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Who Is Responsible in the Construction Process?

A practical liability and risk-transfer guide for business owners


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Key Takeaways


  • Direct contract = direct liability. Whoever signs with the owner for the full project carries the responsibilities of the general contractor.


  • Trade-only contracts limit liability. Your responsibility is confined to your scope, as long as your contract makes that clear.


  • Accidental general contractor behavior is risky. Pulling the overall permit, coordinating trades, or guaranteeing schedules can create liability you didn’t intend.


  • Insurance is your safety net. Match your coverage to your role and require subcontractors to do the same.


  • Paperwork matters. Strong contracts, endorsements, and disclaimers make the difference between being protected and being exposed.


When a construction project goes wrong, the first question every homeowner, business owner, or lawyer asks is simple: “Who’s responsible?” The answer isn’t about who swung the hammer—it’s about who signed the contract. Responsibility in construction follows the contract. That’s why understanding whether you’re acting as a general contractor or just a trade contractor is critical for managing risk.


Why This Matters


If you’re a business owner working on residential or commercial projects, your liability could swing dramatically based on one thing: whether you’re the only party in direct contract with the owner. If you are, you carry the umbrella of liability—even for work you didn’t personally do (OSHA’s Multi-Employer Citation Policy confirms this “controlling employer” principle). If you’re just a trade contractor under your own agreement, your responsibility narrows to your scope of work.


A Tale of Two Kitchen Remodels


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Scenario 1: You’re the General Contractor


A homeowner hires you for a full kitchen remodel: flooring, cabinets, countertops, painting, electrical, and plumbing. You only install the cabinets but subcontract the rest.


Halfway through, the electrician makes a mistake that sparks a small fire. The homeowner doesn’t go after the electrician—they come after you. Why? Because you signed the prime contract for the entire remodel. You’re on the hook to deliver the whole project, regardless of who actually did the work.


If you’ve done it right, your subcontract requires indemnity, endorsements adding you as an additional insured, and waivers of subrogation. Your general liability insurance policy may pay out first, but then your insurer can pursue reimbursement from the electrician’s insurer. Without those protections? You’re left footing the bill.


Scenario 2: You’re Trade-Only


Now imagine you only sign for the cabinet installation. You refer the homeowner to an electrician, plumber, and painter, but they each contract directly with the homeowner. In this case, you are not the general contractor—the homeowner effectively acts as their own general contractor (a setup sometimes called “owner-builder” by municipalities). If the electrician’s mistake causes that same fire, liability lands on the electrician, not you.


Your responsibility stays within your lane: the cabinets. As long as your contract makes clear you’re trade-only and your referral is courtesy only, you avoid being pulled into disputes you didn’t control.


Real-World Claim Snapshots


  • Flooded basement: A plumber’s loose fitting caused a major water loss during a remodel. The general contractor’s insurer paid first, even though the plumber made the mistake. Recovery from the plumber’s insurer came later.


  • Electrical fire: An electrician wired a panel incorrectly, sparking a fire that damaged a client’s home office. The cabinet installer was initially named in the lawsuit but was released because their contract clearly limited liability to cabinets only.


  • Paint overspray: A painting subcontractor damaged an owner’s dining set. The owner made a claim against the general contractor, not the painter, because the general contractor held the prime contract.


The Liability Map


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Here’s the quick breakdown:

Issue

General Contractor

Trade Contractor

Contract with owner

Entire project

Trade-only

Coordination and scheduling

Yes

No

Site safety

Broad responsibility

Limited to your crew

Defective work by others

General contractor liable

Not your risk

Permits

Overall permit

Trade permit only

Warranty

Entire project

Your trade only

Common Misconceptions


  • “If I didn’t cause the problem, I can’t be liable.” False. As a general contractor, you can be held liable for your subcontractors’ mistakes.


  • “A certificate of insurance proves I’m covered.” False. A certificate is only evidence. Actual coverage comes from the policy and endorsements.


  • “Referring another trade means I’m responsible for them.” Not necessarily. If you clearly state it’s a courtesy referral and the homeowner contracts directly, responsibility stays with that trade.


  • “Pulling the permit is no big deal.” Wrong. The permit holder is often treated as responsible for code compliance.


How to Finance or Transfer Risk


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If You’re the General Contractor


  1. Carry broad coverage: general liability insurance with completed operations, umbrella or excess liability, workers’ compensation, commercial auto, builder’s risk coverage, professional liability (if you design or specify), and pollution liability.


  2. Require subcontractors to sign strong agreements with indemnity, additional insured endorsements for ongoing and completed operations, primary and non-contributory wording, and waivers of subrogation. Collect endorsements—not just certificates of insurance.


  3. Prequalify subcontractors for licenses, insurance, and safety record. A bad hire can expose you to negligent selection claims.


If You’re Trade-Only


  1. Focus on your lane: general liability insurance, workers’ compensation, tools and equipment coverage, umbrella liability if needed.


  2. Add professional liability if you design or make layout decisions.


  3. Use a contract with a non-general contractor acknowledgment and a referral-only disclaimer to avoid accidental general contractor exposure.


  4. Avoid “silent general contractor” behavior: don’t pull the overall permit, don’t coordinate other trades, and don’t guarantee their schedules.


OSHA and Permits: Hidden Traps


Even if you didn’t cause a hazard, OSHA can cite you as the “controlling employer” if you had the ability to prevent or correct it (OSHA Multi-Employer Citation Policy). Likewise, if you pull the overall permit, many authorities will treat you as responsible for code compliance—even if your contract says otherwise.


What To Do Next


  1. Decide your role upfront. Are you the general contractor or trade-only? Write it down in your contract.


  2. Align your insurance. Make sure your coverage fits your role. If you’re the general contractor, go broad; if trade-only, protect your lane.


  3. Tighten your contracts. Require endorsements from subcontractors if you’re the general contractor. Add disclaimers if you’re trade-only.


  4. Don’t rely on certificates of insurance. Collect actual endorsements.


  5. Avoid accidental general contractor moves. Don’t pull overall permits or coordinate trades unless you’re ready to carry the liability.


  6. Consult professionals. Have legal and insurance advisors review your documents and policies.


Final Takeaway


In construction, liability doesn’t follow the hammer—it follows the contract. Direct contract = direct liability. Decide your role upfront, spell it out in your paperwork, and align your insurance and subcontract agreements accordingly. That’s how you protect yourself, finance the risks you can’t avoid, and transfer the ones you shouldn’t carry.




References

Educational only, not legal advice. Consult local counsel.




 
 
 

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