What insurance to require from your vendors
Every vendor agreement needs an insurance clause, and most are copied from a document nobody remembers drafting. This is the practical version: what to require, when to require more, and how to make requirements enforceable rather than decorative.
The baseline (almost every vendor)
- Commercial General Liability: $1,000,000 each occurrence / $2,000,000 aggregate is the standard floor for vendors doing physical work on your property.
- Workers Compensation: statutory limits, for any vendor with employees — this is the one that protects you from their injured worker's claim.
- Additional insured status on the GL, via CG 20 10 (ongoing ops); add CG 20 37 (completed ops) for construction trades.
- Waiver of subrogation and primary & non-contributory wording — the endorsements that stop their insurer from clawing back at you and arguing about whose policy pays first.
When to require more
- Vehicles on site (deliveries, landscaping, snow removal): Auto Liability, $1,000,000 combined single limit.
- High-severity trades (roofing, structural, demolition, crane, electrical): umbrella/excess of $2–5M over the GL.
- Professional services (engineers, architects, consultants): professional liability / E&O, typically $1M.
- Anyone handling your data or systems: cyber liability — increasingly required by insurers upstream.
- One-day/low-risk vendors: consider a lighter tier so requirements don't become a reason small vendors can't work with you.
Making requirements enforceable
Three rules turn a clause into a control: (1) put the exact limits AND endorsement form numbers in the contract, so the vendor's agent knows precisely what to issue; (2) collect and verify the certificate — including the endorsement pages — before work starts, not after; (3) track expirations continuously, because a requirement that's only checked at onboarding is a requirement for the first year only.
Frequently asked questions
What insurance should a vendor have at minimum?
For on-site vendors: $1M/$2M general liability with additional insured status, plus statutory workers comp if they have employees. Scale up by trade risk and vehicle use.
Can I have different requirements for different vendors?
You should — a roofer and a window-washer don't carry the same risk. Good tracking systems support org-wide defaults with per-vendor overrides.
What are typical insurance requirements in a contract?
GL limits, auto and workers comp where applicable, umbrella for high-severity work, plus additional insured, waiver of subrogation and primary & non-contributory endorsements evidenced by attached endorsement pages — not just certificate checkboxes.
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