What Happens If a Subcontractor You Hired in Tennessee Has No Workers’ Compensation Insurance?

Hiring an uninsured subcontractor can expose you to significant liability if one of their employees is injured. In Tennessee, you may be classified as the “statutory employer” and become responsible for workers’ compensation benefits, including medical bills and lost wages.

How Statutory Employer Status Works

When a subcontractor has no workers’ compensation coverage, state law may assign you employer status for the purpose of that claim. That means your workers’ compensation policy, if you carry one, may be triggered to cover the injured worker’s costs. If you carry no coverage yourself, you face those costs out of pocket.

Tennessee law offers a trade-off alongside this liability: As a statutory employer, you generally receive the same exclusive remedy protection as a direct employer, meaning the injured worker typically cannot also sue you in tort for negligence.

What Your General Liability Policy Can and Can Not Do

General liability insurance can cover third-party property damage and bodily injury to others, not injuries to workers on your payroll or under your direction. Common gaps include:

• Medical expenses for injured subcontractors treated as statutory employees
• Lost income claims filed against you
• Legal defense costs if the worker files suit

Speak to an Agent Near You

Contact Builtwell Insurance Agency Inc. to review your current contractors insurance and confirm whether your coverage addresses statutory employer exposure. We work with businesses across Chattanooga, Cookeville, and Hixson, TN and can help identify gaps before a claim surfaces.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.