Contractor Liability Insurance FAQ

Even though the state requires all drivers to have auto insurance, there is no governing body that requires contractors to have General Liability insurance. But this shouldn’t be taken as a signal to overlook contractor liability insurance, whether you’re a business operator with contract workers or a homeowner who just contracted someone to do work on your house. You want to hire contractors who have the coverage that will protect you from liability related to on-site or on-job accidents and products sold by the contractors. For contractors, that means contractor liability insurance is advantageous for you from a business perspective. You need to find a good policy at the right price.

Does My Contractor Need Insurance?

Yes. If you sign a contract for someone to remodel a room in your house, and one of the workers is injured, you want to be sure you’re protected against a lawsuit. Knowing your contractor provides work comp coverage for their employees can help protect you as a homeowner. If, in the same scenario, the injured party is not one of the workers but your neighbor (a third party) who has stopped by to see the renovations you are doing but gets injured while on the property, the General Liability insurance the contractor has could protect you as an additional insured, which all homeowners should require of contractors they hire. Lawsuits are all too common these days, and sometimes cost businesses and individuals millions of dollars.

As a Contractor, How Should I Proceed?

The short answer: purchase contractor liability insurance. Most of the time, this will be a prerequisite to compete for a job. If it’s not, an insurance policy is still a smart move to protect your business and give your clients peace of mind knowing that you are insured. And keep in mind, a contractor liability insurance policy does not protect the contractor against poor workmanship or construction defects.

How Much Does Contractor Liability Insurance Cost?

There is no set cost. First, you need to decide how much coverage you want. A typical coverage amount on a General Liability insurance policy for a contractor would be $1,000,000 in liability coverage per claim. Your premiums will be controlled by factors such as the type of work you’re doing, payroll expenses, subcontractor costs, and gross receipts. A clean claims record will also have an impact on getting the best pricing.

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