5 Risks of Hiring an Uninsured Contractor

September 8, 2025||inBusiness Insurance|business insurance, business liability coverage, commercial insurance, liability insurance, property damage

Project owners and general contractors must thoroughly vet all contractors to ensure job site safety and protect against financial losses. A key part of this vetting process is confirming that contractors carry the appropriate insurance coverage.

Hiring uninsured contractors can lead to very serious consequences, including safety risks, legal liabilities and unexpected costs.

Floorplan 1200
Click here to submit an inquiry to Murphy Insurance or call us at 800 222 8711

Imagine a subcontractor’s ladder falls and damages a vehicle—or worse, injures someone passing by. Without insurance, that liability lands on you.

These five risks show why hiring uninsured contractors can expose your business to costly legal, financial, and safety consequences.

Legal Violations and Penalties

Hiring uninsured contractors may breach local, state or federal regulations that mandate specific insurance coverage on construction sites. This can result in fines, penalties or even project shutdowns. Verifying insurance coverage helps ensure compliance and protects against costly legal consequences.

Liability for On-the-Job Injuries

If an uninsured contractor or their employee is injured while working, the responsibility for medical bills and lost wages may fall on the project owner or general contractor. In many jurisdictions, workers’ compensation laws extend liability to the hiring entity when the contractor lacks coverage.

Out-of-Pocket Costs for Property Damage

Should an uninsured contractor cause damage to property during the project, the financial burden may shift to the project owner or general contractor. Without general liability insurance in place, there would likely be no safety net to cover the resulting repair or replacement costs.

Exposure to Third-Party Injury Claims

If a worksite visitor, pedestrian or other third party is injured due to the actions of an uninsured contractor, the project owner or general contractor could be held liable. Without the contractor’s liability insurance to cover medical expenses, legal fees or settlements, these costs may come directly out of the hiring party’s pocket.

Increased Safety Risks

Uninsured contractors often lack the motivation and resources to adhere to industry safety standards or invest in proper training and equipment. This can lead to unsafe working conditions, higher accident rates and potential violations of OSHA regulations. Hiring insured contractors helps promote a culture of safety and accountability on the job site.

The Bottom Line

Hiring uninsured contractors poses a wide range of legal, financial and safety risks. Ensuring that all contractors carry adequate insurance is a critical step in protecting personnel, third parties, projects and finances and maintaining high jobsite safety standards.

Contact us today if you have questions about screening subcontractors to protect your business.

Read Our Business Blog Posts

Murphy Insurance Team

27 Reasons to Work with Murphy Insurance Agency

For more than 88 years, Murphy Insurance Agency has been a trusted partner for families, individuals, and businesses across Massachusetts. As a family-owned and independent agency, we prioritize relationships over transactions, offering guidance and support tailored to your needs. With access to more than 25 top-rated carriers, we deliver personalized solutions, competitive options, and peace of mind. Discover 27 reasons why thousands have chosen Murphy Insurance to protect what matters most.
Read more
What Is Professional Liability Insurance and Does Your Business Need It

What Is Professional Liability Insurance—and Does Your Business Need It?

General liability insurance won’t protect your business from claims tied to mistakes, missed deadlines, or professional advice gone wrong. That’s where professional liability insurance—also known as Errors & Omissions (E&O) coverage—steps in. It covers negligence, inaccurate advice, project delays, and the legal costs that come with client disputes. From consultants and IT professionals to architects, real estate agents, and accountants, this coverage is essential for anyone providing specialized services.
Read more
Construction worker 1200

5 Workplace Safety Trends to Watch in 2025

While certain elements of occupational safety remain constant, others may change and evolve over time. As such, it’s essential for employers to stay on top of the latest workplace safety trends and adjust their risk management strategies accordingly. Several factors have been influencing the occupational safety landscape this year, including advances in technology, rising mental health concerns, ongoing remote work challenges, a growing connection between sustainability and safety, and shifting corporate culture expectations. This article provides more information on these trends and offers guidance to help employers properly navigate such developments.
Read more
Floorplan 1200

5 Risks of Hiring an Uninsured Contractor

Project owners and general contractors must thoroughly vet all contractors to ensure jobsite safety and protect against financial losses. A key part of this vetting process is confirming that contractors carry the appropriate insurance coverage. Hiring uninsured contractors can lead to serious consequences, including safety risks, legal liabilities and unexpected costs. Here are five major risks of hiring uninsured contractors that highlight why adequate insurance is essential.
Read more
Paperwork 1200

Medicare Part D Notices Are Due Before Oct. 15, 2025

Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2025—the start date of the annual enrollment period for Medicare Part D. This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date.
Read more
OSHA Safe & Sound Week

OSHA’s Safe and Sound Week Runs From August 11-17, 2025

More than 5,000 workers are killed on the job each year, and more than 3.6 million employees are seriously injured each year while at work. Because of this, OSHA holds a nationwide event each August called Safe and Sound Week, which promotes the importance of companies incorporating safety and health programs into their workplaces. This year, the event runs August 11-17, 2025.
Read more
Hudson Family Dental

Business Spotlight: Hudson Family Dental Providing Modern Dentistry in the Heart of Hudson

Hudson Family Dental has been providing modern, compassionate dentistry in Hudson, MA since 1988. With cutting-edge technology and a team dedicated to personalized care, they’ve earned the trust of local families for generations. Learn how this Main Street practice blends innovation with community values—and why Murphy Insurance is proud to call them a client.
Read more
File folders

Employee Benefits SAR Is Due by September 30 for Calendar Year Plans

Many employers that must file Form 5500 on behalf of their employee benefit plans must also provide plan participants with a summary annual report (SAR). The SAR is a summary of the information included in the Form 5500. Employers with plans that operate on a calendar year basis must provide the SAR by Sept. 30
Read more
Balance Scale 1200

Supreme Court Upholds ACA’s Preventive Care Mandate

On June 27, 2025, the U.S. Supreme Court upheld a key component of the Affordable Care Act’s (ACA) preventive care mandate. Due to the Court’s ruling, the ACA’s preventive care mandate remains in full effect and health plans and issuers are required to continue covering the entire range of recommended preventive care services without cost sharing.
Read more

Visit Our Business Insurance Page

Contractor Insurance

Being a successful contractor takes more than skill on the job site—it requires planning, discipline, and careful risk management. Every day, your business faces challenges that can disrupt operations and impact your bottom line, from worker injuries and equipment breakdowns to property damage, lawsuits, and unforeseen accidents. Even with strong safety protocols in place, things can still go wrong. That’s why the right Contractor Insurance coverage is essential, providing protection through general liability, workers’ compensation, commercial auto, tools and equipment coverage, and more—all tailored to the unique risks contractors face.