How to Make Sure a Subcontractor Is Insured Before You Pay Them
The bill is legitimate, the work was done, and the payment is approved. Whether the sub’s insurance was still in force while they did the work is the part nobody checked. This guide is for whoever pays the subs: what to look at on each pay run, the contract term that lets you hold a payment, and what skipping it costs when the premium audit comes.
Before releasing a payment, confirm the sub has a certificate of insurance on file whose general liability, workers' comp and auto lines were all in force for the dates of the work you're paying for, or a valid workers' comp exemption for a sub with no employees. Collect the certificate and W-9 before the first payment, not after. Make current certificates a condition of payment in the subcontract so you can hold a payment when one lapses. Payments to a sub with no insurance on file are the ones your insurer can add to your premium at audit.
In this guide
Why the pay run is the place to check
In most small companies the certificate of insurance and the bill live in different places. Someone in the field or the office collects the certificate when the sub starts, it goes into a folder or an inbox, and nobody looks at it again. The bill goes into the accounting system, gets approved and gets paid. Nothing connects the two.
That’s why the person who pays the subs is in the best position to catch a lapse. A payment is the one moment every sub passes through, every time they work for you. It’s also your leverage: a sub who hasn’t sent a renewal in three months tends to send it the day a payment is held for it.
None of this means AP has to read certificates. It means AP needs to see one answer, insured or not, at the moment of approving the bill.
What “insured” means on the day you pay
A certificate on file isn’t the same as a sub who’s insured. What matters is whether each policy you require was in force for the dates of the work on the invoice:
| Check | What to look for | Why it trips people up |
|---|---|---|
| Each line's own dates | The effective and expiration date on every coverage line you require: general liability, workers' comp, auto, umbrella | Policies on one certificate rarely renew together. The GL can be current while the workers' comp lapsed last month. |
| The dates of the work | The policies covered the period the invoice is for, not just today | A renewal that arrived after a gap leaves the weeks in between uninsured, and that's what an auditor looks at. |
| Workers' comp, or an exemption | A workers' comp line, or the state's exemption for a sub with no employees | An exemption usually covers only the named owner. A sub who brings helpers is uninsured for them. |
| The right company | The insured's name matches the vendor you're paying | A certificate for a related company or a previous business name doesn't cover the one on the bill. |
| A W-9 | A signed W-9 with a name and TIN that match the vendor | Without one, you may have to withhold 24% from the payment. |
A certificate is a snapshot from the agent, not the policy itself, so a policy can be cancelled after it was issued. For a large payment or a sub you have doubts about, call the agent listed on it. How to check if a contractor has insurance covers that call and the state workers’ comp lookups; how to spot a fake certificate covers the red flags. The missing-W-9 side is in backup withholding.
The pay-run check
A routine that fits into the way bills already get approved:
- Nothing for a new sub until the packet is in. Certificate of insurance, W-9 and, where the trade needs one, the license, before the first payment. After the first payment, your leverage is gone.
- Before approving the run, look at the status of every sub on it. Expired or missing means the bill waits, or gets approved with a note to collect the renewal first, whichever your company decides.
- Ask for the renewal, don’t just note it. Send the sub the request the same day, and copy their agent if you know who it is. The agent can issue the renewal certificate directly; subs often forget to forward it.
- Hold the payment only the way your contract allows. See the next section.
- Keep what you collect. Every certificate, with the date you received it. The premium auditor will ask for it, for every sub you paid in the policy year.
Done by hand, step 2 is the one that quietly stops happening: cross-checking a spreadsheet for every vendor on every run is a second job. That’s the step worth automating.
The contract term that lets you hold a payment
Many states have prompt-payment laws that set deadlines for paying subcontractors, and a sub whose payment is late may be owed interest. Holding a payment on your own initiative, with nothing in the contract about it, is where disputes start.
The usual answer is to put the condition in the subcontract or vendor agreement before work begins:
- Insurance requirements, by line and limit, with a certificate due before work starts and a renewal due before each policy expires.
- Current certificates as a condition of payment: no payment is due for any period in which the required insurance wasn’t in force and documented.
- A W-9 before the first payment.
How a clause like that works alongside your state’s prompt-payment rules depends on the state and on the rest of the contract, so have your attorney word it. Once it’s there, a held payment is a term the sub agreed to, not a surprise.
What it costs when nobody checks
The bill for an uninsured sub usually arrives months later, through your own insurance:
- The workers’ comp premium audit. After the policy year, your insurer lists every sub you paid and asks for proof of their workers’ comp. For a sub with none, the auditor commonly adds what you paid them to your payroll, at the rate for their trade. Workers' comp audits and subs walks through it.
- The general liability audit asks the same question about liability insurance. GL premium audits and subs.
- An injury or a claim. In many states the hiring contractor is responsible for an uninsured sub’s injured workers, and damage the sub causes with no liability policy behind them lands on yours. Subcontractor without insurance covers where that cost lands.
The audit list comes out of your accounting system: every vendor you paid, with the amount. The certificates have to come from wherever you kept them. A pay-run check means they’re all in one place before anyone asks.
Making the check automatic
The check only survives if the answer is where the bills get approved. Nothing in QuickBooks flags a vendor whose general liability expired last month, so the status has to be put there.
How TrackMyVendor automates this
- On paid plans, the status sits on the QuickBooks vendor record as one PDF named for it — COMPLIANT, NOT COMPLIANT or NO DOCUMENTS ON FILE — and it’s replaced when the status changes. Whoever approves the bill sees it without opening another tab.
- Every certificate is read when it arrives: each coverage line’s limits and its own expiration date, checked against what you require.
- Subs get the renewal request themselves, at 90, 60, 30 and 7 days before a policy expires on paid plans, with a secure upload link and no account to create.
- W-9s come in the same link and are read for you, and the 1099 sheet notes anyone with no W-9 on file.
TrackMyVendor never touches bills, payments or accounts in QuickBooks, and it doesn’t hold a payment for you. The person approving the bill decides; it just puts the answer in front of them.
Start tracking your subs freeMore on how it connects in QuickBooks COI tracking, and on W-9s in W-9 collection.
See who's insured before the pay run
Everything above is a check you can run by hand. This is what it looks like when it runs itself.
On the free plan
- Your first 25 subs, no credit card
- Subs upload certificates, licences and W-9s through a one-time link — no account, no app
- Every certificate read automatically: coverage rows, limits and each policy’s own dates
- Contractor licences checked against the state board’s own records
- A Monday summary of everything expired or expiring
- Compliance status on the QuickBooks vendor record, certificates read for you
Per-deadline alerts at 90, 60, 30 and 7 days, sent to your team and to the sub, start on Starter. Compare plans
Stop checking by hand
Set up your roster today
Add your subs — or import the whole list from a spreadsheet on Starter — send each a one-time upload link, and the certificates, licences and W-9s arrive already read. No demo, no sales call, no implementation project.
Start free — no credit card →Up and running in about 10 minutes.
Explore what it does: QuickBooks COI tracking · W-9 collection · Expiration alerts · COI tracking
Frequently Asked Questions
Can I hold a payment to a subcontractor whose insurance expired?
Is a certificate of insurance enough proof that a sub is insured?
What if a sub has no employees and no workers' comp?
How often should AP check a sub's insurance?
Does QuickBooks track vendor insurance?
This guide is general information as of November 2026, not legal, tax or insurance advice. Prompt-payment rules, workers’ comp exemptions and audit practice vary by state and insurer: ask your attorney, accountant or agent about a specific sub or contract.