General Contractor Workers Compensation Insurance: What GCs Owe

General contractor workers compensation insurance pays medical bills and lost wages when one of your employees gets hurt on the job. Most states require it once you have employees, and some require it even earlier. For a GC, though, it does a second job that's easy to overlook. In many states, if a sub you hire has no coverage, that sub's injured workers can land on your policy, and your insurer will bill you for them after the policy year ends.

So the real question isn't just "do I need it?" It's also "whose injuries am I paying for?" The sections below tackle both in the order they usually come up.

Do I have to carry workers comp if I run my own crews?

In most states, yes, once you have employees. The details vary by state, and construction often gets stricter rules than other industries. Florida is the clearest example. There, construction employers with one or more employees must carry coverage, and that count includes owners who are corporate officers or LLC members. Outside construction, Florida's threshold is four (4) or more employees. So if a general article tells you Florida only requires comp at four employees, that number doesn't apply to you.

Other states handle it differently. Here's how the states in this guide treat construction:

California's rules are changing in stages. According to a summary of SB 216 as delayed by SB 1455, a California contractor with no employees can still file a CSLB exemption today, unless the license includes one of those five classifications. That option disappears on January 1, 2028. For the full California picture, see CA contractors insurance requirements.

In Texas, private employers generally get to choose. Public work is another story. Under Texas Labor Code 406.096, a contractor on a government building or construction contract must certify coverage for each employee on the project, and "building or construction" includes remodeling, repair and demolition. If you bid city or school work in Texas, get a policy lined up before you bid.

If my sub's helper falls off a ladder, whose policy pays?

This is where GCs get caught. Many states make the hiring contractor responsible when a sub has no workers comp. Florida's Division of Workers' Compensation puts it plainly: if the sub doesn't have coverage for its employees, those workers become the contractor's employees.

And it's not only the sub's employees. Missouri's Department of Labor gives an example that mirrors a common setup on residential jobs. A sole proprietor sub doing the same kind of work as the GC isn't legally required to cover himself. But because he's uninsured, the general contractor may become liable if he's hurt on the job. The GC's insurer may have to pay the claim, and it'll charge premium for that sub.

Builders Mutual describes the same risk from the insurer's side: an uninsured person you hire who gets hurt on your site can file a claim with your workers comp carrier.

A sub's liability certificate won't protect you here. You need proof of the sub's workers comp.

Why did my audit bill come back higher than my quote?

A workers comp premium starts out as an estimate. Once the policy year ends, the insurer audits your books. Builders Mutual says the auditor verifies your payroll and job classifications and asks for certificates of insurance for your subs. The auditor will also look for records of any job-role changes since the original estimate.

For GCs, the big surprise is usually the subs. NYSIF, New York's state-run insurer, says that if you can't produce workers comp documents for your subs at audit, your premium gets recalculated as if those subs were on your payroll. New York's Workers' Compensation Board warns that carriers routinely charge general contractors premium for subs without their own New York policy.

There's some good news in the details. Builders Mutual notes there are no required limits for a sub's workers comp. If the sub has a policy, the audit treats them as insured, whatever the limits. What usually goes wrong is simpler: the certificate was never collected, or it expired halfway through the job.

Do I have to cover myself as the owner, or can I opt out?

That depends on how your business is set up and where you work. In Florida construction, owners who are corporate officers or LLC members count as employees unless they file an exemption, and an exempted officer or LLC member doesn't count toward the one-employee threshold. In Missouri, sole proprietors and partners aren't covered automatically. They have to choose to buy a policy for themselves.

California is moving away from owner exemptions for contractors, and some licenses already can't use them. The TSM summary says a license qualified by an RME (a responsible managing employee) can't file the CSLB exemption. Roofing, concrete, HVAC, asbestos abatement and tree service licenses already have to carry a policy.

Even if you can skip covering yourself, ask whether you should. Your health plan may not pay for a work injury, and your general liability policy won't cover your own injuries. If you mostly sub for other GCs, they may want proof of coverage before you start, no matter what the law says. The independent contractor workers compensation guide covers that side of it.

What if I take a job in another state?

Your home-state policy may not follow you across state lines. Florida is strict about this. A construction employer with even one employee working in Florida needs a Florida policy from a Florida-licensed insurer. If you use an out-of-state policy, the insurer has to be licensed in Florida, and Florida must be listed in Section 3A of the policy. Florida also says to tell your insurer or agent right away that you have employees working there.

New York relies on the same section of the policy for out-of-state subs. NYSIF tells GCs to get a certificate that specifically lists New York in Item 3A. If your crew follows a client to a vacation-home project or a commercial rollout in another state, call your agent before the first truck leaves, not after someone gets hurt.

What does the policy pay for, and what doesn't it cover?

Workers comp covers work-related injuries and illnesses for people your policy covers, which mainly means your employees (and owners, if they're included). It pays medical care and lost wages under your state's benefit rules. Most policies also include employers' liability coverage, which helps if an injured worker or their family sues you instead of filing a regular claim. Ask your agent how that piece works in your state.

It won't cover damage to a client's house, a neighbor's car or a passerby who trips over your lumber. That's general liability. Your tools, trailer and materials aren't covered either. And it won't make you compliant everywhere you work if the policy doesn't list those states. For how these policies fit together, see general contractor insurance coverage.

You also can't pass the cost on to your crew. New York's Workers' Compensation Board notes that WCL Section 31 makes it a misdemeanor to deduct workers comp costs from employee wages.

How do I check a sub's coverage before they start?

Make it part of onboarding, just like collecting a W-9. NYSIF recommends getting a certificate before work starts and every year after that, and points out that a certificate only shows coverage as of the date it was issued. A simple routine looks like this:

• Get a workers comp certificate (not just general liability) before the sub shows up on site.
• Make sure the business name on the certificate matches the name on your subcontract and invoices.
• Check the policy dates and set a reminder for when it expires.
• Confirm the state you're working in is listed on the sub's policy.
• Use a state lookup tool when one exists. NYSIF, for example, lets its policyholders check a sub's coverage by FEIN in their online account, and the WCB has an employer coverage search.
• Keep every certificate, invoice and 1099 for that sub in one folder for the audit.

Write the requirement into your subcontract, too. Missouri's Department of Labor confirms a GC can require proof of coverage even from a sub who isn't legally required to carry it. If a sub won't or can't provide it, talk to your agent before they start about how that sub's pay will be treated at audit. That way the cost lands in your bid instead of in a bill months later.

What should I ask my agent before the next bid?

Bring your payroll by job type, your sub list and any upcoming out-of-state or public jobs. Premiums are based on payroll, classification codes and your claims history, so these details drive the price. Then ask:

• Classifications. Which class codes apply to my crew, and what happens if a carpenter also does roofing or concrete work?
• Owners. Are my partners or officers and I included, or exempt, and is that allowed in each state where I work?
• States. Which states are listed on my policy, and what do I need to do before starting a job in a new one?
• Subs. How will my insurer treat payments to subs with no workers comp, and what proof will the auditor accept?
• Audit. What records will the auditor ask for, and can I report payroll during the year to avoid a big bill at the end?

Bring any owner's or GC's contract you're about to sign, too, and ask whether it requires specific wording, waivers or certificate handling that your policy needs to match. A licensed agent or your state's workers comp agency can tell you how these rules apply to your business. This guide can't. Get those answers before you sign the contract.