Short answer
When a first big contract asks for workers’ comp and an umbrella, start by listing every insurance requirement in the contract. Compare each one with the policies you carry today. Owners increasingly refuse workers’ comp exemptions, and not every carrier offers an umbrella. The gaps you find show what to fix before you can send certificates, and policy wording and carrier appetite vary.
Why a first large contract changes your insurance
Small firms often carry the coverage a client asked for last year. A larger developer or owner contract can raise the bar all at once.
Picture a one-person consultant whose client asks the firm to perform the work too. The contract arrives with a full insurance section. It asks for workers’ comp, an umbrella, and the usual general liability wording. The firm’s current carrier does not offer an umbrella. The owner’s accountant had also been urging a move from owner distributions to real payroll, so one contract forced two decisions at once.
Reading a contract like this is a normal part of growing. Brokers see contracts with long insurance sections all the time, and sending one over is a routine request.
Why owners refuse workers’ comp exemptions
Many owners and developers now prefer proof of workers’ comp coverage over an exemption certificate. They often want to avoid questions about who carries the risk if someone gets hurt on the project.
A contract may say plainly that it will not accept an exemption and expects the firm to have payroll. Exemption rules vary by state, and some states have specific rules for the construction industry. Florida, for example, has its own construction-industry requirements. Talk to your accountant about payroll and tax questions, and confirm the rules for your state before you decide. Our workers’ compensation page explains the coverage itself.
What an umbrella sits over and what it usually does not
An umbrella liability policy typically sits over underlying policies such as general liability, auto liability, and employer’s liability. It adds limits above those policies when a claim exceeds them.
It usually does not extend over professional liability. A consultant who needs higher professional liability limits generally has to address that on the professional policy itself. Some umbrellas follow form differently, so read the actual policy and ask how it connects to each underlying coverage.
Why your current carrier may not offer an umbrella
Not every carrier offers every line of coverage. A policy bought online, or from a carrier that focuses on one product, may not include an umbrella option at all.
When that happens, the contract requirement stays in place even though the carrier cannot meet it. A broker can look across carriers, check how a new umbrella would connect to your underlying policies, and flag any timing issue before you cancel anything. Availability and terms depend on each carrier’s underwriting.
How to handle an insurance requirements check
The process usually follows four steps:
- Send the contract. Share the full insurance section along with your current policies.
- Get a gap list. Compare each requirement with what you carry, including limits, endorsements, and wording.
- Fix the gaps. Add or change coverage where needed, and avoid cancelling a current policy before the new one is in place.
- Get the certificates. Request certificates of insurance that match what the contract asks for. If you are unsure how to read one, see how to read a COI.
If you would rather hand this off, you can send us your contract for a requirements check.
What to check in your contract’s insurance section
- Does the contract accept a workers’ comp exemption, or does it require coverage?
- What limits does it require for general liability, auto, and employer’s liability?
- Does it ask for an umbrella, and does it set a minimum limit?
- Does it require additional insured status or other endorsements?
- Does it ask for professional liability, and at what limit?
Related questions
Can I use a workers’ comp exemption on a large contract?
Some contracts accept one and some do not. Exemption rules also vary by state. Read the contract language and ask your accountant about payroll before deciding.
Does an umbrella policy cover professional liability?
It usually does not. An umbrella typically sits over general liability, auto liability, and employer’s liability. Check the policy wording to see how it applies.
What if my carrier does not offer an umbrella?
You may need to look elsewhere for one. A broker can compare options and check how the umbrella would sit over your underlying policies.
Do I need to send certificates of insurance with my contract?
Many owners expect certificates before work begins. Check what the contract asks for, then request certificates that match it.