General Contractors Insurance Policy Information

General Contractors Insurance. As a general contractor, a lot of responsibilities rest on your shoulders. Whether you're tasked with building houses, schools, restaurants, hotels, or any other type of structure, not only do you need to ensure that the needs of your clients are met, but you also have to ensure that all of your work is up to code, as well as secure all necessary building permits.

General contractors manage the construction of a new building project or renovation to an existing structure. They purchase all building materials, hire all labor, and obtain any other equipment or services needed to complete the project.

general contractors generally specialize in constructing single family homes or commercial buildings such as factories, offices, restaurants, or stadiums, but may also oversee other construction projects such as bridges, retaining walls, or towers.

Most have permanent employees, then subcontract the remaining tasks, such as electrical, heating, or plumbing, to specialty subcontractors. While firms whose employees do no actual construction work are commonly called "paper" contractors, they generally act as the prime contractor for such tasks as framing carpentry, structural masonry, or metal building erection, with remaining work done by subcontractors.

Once the land has been purchased and the design or architectural work approved by the property owner, the general contractor handles the project from site preparation to its completion, including any interior finishing work.

Typically, the general contractor turns the architect's design into specifications for work and materials, sets quality standards, schedules all phases of the project, and dictates insurance requirements.

The contractor solicits competitive proposals or bids from potential subcontractors and suppliers and works with the customer to award contracts to the successful bidders.

The general contractor is responsible for complying with all local and state ordinances, codes and zoning requirements, including obtaining the necessary permits and purchasing the required surety bonds, and for workplace safety.

Given the fact that you are responsible for so much, if anything goes wrong, you will be held liable and could be looking at serious financial losses. That's why investing in the right type of general contractors insurance coverage is so important.

What kind of coverage will you need? Read on to find out how you can protect your general contracting business.

General contractors insurance protects your contracting business from lawsuits with rates as low as $79/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked contractor liability insurance questions:

What Is General Contractor Insurance?
How Much Does General Contractor Insurance Cost?
Why Do General Contractors Insurance?
What Does General Contractors Insurance Cover?
What Does General Contractors Insurance Cover & Pay For?

What Is General Contractor Insurance?

General Contractor Insurance is a type of insurance policy specifically designed to protect general contractors from the financial losses and damages they may incur while working on a construction project.

This insurance covers a wide range of risks, including liability for injury or death to workers or others on the job site, damage to property, and errors or omissions in construction work. It also provides coverage for legal fees and expenses incurred in the event of a lawsuit or other legal action against the contractor.

How Much Does General Contractor Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Contractor Insurance policy for small contractors ranges from $79 to over $117 per month based on location, size of jobs, revenue, claims history and more.

Why Do General Contractors Need Insurance?

There are any number of things that could go wrong when you're a general contractor. A client could file a lawsuit against you, stating that you didn't complete the job that you were hired to do. An employee could fall off a ladder while working and suffer an injury.

The office that you operate your business out of could go up in flames. Your expensive tools could be lost or stolen. These are just a few examples of the different things that could go wrong, and for each one, guess who is responsible? - That's right, you are.

The costs of repairs to buildings, medical care that anyone may require, lost wages, replacing lost or stolen tools, and legal expenses, can all be quite exorbitant. That's why you need to have the right kind of insurance coverage.

If you're insured, instead of paying the expenses that are related to any mishaps that may occur yourself, your insurance carrier will cover them for you. In the long run, insurance can help to save you from serious financial losses. Being properly covered is also important because it ensures that your business is compliant with local laws.

general contractors are legally required to carry certain types of coverage. If you don't have the necessary general contractors insurance coverage in place, there's a chance that you could be looking at stiff fines and there's even a chance that you might lose your business.

What Type Of Insurance Do General Contractors Need?

There is no "one-size-fits-all" general contractors insurance. That's because the services that contractors offer vary and the types of insurance that are legally required vary from location to location.

In order to find out exactly what type of insurance coverage you'll need to carry, speaking with a reputable and experienced commercial insurance agent is definitely your best bet. With that said, however, there are some coverages that most general contractors will need to carry, including:

General Liability: This policy provides protection against third-party property damage and bodily injury claims. If a client were to trip over a wire while visiting your office, suffer an injury, and then file a lawsuit against you, general liability insurance would help to pay for any related expenses, including legal defense fees and compensation that you may be required to pay out.
Workers' Compensation: Most states require employers to carry workers' compensation insurance. This type of coverage will pay for any work-related injuries that your employees may sustain. For instance, if a worker were to fall off a ladder, break a leg, and not be able to work until they healed, this insurance would pay for their medical expenses and lost wages.
Commercial Property: To protect the building that you operate your general contracting business out of, you'll need to carry commercial property insurance. It covers the physical structure of your business, as well as the contents within it. If a fire were to break out in your office, for example, this insurance would cover the cost of any related repairs, as well as compensate you for anything that needs to be replaced.

