your premiums can skyrocket, or worse, you may face non-renewal if too many claims are tied to uninsured subcontractors.
The Financial Consequences
If you think skipping insurance checks saves money, think again. One serious injury could cost tens of thousands of dollars—or more. By hiring uninsured workers under your license, you’ve essentially accepted financial responsibility for their safety. That’s not just risky, it’s potentially devastating to your business.
How to Protect Yourself
The best protection is prevention:
- Always verify that subcontractors carry the proper insurance.
- Confirm they hold the licenses required for the work they’ll perform.
- Keep thorough documentation in case of an audit.
A few minutes of due diligence can save you thousands of dollars and the stress of dealing with lawsuits and insurance claims.
Final Thoughts
I’ve seen countless situations come up during audits where contractors learned this lesson the hard way. Don’t wait until you’re facing an ugly audit or a lawsuit to protect yourself. Take this as an opportunity to safeguard your business now.
If you have questions or need guidance, reach out—I’ve helped many contractors through these exact challenges and would be glad to help you avoid costly mistakes.
