Is it within the bounds of the law for a contractor’s insurance provider to require that the contractor not pay sub-contractors more than a certain % of their own earnings?
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Is it within the bounds of the law for a contractor’s insurance provider to require that the contractor not pay sub-contractors more than a certain % of their own earnings?
Is this a common practice? This is a very large problem for a couple managing some properties and intending to sub-contract most of the substantial workload.
Asked on March 18, 2015 under Insurance Law, New Hampshire
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 9 years ago | Contributor
It is completely within the bounds of the law: an insurance company or provider may put any restrictions into its policy that it wants, and if someone doesn't like those restrictions, they don't have to buy insurance from that company.Remember: no one is obligated to sell anyone else insurance, and will only sell it if the terms and conditions make sense for them.
The restriction you describe is intended to make sure that contractor keeps enough of the money to remain solvent, and it's not that uncommon a restriction, but the contractor can look for a different provider if that restriction doesn't work for the contractor.
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