Vendor Insurance Requirements: How to Set Coverage Minimums

Vendor insurance requirements are the coverage types and minimum limits a vendor must carry before they work for you. To set them, sort vendors into high, medium, and low risk tiers, match coverage such as general liability, workers’ comp, commercial auto, or professional liability to the work, and set the limits for each tier with your broker. Then write the requirements into the vendor contract so they’re agreed before work starts.

Construction has well-worn habits for this, but most businesses also hire cleaners, IT contractors, consultants, maintenance techs, and delivery services, and those vendors often start work with no requirements at all. This guide focuses on those non-construction vendors.

This article is general information, not legal or insurance advice. Check your contracts and talk to your insurance broker or attorney about your situation.

If you hire contractors and subcontractors for building work, see subcontractor insurance requirements instead; construction has its own conventions. For the bigger picture of collecting and tracking certificates once requirements are set, see the certificate of insurance tracking guide.

Why do vendor insurance requirements matter beyond construction?

Requirements matter beyond construction because cleaners, IT contractors, consultants, and delivery drivers can all cause injuries or losses that someone’s insurance has to pay. It’s easy to assume that only contractors with ladders and power tools need to show insurance. But consider a few ordinary situations:

• A cleaning crew’s employee slips on a wet floor in your lobby and is injured.
• An IT contractor misconfigures your backups and you lose a week of data.
• A consultant’s advice leads you into a costly mistake.
• A delivery driver backs into a visitor’s car in your parking lot.
• A maintenance tech’s space heater starts a small fire in a storage room.

In each case, the question becomes whose insurance pays. If the vendor has the right coverage, theirs should respond first. If they don’t, the cost can land on you or your insurer. Requirements make sure the right coverage exists before anything happens.

Step 1: Sort vendors into risk tiers

You don’t need a different requirement for every vendor. Three tiers cover most small and mid-size businesses:

Tier	What it looks like	Examples
High	Physical work on your property with tools, heights, heat, chemicals, or vehicles; or access to sensitive systems or data	Facility maintenance, HVAC service, elevator service, managed IT with admin access, security guard services
Medium	Regular on-site presence with limited physical risk, or regular driving on your behalf	Janitorial and cleaning, landscaping, couriers and delivery, on-site IT support
Low	Little or no physical presence, low access to sensitive information	Remote consultants, marketing agencies, office supply vendors, software subscriptions

When a vendor sits between tiers, go with the higher one. Revisit the tier if the scope changes: a consultant who starts handling customer data is no longer low risk.

Step 2: Match coverage types to the work

Insurance requirements should follow the risk, not a generic template. Here’s how common coverage types map to non-construction vendors.

General liability

Covers bodily injury and property damage to third parties caused by the vendor’s operations. Ask for it from nearly any vendor who comes onto your premises. On an ACORD 25, look for each occurrence and general aggregate limits.

Workers compensation and employer’s liability

Covers the vendor’s own employees if they’re hurt on the job. Important for cleaning companies, maintenance vendors, and anyone with crews working on site. Rules on who must carry it vary by state (the Department of Labor lists each state’s workers’ compensation office), so talk to your broker about vendors who say they’re sole proprietors with no employees, and what proof to accept in that case.

Commercial auto

Required when driving is part of the job: couriers, delivery services, mobile technicians, landscaping crews. A personal auto policy may not cover business use, so ask specifically for commercial auto.

Professional liability (errors and omissions)

Covers financial harm caused by a vendor’s professional mistake or advice. This is the key coverage for consultants, accountants, designers, and many IT vendors, because the risk is a bad outcome, not a physical injury.

Cyber liability

Relevant for vendors who access your systems or store your data: managed IT providers, software vendors, payroll processors. Policies differ a lot in what they cover, so this is one to review closely with your broker.

Umbrella or excess liability

Adds limits above general liability, auto, and employer’s liability. Usually reserved for high-tier vendors where a single incident could exceed the underlying limits.

Crime or fidelity coverage

Some businesses ask cleaning companies and other vendors with unsupervised access to carry coverage for employee theft, sometimes called a janitorial or fidelity bond. Whether it’s worth requiring depends on what’s in the spaces they’ll access.

Coverage by vendor type

Vendor type	Usually ask for	Sometimes ask for
Janitorial and cleaning	General liability, workers comp	Crime or fidelity coverage, commercial auto
Facility maintenance and repair	General liability, workers comp	Commercial auto, umbrella
Managed IT and IT contractors	Professional liability, cyber liability	General liability and workers comp if on site
Consultants and advisors	Professional liability	General liability if they visit your offices
Courier and delivery	Commercial auto, general liability	Workers comp, cargo coverage for your goods in transit
Landscaping	General liability, workers comp, commercial auto	Umbrella
Security services	General liability, workers comp	Umbrella, professional liability

Treat this as a starting point for a conversation with your broker, not a rule.

