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What is General Contractor Insurance?

According to the Associated General Contractors of America, “The construction industry has more than 680,000 employers with over 7 million employees. Your line of work creates almost $1.3 trillion worth of structures each year”. According to the U.S. Census Bureau, as of January 2020, $1.3 billion is spent on construction—both public and private—in a single month

Why Contractors General Liability Insurance Is Necessary

“What’s the worst that could happen?” is a question every general contractor needs to be prepared for as you consider the type of business insurance you need. While some occurrences are small—and could be paid off without putting a huge hole in your budget—there is always a chance that you don’t have the appropriate general contractor insurance policy. You may not only lose your business, but any personal assets that were leveraged as well. You could be seriously underprepared for a major incident that has the potential to put you out of business—for good. Not every business has the same risks, but you don’t want to rely on guesswork when it comes to your livelihood. Consider taking the proper precautions to protect your business and invest in the proper contractors insurance

General Liability Insurance Vs General Contractor Insurance

What is the difference between general liability insurance and general contractors insurance? They're actually used interchangeably to describe the same type of policy insurance companies offer. Both are often referred to as business liability insurance.

What is General Contractor Liability Insurance?

Every general contractor has assets to protect and are exposed to liabilities while conducting business. If you’re overseeing a project and something goes wrong—you’re typically the one held liable. You need to recognize the importance of securing a policy to protect yourself and your business. This is where General Liability Insurance comes into play.

General Liability Insurance is a basic insurance policy that protects you in the event of injury or damage to a third-party. It’s a requirement from most entities when you enter into a contract. In short, contractors general liability insurance typically covers:

  • Third party bodily injury
  • Property damage
  • Libel and slander

General contractors should seek out a licensed insurance professional and discuss the policy options available to insure your business. Utilize your state department of insurance as well to determine coverage and reasonable costs. Make it a top priority and work with your agent to develop a comprehensive insurance package that makes sense for your business while addressing affordability and cost savings options.

What Types Of Business Insurance Do General Contractors Need To Consider?

Beyond general liability insurance, there is additional business insurance coverages that are important for general contractors to consider: 

Professional Liability Insurance: Professional liability insurance for contractors covers negligence as it pertains to the professional services you provide. It is usually financial damages versus a physical injury or property damage claim. This is highly recommended to cover any financial claims incurred. For that reason, we recommend bundling general liability with professional liability coverage. 

Inland Marine Insurance: Inland Marine Insurance is a type of floater policy and can often be referred to as Contractors Tools and Equipment Insurance. It is coverage for equipment being transported to and from a worksite as well as at the worksite (this is NOT covered in your auto or renter’s insurance because it is business related).

Commercial Auto Insurance: As a small business owner and general contractor, you likely use some sort of vehicle to transport yourself and your tools to a worksite. This opens yourself up to risk, especially if you’re involved in an accident or the vehicle is stolen. Insuring your vehicle has coverage under commercial auto insurance is another factor to consider to protect your business.

Business Property Insurance: This is important if you have a physical location and/or office and store equipment there. General contracting is more than building: It’s organizing contracts and plans, client information, and maintaining records. Using Property Insurance to protect your data and off-site equipment is just as important as securing your tools and vehicles.

Workers Compensation: Workers Compensation provides health benefits to your employees for work-related injuries. If you're a small business and have employees, you need to be familiar with your state’s laws concerning Workers Compensation—many require a business to obtain it. It can also protect your business from being sued if injury occurs. Familiarize yourself with your state’s laws to understand your obligations and risks. 

Builder’s Risk Insurance Coverage: Builder's Risk Insurance can be defined as coverage that protects a person's or organization's insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause.

Other Factors General Contractors Must Consider

Things that are required to bid on a government contract include: 

Construction Bond/Surety Bonds: A Surety Bond is a legally binding contract—between a surety, principle, and the obligee—that guarantees the type of contracting work to be done is completed correctly and in the agreed upon length of time. The ‘surety’ is the insurance company that backs the bond. The ‘principle’ typically refers to the contractor, with the ‘obligee’ being the agency requiring the surety bond. 

Liability Insurance Certificate: Many clients are requesting a Liability Insurance Certificate from contractors as a requirement to bid on a project. Certificates of insurance summarize a tremendous amount of information on a single sheet of paper for the requester of the certificate. Ask your licensed insurance professional for a current copy of your Liability Insurance Certificate. 

How Much Does General Contractors Insurance Cost?

The cost of a policy varies depending on the type of coverage that you get, the value of the equipment you use, and what insurance policies you bundle (i.e. general liability, professional liability, workers compensation, property coverage and so forth). If you're a small business, don't try cutting costs with your insurance policy. An exact number cannot be articulated without a detailed conversation. Your insurance cost doesn't have to break the bank.

How Do I Find A Contractors Insurance Company?

As a general contractor, your work is extremely valuable and important. Let us help you protect your prized business with the best possible insurance coverage. You can call us today at 1-877-907-5267 to get a free quote for a general contractors insurance plan. Or contact us by completing the form at the top of the page. We'll set you up with the right insurance policy to fit your general contractors business.

Related Articles: General Liability Insurance, Professional Liability InsuranceBuilders Risk Insurance, Masonry Contractor Insurance

I recommend the prices! They have great customer service!
Susan Ellison
Great! Fast service at a great price. Needed a business insurance provider the same day for a company I work with. They had the quote to me within minutes and policy up and running shortly after. Would recommend highly!
Andrew Moran
The entire process was very easy....from initial quote to signing the policy. Their rates were very competitive. Thanks for protecting me and my business!
R Luscombe