Is a Construction Company Liable for a Subcontractor’s Mistake?

Is a construction company liable for a subcontractor's mistake?

When you’re working on a construction project, you may need to pull in other people to help you complete the job, and as with any business relationship, it can quickly become complicated. As the construction company or general contractor, you’re in charge of the job site and are tasked with ensuring the job is finished safely, quickly and according to client specifications.

So, what happens if a tradesman or other individual you’ve hired on as a subcontractor creates a problem on your job site? Is a construction company liable for a subcontractor’s mistake?

In this blog, we’ll explain what you can do if your subcontractor causes a problem for your construction project.

What Is a Subcontractor?

A subcontractor is an individual or entity who specializes in a specific aspect or trade and is hired and managed by the general contractor or construction company in charge of a project. Subcontractors are framers, plumbers, or the people installing the flooring or lighting fixtures. In short, they are anyone who is needed for a specialized task, and the general contractor is responsible for the subcontractor’s work. According to West Virginia State Statute 23-2-1d, general contractors are also responsible for ensuring that all subcontractors maintain workers’ compensation coverage or are self-insured.

What Happens if a Subcontractor Makes a Mistake?

If property damage or personal injury occurs on a construction site, more likely than not, the general contractor or construction company in charge will be named in the lawsuit. With an experienced construction litigation attorney, you and your company can fight any allegations and prove you have no legal liability.

However, if your company, as the prime contractor, is held responsible for all damages caused by a careless subcontractor, the following can occur:

Harm to Your Company’s Reputation

West Virginia, as with many other states, allows the general public access to civil lawsuit records, except in some circumstances. This means that if your company has been named in a lawsuit regarding a construction mistake, anyone can find out about it, and your company name will be synonymous with problems. Even if it is determined that your company is not liable, the information is still accessible, and it can severely harm the reputation of your company and your future business.

Time-Consuming Lawsuits

Lawsuits take time; we all know this. In some cases, these suits can take years, and if you’re named in a lawsuit, that means you have to be involved in many aspects of the case, be present during court proceedings and meetings, etc. This takes time away from current or future work, and in some cases involving smaller construction companies with few employees, it may prevent you from getting new work at all until the lawsuit is settled.

Expensive Settlement Payouts

If you are unfortunately saddled with the responsibility for your subcontractor’s mistake and are required to pay out for damages, settlements in construction litigation can be quite expensive. This means that not only have you been stuck in court, unable to work as much as you could have, but now you have to pull from the minimal income you have to pay out a settlement for someone else’s wrongdoing.

How To Avoid Subcontractor Liability

We like to think that people generally mean well and that “we’re all human” and we all make mistakes. However, in the case of a mistake on a construction site that causes severe injury or thousands of dollars in repairs, you as the construction company in charge could be held responsible for those human mistakes of others.

Now that we’ve determined the high possibility of your construction company being held liable if a mistake does occur, what can you do to help protect your company from negligent subcontractors? The easiest thing to do is to make sure you’re covered under a good construction insurance policy that has both general and professional liability coverage.

General liability policies will cover common risks such as customer person and property damage, libel and slander, and product liability. Professional liability policies will cover failure to deliver or negligence in providing promised services as well as errors and oversights.

Even if you don’t have any subcontractors working on any current projects, it’s best to have subcontractor exclusions, warranties, and deductibles written into your insurance policy, which will protect you and your company from liability should a subcontractor you hire make a mistake.

To further protect yourself and your company, before you reach out to an insurance company or hire a subcontractor for your next project, consider sitting down for a free consultation with a member of our legal team at Hendrickson & Long, PLLC. Our attorneys have the experience necessary to assist you through all aspects of construction laws and can help ensure that you and your company have a solid plan to stay safe from the mistakes of others.