Contractor License Practice Exam

Can a prime contractor be held liable for an uninsured subcontractor's employee claiming workers compensation benefits?

1. Yes

2. No

3. Only in certain states

4. Only if negligence is proven

The correct answer is: Yes

A prime contractor can indeed be held liable for an uninsured subcontractor's employee claiming workers' compensation benefits. This liability generally stems from the principle of vicarious liability, where a principal contractor may be responsible for the actions of their subcontractors in the context of worker safety and compensation. In many jurisdictions, the prime contractor is considered to have a duty to ensure that all workers on a job site are protected and covered by the required insurance, including workers' compensation. If a subcontractor fails to provide this coverage, the prime contractor may be obligated to step in and fulfill these responsibilities, especially if that failure contributes to an employee claiming benefits due to a work-related injury. Moreover, many states have specific laws that emphasize this responsibility. Legal frameworks often impose penalties on contractors for failing to verify insurance coverage. Therefore, the liability can extend beyond just contractual obligations to include ensuring compliance with state workers' compensation laws. Understanding these responsibilities is vital for contractors, as they can face significant financial repercussions and legal ramifications if they fail to account for the insurance status of their subcontractors.