Business insurance


Contractor vs. Subcontractor: Know the Difference

Sep 13, 2022 · 6 minutes to read

Electrician at work on a residential electrical system.

A construction site is a busy place filled with many people working together to get the job done. Contractors and subcontractors bring different yet equally important skills to each project. However, it may not always be obvious who is who at first glance.

This article covers the difference between contractors and subcontractors, including the tasks performed by each and why both may want to consider business insurance.

What is a contractor?

A contractor is an individual or business hired to complete a specific project or on a freelance basis. Contractors are hired directly by the client or business owner they will be working for.

Building contractors obtain construction contracts and deliver on them. They typically have some construction experience, often within a specific trade (carpentry, plumbing, electrical, etc.). Though a contractor typically has some trade experience, they may be hired to oversee an entire project, including areas they do not specialize in.

You will need a general contractor or specialized trade license in many states to be hired as a contractor. Licensing requirements vary from state to state (and sometimes within local jurisdictions). Always check the licensing laws in your area before you begin accepting clients or contracts to ensure you are legally able to work as a contractor.

What do contractors do?

Generally speaking, a contractor’s job is to:

  • Secure clients and project contracts
  • Deliver finished projects

Contractors typically work under a contractual agreement to deliver services, labor, or materials for a project. To secure these job contracts, they must first establish a strong professional reputation in the construction industry and advertise their services.

A building contractor may work on smaller projects themselves but often delegate work to others on larger, more complex jobs.

What is a subcontractor?

A subcontractor is an individual or business hired to carry out work for a contractor. Subcontractors are hired by the contractor and rarely interact with the main client. They are liable to the contractor who hired them.

On a construction site, subcontractors are typically the ones to do the physical work on a project. You will typically need a specialized trade license to be hired as a subcontractor. Licensing is one way for the contractor hiring you to ensure you have the skills necessary to do the job and that you understand safety and best practices within your trade.

What are a subcontractor’s duties?

The duties of a subcontractor will vary, depending on exactly what they’ve been hired to do. Subcontractors are brought on to a project for their specific knowledge or skill. Therefore, the duties they carry out will be related to their individual expertise.

For example, a general contractor may hire separate subcontractors to work on the project’s plumbing, electrical system, and carpentry elements.

Can a subcontractor hire another subcontractor?

Managing risk is part of a general contractor’s job. Whenever they bring on a new subcontractor, they are also taking on risk. For this reason, the agreement you sign with a contractor may prohibit certain activities, including barring subcontractors from hiring their own subcontractors.

When subcontractors hire other subcontractors, it can become harder for the general contractor to control the project. Delays and other problems could result, including a lawsuit that affects everyone up and down the chain of command.

If you are a subcontractor, check your contract before hiring another subcontractor. Even if it is allowed, it may not be the best course of action. You might want to speak with the contractor who hired you or the project manager to work out issues regarding potential delays and lack of skill or expertise. You might find that further subcontracting is not necessary or that the general contractor prefers to hire additional subcontractors themselves.

Subcontractor vs Contractor recap

There are key differences between contractors and subcontractors. Here’s a quick breakdown to sum up what we’ve discussed.

Contractors Subcontractors
Brought in to complete a specific project or ongoing freelance work Brought in to help complete a specific project
Oversee an entire project (or part of one) and may do some physical work themselves Complete physical work related to their specific trade or specialty knowledge
Hired directly by companies or business owners and are liable to them Hired by contractors and are liable to them
May be required to hold a general contractor or skilled trade license to work May be required to hold a skilled trade license to work

Contractor insurance for your small business

Both contractors and subcontractors consider different types of business insurance to help protect themselves while they work. The policies you need will depend on the work you do and how your business is structured.

Contractor insurance

As a general contractor, you may need or want policies such as:

  • General Liability – This policy may be required to obtain a contractor license, lease commercial workspaces, or be hired by a client.
  • Professional Liability – Coverage may be considered to cover mistakes in your or a subcontractor’s work, plus missed deadlines and other project issues.
  • Business Owner’s Policy – These insurance packages can help you prepare for business interruptions, equipment breakdowns, and other risks your business may face.
  • Workers’ Compensation – This coverage may be required by law if you have one or more employees (though subcontractors are often not considered employees for these circumstances).

Subcontractor insurance

As a subcontractor, you may face fewer on-the-job risks than a general contractor. General Liability insurance may be necessary to get and keep your trade license, but you may not be required to have Workers’ Compensation if you are the only employee at your business.

However, if you frequently bounce between the roles of contractor and subcontractor on different projects, it might make sense to maintain coverage between projects to ensure you are always covered.

