Ep. 601 Building Protection Through Strong Subcontract Agreements

Rancho Mesa's Alyssa Burley sits down with Account Executive Casey Craig to talk about protecting specialty contractors through strong subcontractor agreements.

Show Notes: ⁠⁠⁠Subscribe to Rancho Mesa's Newsletter⁠⁠⁠.

Director/Host: ⁠⁠⁠Alyssa Burley⁠⁠⁠

Guest: ⁠⁠⁠Casey Craig⁠⁠⁠

Producer/Editor: Jadyn Brandt

Music: "Home" by JHS Pedals, “Breaking News Intro” by nem0production

© Copyright 2026. Rancho Mesa Insurance Services, Inc. All rights reserved.

Transcript

Alyssa Burley: You're listening to Rancho Mesa’s StudioOne™ Podcast, where each week we break down complex insurance and safety topics to help your business thrive. I'm your host, Alyssa Burley, and I'm joined by Casey Craig, Account Executive with Rancho Mesa. He specializes in providing insurance for painting, plaster, and drywall contractors. And today we're going to talk about protecting specialty contractors through strong subcontractor agreements. Casey, welcome to the show.

Casey Craig: Thanks for having me.

AB: Now, in a recent article you wrote, you pointed out that many specialty contractors are very diligent about meeting prime contractor requirements, but far less rigorous with their own lower tier subcontractors. Why is that gap so common and what risk does it create from an insurance and liability standpoint?

CC: Yeah, I think when you're looking at it from the GCs and the builders, they're getting pressure from their carrier. Their carrier is saying that they need to have a strong subcontractors agreement because they're having many subs on the jobs. A lot of these second tier or subcontractors that are working for them, they don't have a lot of subs that work underneath them. So they kind of feel like they're insulating the people below them by saying, don't worry about it. I don't think they realize that the risk follows them down, but it doesn't go up. So if there is a problem that happens with their subcontractor, I think that they're expecting it to go back up to the general contractor. It doesn't, it sticks with them. So they're looking like they're helping these lower-tier subs, but in reality, all they're doing is taking on more risk themselves.

AB: Yeah, that's kind of scary. Now in your article, a recurring misconception you've highlighted is the belief that collecting a certificate of insurance is enough. Will you explain why that approach really falls short and how inadequate or lapsed coverage by a subcontractor can ultimately impact a specialty contractor's claims, audits, and premiums?

CC: Yeah, this is a tough one. Once you get a certificate of insurance, a lot of people feel like they've done their diligence to make sure that they have insurance on a job site. There's always a chance that that sub can have their insurance lapse, and if that were to happen, whatever injuries that happen whatever claims that might pop up, they do fall back on you because you're the one that hired them and have them on contract to get on that job site.

So, the other part that comes with it is at the end of the year if they have an audit and they weren't able to prove that they had insurance when they were on your job site the premium that's collected for that falls on the subcontractor that hired them. So there's been rare circumstances where you hire somebody, you feel like this job's profitable, and then at the end of it, you realize that you're covering their work comp and all their claims as well. It can take a profitable job and make it really unprofitable very quickly.

AB: So in today's California construction market, insurers are paying closer attention to risk management at every level. How can a strong subcontractor agreement help specialty contractors better protect themselves financially and improve their long-term insurability?

CC: Yeah. So to start with, I mean, it's going to protect you from any claims or the audits that might come through that we just talked about. But more long-term that we're looking for is you're pairing with these carriers and you're trying to look for partners that are the best fit for your type of operation. If you have subcontractors that don't fit into your mold and you're having, let's say you're a painter and you have a tile shop that's going to be sub. If you don't have proof of insurance and at audit, you're picking up that payroll, your carrier might not want to work with tile companies or acoustical ceiling. It truly could change what carrier appetite that you're with and make things potentially way more expensive for you down the road. And who knows if they would want to renew your policy the following year.

AB: All right. Well, Casey, if listeners have questions about their potential risk with subcontract agreements, what's the best way to get in touch with you?

CC: You can give me a call at 619-438-6900 or email me at ccraig@ranchomesa.com.

AB: All right. Well, Casey, thanks for joining me in StudioOne.

CC: Absolutely. Thanks for having me.

AB: Thanks for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at RanchoMesa.com and subscribe to our weekly newsletter.