Subcontracting in insurance investigations is a high-margin play—if you build the right vendor relationships. The difference between a one-person operation and a scalable practice often comes down to who you trust to handle surveillance, skip tracing, and field interviews when you're overloaded.
Why Subcontracting Matters for Investigation Shops
Most insurance investigators hit a capacity wall within 12–18 months of consistent work. You land three concurrent cases, the insurance company wants daily surveillance updates, and suddenly you're working 16-hour days. Subcontracting lets you say yes to more claims without burning out or hiring full-time staff you can't keep busy year-round.
A reliable subcontractor network also positions you as a "one-stop shop" to insurance carriers. Instead of referring claimants to another investigator (and losing that margin), you manage the work internally, vet quality, and pocket 15–30% of the subcontract fee while maintaining client control.
Finding the Right Subcontractors
Start local. Scope out other investigators, retired law enforcement, and licensed security professionals in your region. Insurance carriers prefer investigators they know have "boots on the ground" capability—that's you leveraging local talent.
Vet thoroughly:
- Ask for references from other investigation firms (not their friends)
- Review their licensing status with your state's regulatory body
- Ask what liability insurance they carry (minimum $1M is standard)
- Request a sample report or past case file to check quality
- Confirm they understand your SOP for data handling and confidentiality
Interview at least 3–5 candidates per specialty (surveillance, interviews, asset location) before committing. A bad subcontractor burns your client relationship faster than it takes to lose an investigation contract.
Setting Rates and Expectations
Subcontractors typically expect 40–55% of the billable rate to the end client. If you bill an insurance carrier $85/hour for surveillance, offer your sub $35–45/hour. That leaves you margin for administrative overhead, liability coverage, and risk.
For fixed-project work (a pre-suit investigation, for example), offer 35–40% of the project fee. If you charge a carrier $1,500 for a skip trace and asset review, paying your sub $500–600 keeps relationships solid while preserving your markup.
Never lowball to desperation rates. You'll attract unreliable people, and they'll underdeliver when a big case hits. Quality subs want consistency, respect, and fair compensation—offer that, and they'll prioritize your work.
Formalizing the Relationship
Use a written subcontractor agreement. It should cover:
- Hourly rate or project fee
- Expected turnaround (24-hour reports for surveillance, 48-hour deliverables for interviews)
- Confidentiality and NDA requirements
- How they handle client communications (always through you, never direct)
- Liability and insurance requirements
- What happens if they miss deadlines or submit poor work
A simple one-page agreement from a template site (or your attorney) costs less than one botched case. It protects you both and sets clear expectations.
Managing Quality and Consistency
Weekly check-ins go a long way. Text or email your active subs asking about workload and upcoming availability. When you assign a case, confirm receipt within 1 hour and set a deadline that's 24 hours before the carrier needs it.
For ongoing subs, conduct quarterly reviews. Share what the carriers told you about report quality, responsiveness, and accuracy. Good performers get first dibs on premium cases; poor performers get phased out.
Build in redundancy. Maintain 2–3 subs for each specialty. When your lead surveillance person is booked, you don't panic—you call the backup.
Scaling with Subcontractors
Once you've built a trusted network of 4–6 subcontractors, you can comfortably handle 2–3x more cases than you could solo. That translates to 2–3x revenue without proportional headcount growth.
At this stage, consider listing your expanded capabilities on Mercoly. Showcase that you offer multi-discipline investigations—surveillance, interviews, records retrieval, and more—backed by licensed professionals. It signals to insurance carriers that you're a serious shop, not a one-person show.
Frequently Asked Questions
Q: Can I use subcontractors who aren't licensed investigators? A: Absolutely—for support roles like asset location, records retrieval, or scheduling. For interviews and surveillance, licensing requirements vary by state; verify your state's rules before assigning sensitive fieldwork.
Q: What's a realistic timeline for building a trusted subcontractor network? A: 3–6 months of active recruiting and vetting. Start with 2–3 people and add specialties as cases demand them.
Q: Should I require subcontractors to carry their own liability insurance? A: Yes, always. Require proof of at least $1M general liability, and have your carrier add them as additional insured on your E&O policy.
Start recruiting today—your next overflow case is coming sooner than you think.