BizInsure for your contracting business

Running a construction contracting business is hard work, but finding insurance doesn’t have to be. BizInsure has simplified business insurance, making it easy and fast to buy policies.

Compare coverage from top-rated insurers and get protected instantly, all in a matter of minutes. We’ll even send your proof of insurance by email right away, so you can get back to what you do best!

Start your online quote now!

*As with any insurance, coverage will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.
The number of quotes provided varies between products, occupations and other underwriting factors determined by the insurers.
© Copyright 2022 BizInsure LLC, 2015 ALL RIGHTS RESERVED BizInsure LLC; CA DBA: Simple, Smart, BizInsure Insurance Agency LLC; NY DBA: BizInsure Services LLC; NH DBA: Simple, Smart, BizInsure Insurance Agency; PA DBA: BizInsure Services LLC. 2950 Buskirk Ave Suite 300, Walnut Creek CA 94597. License #0H81929

Get Free Online Quotes and get coverage instantly

The coverage you need for your business.

Business insurance is divided into different policies. We offer 4 types so it's easy to design the coverage that fits your business.

Professional Liability Insurance

Get a quote

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Get a quote

Let's find

The coverage you need for your business

Professional Liability Insurance

Get a quote

General Liability Insurance

Get a quote

Business Owner’s Policy (BOP)

Get a quote

Workers Compensation Insurance

Get a quote

bizinsurance makes purchasing Business Insurance...SIMPLE!
Andrea W.
Great quality of Service ,faster and convenience way to pay at most. Thank you for your Service to my Healthcare Facility .
Quick and easy!!!!
Great service! Easy process and very informative representative. Andrea was great and very patience with our process. I would recommend using them!!
Terrance R.
Always and easy process. Thanks!
Gerald S.
Renewal was quick and easy online
Angelita K.
I had a great experience working with Andrea from BizInsure. She was extremely knowledgeable, helpful, and responsive throughout the entire process. She guided me through the different options available and helped me find the perfect home care professional liability insurance policy that suited my needs. Her professionalism and expertise made the entire experience smooth and hassle-free. I highly recommend working with Andrea and BizInsure for all your insurance needs.
Juliette S.
Easy to submit an application and to get quotes
Simone S.
I had the most pleasant prompt and professional experience of my life with Bizinsure. Everything was completed in record time, at an unbelievable cost…and my certificate of Insurance was promptly emailed to me. Most of all it was effective immediately. No hassle no back & forth, just great service highly recommend to all small businesses.
Marcia S.
advanced U.
Great service. Very professional and cordial. Thanks
Jeremiah U.
BizInure has been a great company for our insurance needs. I wish customers services was 24/7, that would make it a five stars
Novilette L. J.
Easy to navigate what you need. Always notify ahead of renewal!
Athena T.
This is the best company I have ever worked with. They are professional and get you exactly what you need. I highly recommend them!
Jim P.
this is really easy
Riaz R.
Andrea was very useful and professional. I will be recommending Biznsure to my friends that need business insurance. Keep up the good work. I wish the agency also offers auto insurance and whenever you do I will be one of the first to sign up as sign of my appreciation.Mike Okonkwo.
Mike O
Kalab was excellent. Great, great Agent. Every step was organized and well planned. I WILL recommend your firm to anyone. Thank you...
Easy to renew Policy
Plain S.
Great total experience. The agent was professional, knowledgeable,and a pleasure to work with. The fastest business insurance purchase I've ever experience. I highly recommend Bizinsure.
Tony W.
Communication was excellent and the process was easy.
Jessie R.
I have been using Bizinsure for several years and find the ease of renewing as well as generating additional insured certificates to be easy and useful, especially as a sole prop. thank you
Michelle C.
Kaleb tailored the right coverage to our business. Customer service was good and gave great understanding of coverage. Thank you from Goleda's Gentle Homecare LLC
Aneesah M.
Supreme A.
Easiest & fastest online quote and purchasing experience out there. Inside of 10 minutes I had a quote, payment draft, and policy in force... and at the most competitive GL rates I found.
Rusty H.
very quick and prompt service.
Sally Jo W.
caleb was great in helping me navigate thecorrect liabilty insurance for my company
Lindsay Erin P.
Friendly fast service I recommend you to all vendors
Terry R.
Kemi S.
Great Customer service and easy renewal process!!!! I would refer this company to anyone.
Chris H.
Great company easy to work with, Andrew was very helpful,you can call him any time he is ready to listen and help
Olu A.
Good customer service indeed
Google Rating
Based on 214 reviews