Utah General Contractors - Business and Law Practice Exam

Should prime contractors verify that their subcontractors have their own general liability and workers' compensation insurance?

1. Yes

2. No

3. Only if required by the contract

4. Only for large projects

The correct answer is: Yes

Verifying that subcontractors have their own general liability and workers' compensation insurance is crucial for a prime contractor. This practice protects not only the contractor's business from potential liabilities but also ensures compliance with legal requirements and risk management protocols. If a subcontractor does not have appropriate insurance, the prime contractor may face financial repercussions in the event of accidents, injuries, or damages occurring on the job site. By securing proof of insurance, the prime contractor can avoid liabilities that may arise from the subcontractor's actions, as well as demonstrate due diligence should any legal disputes arise. While some may think that verification could be contingent upon the requirements of the contract or the scope of the project, ensuring that subcontractors are adequately insured is a best practice that should be uniformly applied, regardless of project size or contract stipulations. This proactive approach enhances overall security and stability for the contractor’s operations and mitigates risks effectively.