When you hire 1099 subcontractors without collecting their certificates of insurance, that payroll can get added to your own workers comp bill at the year-end audit, because many states treat subs who lack their own coverage as your employees for comp purposes. The fix is to collect a proper certificate from every subcontractor before they start work, showing their own general liability and workers comp, so their payroll does not land on your premium.
How uninsured subs become your exposure
If a 1099 worker or subcontractor does not carry their own coverage, many states treat them as your employee for workers comp purposes. That means at audit, their payroll gets added to yours and you pay comp premium on it, as if they had been on your books all along. For a landscaper who leans on subs through the busy season, that can be a large, unexpected addition to the bill.
What a proper certificate should show
A proper certificate of insurance from a subcontractor shows their own general liability and, importantly, their own workers compensation, with current dates and adequate limits. That is the evidence that lets the auditor exclude their payroll from your premium. A certificate that is expired, missing workers comp, or missing entirely does not protect you, so what the certificate actually shows matters as much as having one.
Building the habit before work starts
The protection only works if the certificate is collected before the subcontractor starts work, not chased down at audit. The simple rule is no certificate, no work. Keeping the certificates on file, and confirming they stay current through the season, is what keeps sub payroll off your bill. It is a small administrative habit that prevents one of the most common audit surprises in landscaping.
Why the certificate is not the coverage
A certificate of insurance proves a policy existed on the day it was issued. It does not, by itself, make you an insured on that sub’s policy, and that distinction is where landlords of risk get caught. To actually get protection from a sub’s coverage, you need to be added as an additional insured by endorsement, commonly the ISO CG 20 10 for ongoing operations and CG 20 37 for completed operations, and ideally on a primary and non-contributory basis. A certificate that simply lists you in the description box is not the same as the endorsement being on the policy. The disciplined move is to require the additional-insured endorsement in your subcontract, ask for a copy of the endorsement and not just the certificate, and confirm it before the sub starts work. The certificate opens the conversation. The endorsement is what responds.
Questions to ask your advisor
- Am I collecting a certificate from every subcontractor before they start?
- Do the certificates show the sub’s own workers comp, not just liability?
- Are the certificates current and adequate in limits?
- How much sub payroll could land on my bill at audit?
- Do I have a no-certificate-no-work rule in place?
Uninsured subcontractors are one of the quietest and most expensive audit surprises in landscaping, and the fix is almost entirely administrative. Collecting a proper certificate, one that shows the sub’s own workers comp, before every job, and keeping it current, is what keeps their payroll off your bill. No certificate, no work is the rule that protects your audit.