The Call Every Contractor Dreads
A general contractor in West Columbia was three weeks into a commercial renovation project on Harbison Boulevard. His subcontractor — an electrician he’d used a dozen times — had an accident on site. A fire started. Damages exceeded $400,000.
The building owner’s attorney looked at the contract the general contractor had signed. It had a standard indemnification clause — one he’d seen a hundred times and never thought twice about.
That clause made him responsible for his subcontractor’s actions.
His policy covered some of it. His subcontractor’s policy had a coverage gap that left the rest exposed. He spent the next two years fighting a lawsuit and watching his business credit collapse.
Indemnification Clauses: The Hidden Bomb in Your Contracts
If you are a contractor, manufacturer, property manager, or any business that signs service or vendor agreements — you need to understand indemnification clauses.
An indemnification clause says: if something goes wrong, you agree to cover the losses — even if someone else caused them.
These clauses are in:
- General contractor agreements
- Commercial lease agreements
- Vendor and supplier contracts
- Government and municipal contracts
- Technology service agreements
According to the South Carolina Bar Association, many small business owners sign contracts without having them reviewed by an attorney or insurance advisor — leaving them exposed to liabilities they never anticipated.
The Subcontractor Insurance Gap Nobody Talks About
Even when you require your subcontractors to carry their own insurance, gaps remain. Here’s what most agencies don’t explain:
- Your additional insured status may lapse. Just because a sub names you as additional insured today doesn’t mean that status stays active throughout the project.
- Their coverage limits may be too low. A sub with $500,000 in general liability coverage on a $2 million project leaves $1.5 million of exposure unaddressed.
- Completed operations coverage. Many subs carry claims-made policies that don’t cover injuries or damages discovered after the project ends — and those claims come back to you.
- Your BOP may exclude subcontractor work. Standard Business Owner’s Policies often have exclusions for work performed by uninsured or under-insured subcontractors.
What Safe Harbor Does That Other Agencies Won’t
At Safe Harbor Insurance Advisors, we review your contracts. Not just your insurance policy — your actual contracts.
As part of your Risk Action Plan, our Advisors identify indemnification language that creates exposure, help you require appropriate subcontractor coverage levels, and make sure your own policy is structured to cover the gaps that exist when multiple parties are working under your name.
If you are a residential or commercial contractor in the Columbia area, this review is not optional — it is essential.
Learn more about our commercial insurance approach for SC businesses and why having a risk partner — not just a policy seller — makes all the difference.
Ask Yourself These Three Questions Right Now
- Have you read every indemnification clause in every active contract you’ve signed this year?
- Have you verified that every subcontractor’s certificate of insurance is current and names you as additional insured?
- Does your current policy have a completed operations extension that protects you after a project wraps?
If you answered ‘no’ or ‘I’m not sure’ to any of those — call us before your next project starts. One contract review could save your business.
Don’t wait until it’s too late.
Schedule your free, no-obligation Risk Analysis with Safe Harbor Insurance Advisors today: Request Your Risk Analysis Here
Or get a quote now: safeharborinsuranceadvisors.com/quotes