Jun 29, 2026
Your subs can make or break you. In this bonus chapter, Karalynn explains why every subcontractor needs their own written agreement, how to tie sub payments to owner approvals, and how insurance, additional insured status, and master subcontracts protect your reputation and your bottom line.
Learn more about The Cromeens Law Firm here!
Grab Karalynn's new book Trust Your Gut here.
Follow Karalynn Cromeens on Facebook here.
Follow Karalynn Cromeens on Instagram here.
Follow Karalynn Cromeens on LinkedIn here.
Watch the show on YouTube here.
Key Takeaways
1. Every sub needs a written subcontract that sets quality standards, insurance requirements, and owner‑approval‑based payment terms.
2. Make sub payment contingent on owner approval and your receipt of funds so you are not paying for unapproved or defective work.
3. Use subcontracts to clarify that subs and their workers are not your employees, and require them to carry their own workers’ comp.
4. Add yourself as additional insured on subs’ policies and use a master subcontract to standardize protections across all projects.
Timestamped Overview
01:00 Explanation that the book has focused on homeowner contracts
so far, but subcontracting is another major risk area where
contractors are often exposed.
02:00 Practical reasons for subcontracts: defining the
relationship, setting quality standards, confirming insurance, and
requiring that subs’ work meets plans and specs and is approved
before they get paid.
03:00 Emphasis that subs extend your reputation, so you must
communicate your standards and methods clearly and treat subs’ work
as a reflection of your company.
04:00 Payment terms section: your payment to subs should mirror
your payment from the owner, and subs should not be paid until the
owner approves their work and pays you.
05:00 Common scenario: sub wants payment even when the homeowner is
unhappy or the work is not to spec, and how a clear
contingent‑payment clause gives you leverage.
06:00 Legal reasons for subcontracts: reducing the risk that subs
or their workers can claim to be your employees and sue you or the
owner when injuries occur.
07:00 Explanation of workers’ comp audits: without subcontracts,
auditors may treat everyone you paid as employees and spike your
premiums; story of a client facing a large audit bill that was
reduced thanks to signed subcontracts.
08:00 Insurance strategy: requiring subs to name you as additional
insured so you can file claims directly on their liability policy
if their work causes damage.
09:00 Wine‑cellar flooding example where a sub set off sprinklers
and caused major damage, and how being additional insured allowed
the contractor to file a claim without relying on the sub.
10:00 Introduction to the master subcontract concept: one
comprehensive agreement covering standards, insurance, payment
terms, and legal protections for all future jobs with that sub.
11:00 Explanation that with a master subcontract, each new job can
be covered by a simple work order referencing the existing terms,
simplifying paperwork and enforcement.
12:00 Discussion of how a master subcontract helps during worker
injuries and insurance audits by clearly proving that subs are
independent and must carry their own coverage.
13:00 Reminder that the industry has moved beyond handshake deals;
even long‑time subs and friends should work under written
agreements because risks and claims have changed.
14:00 Suggestion to include extra protections in master
subcontracts, such as preventing homeowners from hiring your subs
directly and requiring approval for extra work before it is
performed.
15:00 Key takeaways recap: always use written subcontracts, set
tight payment and insurance terms, list yourself as additional
insured, and use a master subcontract to streamline the process and
protect your business and reputation.