A General Contractor (GC) is the contractor with the main responsibility for the construction, improvement, or renovation project under contract, and is the party signing the prime construction contract for the project. The general contractor is the person or entity who hires all of the subcontractors and suppliers for a project. It is an individual, partnership, corporation or other business entity that is capable of performing construction work as a contractor with overall responsibility for the satisfactory completion of a project using its own forces to perform or supervise part of the work.
It is common practice in the construction industry for a contractor (the general contractor) to hire other contractors (the subcontractor) to perform some portions of the project.
As a GC it is imperative that you transfer the risk and use a standardized written contract with your subs that includes:
- Indemnification or hold harmless clauses
- A general liability policy of a least $1,000,000 combined single limits (CSL) or equal to your policy limits
- Insurance coverage through a carrier with a A- or better rating by AM Best
- General Contractor listed as an additional insured that includes completed operations hazards
- Primary and non-contributory wording in your favor
- A Waiver of Subrogation in the General Contractors favor
- A Safety Program and job site controls
- An effective Document Management Program
- A lawyer review of the contract prior to use
Hold Harmless Agreements
- Most all construction contracts contain an indemnification or hold harmless clause that specifies who responds in the event of a problem in the work
- Generally, these clauses favor the GC as the subcontractor agrees to indemnify and hold them harmless from problems arising from the subcontractor’s operations.
Three Types of Hold Harmless Agreements
- Limited Hold Harmless Agreements – covers only the negligence of the subcontractor doing the work
- Intermediate Hold Harmless Agreement – covers the joint negligence of the subcontractor and the general contractor (either party could be negligent)
- Broad Hold Harmless Agreement – covers the sole negligence of the general contractor as well as the negligence of the subcontractor (both parties could be negligent)
Note: In some jurisdictions, intermediate and broad hold harmless agreements are considered unenforceable and against public policy. If the GC uses one of these two hold harmless agreements and a court rules unenforceable, then the subcontractor escapes their obligation and it falls back on the general contractor.
To protect your interest, as a general contractor, you should only use subcontractors with an ability to meet their current and potential future obligations.
If you do not have a Loss Control, Safety or Document management Program in place, we can help.
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