Step 3: Set the minimum limits with your broker

Minimum limits are where people want a number to copy. There isn’t a standard one that fits everyone, and a limit that’s sensible for a remote consultant would be far too low for a facility maintenance company.

Limits are usually written as two figures for each line of coverage: a per-occurrence amount (the most the policy pays for one incident) and an aggregate amount (the most it pays over the policy period). Your minimums should depend on:

• What your own contracts require. If your landlord, lender, or client requires you to carry certain limits and to pass requirements down to your vendors, start there.
• The worst realistic incident. What could this vendor damage, and who could get hurt?
• Your own insurance. Your broker can tell you how your policies respond if a vendor’s coverage falls short.
• What’s available to the vendor. Very small vendors may not be able to buy high limits at a reasonable price. Requiring the impossible means either losing good vendors or quietly ignoring your own rules.

Here’s how a hypothetical requirement might read. Say your contract with a facility maintenance vendor requires general liability with a set per-occurrence and aggregate limit, workers compensation at statutory limits with employer’s liability, and commercial auto for any vehicle used on your property. The actual dollar figures come from your broker, based on your situation.

Write the limits per tier, keep them in one document, and review them once a year, ideally when your own policy renews.

Step 4: Write the requirements into the contract

Insurance requirements only hold up if they’re in writing and the vendor agreed to them before starting. A typical insurance clause in a vendor agreement covers:

• Coverage types and minimum limits for each line.
• Additional insured status, if required, naming your company (and sometimes related entities such as your landlord).
• Waiver of subrogation and primary and non-contributory wording, if your broker or attorney recommends them.
• Proof of coverage: a certificate of insurance, plus copies of required endorsements, delivered before work starts.
• Certificate holder details: your exact legal name and address.
• Duration: coverage must be maintained for the full term of the agreement, with renewal certificates sent before expiration.
• Notice: the vendor tells you if coverage is canceled or materially reduced.
• Insurer quality: some contracts require insurers with a minimum financial strength rating.
• Consequences: what happens if the vendor doesn’t comply, such as suspended work or held payments.

Have your attorney review the wording. Insurance clauses interact with indemnity clauses, and small wording differences matter.

A note on endorsements

Additional insured, waiver of subrogation, and primary and non-contributory are endorsements to the vendor’s policy. The certificate can show a checkmark in the ADDL INSD or SUBR WVD columns, but the certificate itself states it’s for information only and doesn’t change the policy. To confirm the coverage, ask for the endorsement pages and have someone read them, and ask your broker if the wording is unclear. For the difference between being named on a certificate and actually being covered, see additional insured vs. certificate holder.

Step 5: Communicate, collect, and check

Send each vendor your requirements before the first job, in plain language, along with the exact certificate holder name and address. The vendor’s insurance agent issues the certificate, so make it easy for the vendor to forward your request. Our guide on how to request a certificate of insurance includes an email template you can adapt.

When the certificate arrives, compare it to the requirements for that vendor’s tier: coverage types present, limits at or above minimums, current policy dates, correct insured name, and correct certificate holder. CertiTrack can read the policy dates, policy numbers, insurers, and coverage amounts from the certificate so you can compare them quickly, but it does not check endorsements or policy wording. Those still need a person.

Then track the expiration dates. Requirements set once and never checked again don’t protect anyone.

Step 6: Handle exceptions on purpose

Some good vendors won’t meet every requirement. A one-person IT consultant may not carry cyber coverage. A small cleaning company may not have an umbrella policy. You have options:

• Accept a lower limit for that vendor, approved by someone with authority and written down.
• Narrow the scope so the vendor doesn’t do the work that drives the risk.
• Ask your broker whether your own coverage can fill the gap.
• Find another vendor if the risk is too high to accept.

The mistake is approving exceptions informally, so nobody remembers later why a vendor was allowed to work without coverage.

Once your requirements are set, the ongoing work is collecting certificates and keeping up with renewals. CertiTrack’s Free plan covers up to 5 vendors, a good way to start with your high-tier vendors; see pricing for larger plans.

Frequently asked questions

Should I require insurance from every vendor?

Not necessarily. Vendors who never come on site and don’t touch your data or finances may not need requirements beyond your normal contract terms. Anyone working on your premises, driving for you, or advising you on decisions with financial consequences usually should carry coverage.

What if a small vendor says they can’t afford the coverage?

Ask what they do carry, then decide whether the gap matters for the work they’ll do. You can accept a documented exception, narrow their scope, or choose another vendor. Talk to your broker before accepting a gap for a high-risk vendor.

How often should vendor insurance requirements be updated?

Review them yearly, and whenever a vendor’s scope changes, your own contracts change, or your broker recommends it. Requirements written years ago may not match the work vendors do today.

Does a vendor’s insurance protect my business automatically?

No. Their general liability covers their liability to others, and whether it extends to you depends on the policy and its endorsements. That’s why contracts often require additional insured status, and why you should read the endorsement rather than relying on the certificate.

CertiTrack keeps every vendor’s insurance, licenses, and renewal reminders in one place. Start free.