Course outline
Bonds, insurance and prequalification: the cost of getting in the door
Before a GC lets you work — and often before it invites you to bid — you need insurance that meets its subcontract: general liability, commercial auto, workers' compensation and usually an umbrella policy, with endorsements that add the GC as an additional insured. Larger and public jobs may also require performance and payment bonds, and prequalification adds financials, safety records and references. All of it costs money before you win anything.
By Michael Reddy, IntelBid
After this lesson you can
- Check a GC's insurance requirements against your actual policies
- Understand the endorsements GCs ask for and why
- Know when bonds come up and what a surety looks at
What insurance do GCs usually require?
| Coverage | What it covers | What to check |
|---|---|---|
| Commercial general liability (CGL) | Property damage and bodily injury arising from your work and operations. | Per-occurrence and aggregate limits, a per-project aggregate if required, and completed operations coverage. |
| Commercial auto | Vehicles used in the business. | Owned, hired and non-owned autos, if the subcontract requires them. |
| Workers' compensation and employer's liability | Injuries to your employees. | Required by state law for most employers; the GC sets employer's liability limits. |
| Umbrella / excess liability | Extra limits above your CGL, auto and employer's liability. | Whether it must follow the form of the underlying policies. |
| Contractor's pollution liability | Pollution events — relevant with adhesives, old flooring removal or mold. | Requested more often on renovation, healthcare and education work. |
Required limits vary by GC and project size. General liability limits of $1 million per occurrence and $2 million aggregate, with an umbrella on top, are frequently requested — but read each subcontract's insurance exhibit rather than assuming.
Which endorsements matter?
A certificate of insurance (COI) only summarizes your policies. GCs care about endorsements — changes to the policy itself:
- Additional insured. Adds the GC, and often the owner, to your liability policy for claims arising from your work. Ongoing operations and completed operations are separate; ISO forms CG 20 10 and CG 20 37 are common, and many GCs require both.
- Primary and non-contributory. Your policy responds first to covered claims and doesn't seek contribution from the GC's own insurance.
- Waiver of subrogation. Your insurer gives up its right to recover from the GC after paying a claim.
- Notice of cancellation. The GC is notified if your policy is cancelled.
Some large projects use an owner- or contractor-controlled insurance program (OCIP or CCIP), where the program provides certain coverage for everyone on site. Bid instructions then usually ask you to exclude the covered insurance cost from your price — read them carefully.
When do flooring subs need bonds?
A bond is a surety company's guarantee, not insurance for you. If you fail to perform or pay, the surety pays and then expects you to repay it.
| Bond | Guarantees | When a flooring sub sees it |
|---|---|---|
| Bid bond | You'll enter the contract at your bid price if awarded. | Mostly required of GCs; occasionally of subs on large public packages. |
| Performance bond | You'll complete the work under the contract. | Large subcontracts, public work, or GCs that require bonded subs above a dollar threshold. |
| Payment bond | You'll pay your workers and suppliers. | Paired with performance bonds. On public work, the GC's payment bond is also your own protection, since you can't lien public property. |
On federal projects, the Miller Act requires prime contractors to provide performance and payment bonds above a set contract value, and most states have similar “Little Miller Act” laws for state and local public work. GCs often pass bonding requirements down to major subcontracts.
Your surety prices bonds as a percentage of the contract, based on your financial statements, work history and credit. Get a real quote from a surety agent before bidding a bonded job — the cost goes in your price, and your bonding capacity limits how much bonded work you can carry at once.
What goes in a prequalification packet?
Many GCs require prequalification before they'll invite you or award you work. Expect to provide:
- Company information, years in business, licenses and ownership
- Financial statements (sometimes reviewed or audited) and bank references
- A bonding capacity letter from your surety
- Insurance certificates and loss history
- Your safety program, OSHA logs and EMR (experience modification rate)
- Project references and a list of current work
Your EMR compares your workers' compensation claims history with similar businesses: 1.0 is average, and many GCs prefer or require 1.0 or lower. A strong safety record lowers your premiums and a GC's hesitation. The residential-to-commercial guide covers getting onto bid lists in more depth.
Budget the cost of admission
Premiums, endorsement charges, bond costs, prequalification paperwork and certified payroll administration are real costs of commercial work. Recover the ongoing ones in your overhead, and put job-specific ones — a bond, a pollution policy, extra limits — in that job's price.
What insurance does a flooring subcontractor need for commercial work?
Typically commercial general liability, commercial auto, workers' compensation with employer's liability, and umbrella coverage, plus endorsements such as additional insured, primary and non-contributory, and waiver of subrogation. Exact limits come from each GC's subcontract.
What does additional insured mean?
It means the GC, and often the owner, are added to your liability policy for claims arising from your work, so your insurer can defend and pay covered claims against them. Ongoing and completed operations are usually separate endorsements.
Do flooring subcontractors need to be bonded?
Not always. Bonds are most often required on public projects and large subcontracts. When they are, your surety prices the bond based on your financial strength and history.
What is a good EMR for a subcontractor?
An EMR of 1.0 is average. Many GCs prefer or require 1.0 or lower, and a lower rate generally means lower workers' compensation premiums.
Key points
- GCs care about endorsements, not just the certificate.
- Send insurance exhibits to your agent while pricing — gaps cost time and money.
- Bond costs and bonding capacity belong in your price and your growth plan.
Keep insurance paperwork with the job
Log certificate requests and other paperwork against the project in IntelBid, so the thread stays with the job and a missing COI doesn't quietly delay mobilization or your first pay application.
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About the author. Michael Reddy builds IntelBid, bid management software for commercial flooring subcontractors. These lessons come from the bid desk: how the work is priced, won and paid for.