General Liability

• Subcontractors working on contracts of $25,000 or more are required to have liability insurance directly related to the monetary limit designated on the contractor's state-issued professional license. Monetary limits designated up to and including $500,000 require $100,000 of liability insurance. Monetary limits of $500,001 to $1 million require $500,000 worth of liability insurance. Monetary limits of over $1 million require the purchase of $1 million in liability insurance.
  
  

Workers' Compensation

• Subcontractors with corporate officers or employees must purchase workers' compensation insurance through the Tennessee Workers' Compensation Insurance Plan or a private insurance company. However, subcontractors can request coverage from the prime contractor instead of purchasing their own liability insurance policy. The prime contractor subtracts the subcontractor's premiums from any payments due the subcontractor.
  
  Workers' compensation insurance does not typically cover a business owner. However, subcontractors who are sole proprietors or operate as a partnership are covered by their company's workers' compensation insurance by completing Form I-4 and filing it with the Tennessee Department of Labor and Workforce Development.
  
  

Exemptions

• A subcontractor with no employees (sole proprietors and partnerships) and 100 percent of asset ownership can apply for an exemption from purchasing the required workers' compensation insurance. A corporate officer for a subcontractor can also apply to be exempt from the workers' compensation coverage purchased by their company. Filing for exemption occurs for licensed subcontractors by contacting the Tennessee Secretary of State's office and completing Form ss-4523, known as the Workers' Compensation Exemption Registration Application.
  
  Subcontractors without a license must first register as a construction services provider with the Secretary of State's Office and then complete Form ss-4523. Subcontractors with a license pay $100 to file for exemption. Subcontractors without a license pay $100 to register as a construction services provider and another $100 to file for the exemption.
  
  

Other Subcontractors

• According to the Tennessee Department of Commerce and Insurance, subcontractors working on contracts in the amount of $3,000 to $24,999 are required to provide proof of a minimum of $100,000 in liability insurance at the time of licensing. Subcontractors licensed as a home improvement contractor are also required to purchase a $10,000 surety bond from an insurance company.
  
  The Tennessee Home Improvement License is obtained through the county the contractor is working in. Although endorsed by the state, only a handful of Tennessee counties require the home improvement license for subcontractors. Home improvement contractors with employees must purchase workers' compensation insurance regardless of the contract amount.