THIS WEEK'S DEEP DIVE
Subcontractors are how you scale. But every sub you bring on site also brings their risk onto your project. In Texas — where workers' comp works differently than anywhere else in the country, and where indemnification law got a notable clarification in early 2026 — your subcontracts need to be doing more work than most GCs realize.
TEXAS IS THE ONLY STATE WITHOUT MANDATORY WORKERS' COMP
This matters more than most contractors know when they're starting out. Texas is the only state in the United States where workers' compensation insurance is not required by law for most private employers. A subcontractor working on your job site can legally operate without carrying workers' comp.
If one of their workers is injured on your site and they don't carry workers' comp, your exposure increases significantly. This is why most commercial GCs in Texas contractually require all subcontractors to carry workers' compensation — because the legal minimum in Texas is zero. That same standard belongs in residential subcontracts too.
THE THREE INSURANCE MINIMUMS TO REQUIRE FROM EVERY SUB
Before any sub steps onto your site, get their certificate of insurance. Verify the policy numbers and expiration dates — expired COIs are common. Require at minimum:
General Liability (GL): $1,000,000 per occurrence / $2,000,000 aggregate is the standard baseline for private projects. Some owners require higher limits — pass that requirement through to your subs.
Workers' Compensation: Require it contractually regardless of what Texas law mandates.
Commercial Auto: Any sub driving to or from your project needs it. An uninsured sub's accident can create a claim that touches your project.
TWO CONTRACT PROVISIONS MOST GCs SKIP
Additional Insured Endorsement — require that your company (and the project owner, when applicable) be listed as an additional insured on the subcontractor's general liability and commercial auto policies. This means if a claim arises from their work, their policy can respond on your behalf.
Waiver of Subrogation — require this on the sub's workers' compensation and general liability policies. Without a waiver of subrogation, the sub's insurance company can sue you to recover what they paid out — even if you're also named as a defendant. This provision prevents that. Both of these cost the sub nothing to add. If a sub pushes back on including them, take note.
INDEMNIFICATION: WHAT CHANGED IN TEXAS IN 2026
Texas law permits parties to contract for comparative or proportional indemnity — meaning you and your subs can agree on who's responsible for what share of a loss. But that agreement must follow the express negligence doctrine: the language has to explicitly state that one party is indemnifying the other for their own negligence. Vague boilerplate language won't hold up in Texas courts.
In March 2026, the Texas Supreme Court clarified that indemnity rights can survive settlement. This is significant: if a claim settles between one party and a claimant, the indemnification obligation between a GC and a sub can still be enforced after that settlement. Have your subcontract indemnification language reviewed by an attorney who handles Texas construction contracts.
WORKER CLASSIFICATION: 1099 VS. EMPLOYEE
The IRS and the Texas Workforce Commission apply specific standards to determine whether a worker is an independent contractor or an employee. The key factors are behavioral control and financial control — if you direct when, where, and exactly how someone performs their work, they may not qualify as an independent contractor regardless of what the paperwork says. Misclassification carries penalties from both the IRS and state agencies. If you have workers you pay as 1099 subs who work primarily for you on a set schedule, have their classification reviewed.
YOUR SUBCONTRACTOR LIABILITY CHECKLIST FOR THIS WEEK
Collect and verify current certificates of insurance from every active sub — check expiration dates. Confirm your subcontract template requires GL, workers' comp, and commercial auto. Add additional insured endorsements and waiver of subrogation requirements if they're not already in your subcontract language. Review your indemnification clause against the Texas express negligence doctrine. Audit any 1099 workers who work exclusively or primarily for your company.
Edward Ortiz
I Am Home Innovations LLC | Veteran-Owned | Conroe, TX
www.iahinnovations.com