The above-mentioned policies are just a few examples of the type of general contractors insurance coverage you should consider for your operations.

General Contractors' Risks & Exposures

Premises liability exposures at the contractor's office and storage facility are usually limited due to lack of public access. Any outdoor storage of equipment or supplies may create vandalism and attractive nuisance hazards. Off-site exposures are extensive as the general contractor is ultimately responsible for all injuries or property damage that results from construction operations, including those that are due to the acts or omissions of subcontractors.

The area of operation should be restricted by barriers and proper signage to protect the public from slips and falls over tools, power cords, building materials and scrap. Lack of adequate communication between the different subcontractors can cause hazardous working conditions, especially if blasting or similar hazardous operations are taking place. Heavy machinery used for excavation may cut power lines, disrupting service to other homes or businesses in the vicinity.

Welding presents potential for burns or setting the property of others on fire if not conducted safely. The contractor's employees can cause damage to the client's other property or bodily injury to members of the public or employees of other contractors. If there is work at heights, falling tools, or supplies may cause damage and injury if dropped from ladders, scaffolding, or cranes.

Disposal of waste materials (dust, scrap, varnishes or paints) could create environmental hazards. Failure to protect equipment, building materials, and property of others left at job sites from theft and vandalism may result in a subrogated loss.

Construction sites create attractive nuisance hazards, particularly to children who enjoy climbing and vandals after operations have ceased for the day and on weekends. Safety barriers such as perimeter fencing should be used to control access to the jobsite.

Contractual liability exposures are very high for general contractors. While it is important to control physical hazards, the key to successful performance is likely to be the management of contractual language.

Catastrophic financial losses and expensive litigation may arise if the general contractor fails to verify that subcontractors' certificates of insurance are accurate, and the limits are adequate for both liability and workers compensation coverages. In addition, the general contractor and project owner must be included as additional insureds on all subcontractors' policies.

The specific terms of the additional insured status may play a significant role in who pays for a loss.

Completed operations exposures are high due to the injury and property damage that can result from improper interpretation of building plans, use of materials that do not meet the quality standards required by design specifications, inadequate construction techniques, or lax supervision of the acts of subcontractors.

Quality control and full compliance with all construction, material, and design specifications are necessary. Inadequate monitoring of work orders and change orders may be a concern as poor record-keeping may necessitate payment of otherwise questionable claims. Inspection and written acceptance of the work by the owner or general contractor is critical.

Workers compensation exposures vary based on the size and nature of the job. When an executive supervisor is only reviewing and providing oversight, the exposure is clerical with some jobsite inspection. However, if actual construction work is done or supervisors remain at job sites continuously, the exposures increase to those encountered by each type of worker on the project.

Control of the jobsite is the responsibility of the general contractor, who may be held responsible for any injuries of subcontractors on the job. There should be strict enforcement of safety practices. Verification that every subcontractor carries adequate workers compensation coverage is important.

Property exposures at the contractor's own location are usually limited to that of an office. Ignition sources include electrical wiring, heating, and air conditioning systems. If the general contractor is a paper contractor, there will be no yard storage of building materials or equipment since there are no operations other than paperwork.

If the general contractor is involved in framework or masonry, lumber or bricks may be stored on site, increasing the exposure to fire, inclement weather, vandalism, and theft. Appropriate security measures should be in place to prevent unauthorized access.

Inland marine exposures include accounts receivable if the contractor bills customers for services, builders' risk, computers, and valuable papers and records for project plans, clients', subcontractors', and suppliers' information. Backup copies of all data, including building plans, should be stored off premises. Builders' risk is an important coverage.

Besides obtaining coverage for themselves, the contractor may need to coordinate their subcontractors' coverages and terms, so limits are adequate for the overall project. There may also be contractors' equipment for owned or rented items, goods in transit for materials transported to job sites, or installation exposures if materials to be installed are delivered to the site in advance.

Subcontractors generally have their own equipment with independent coverage. However, the general contractor may arrange for the lease of larger equipment, such as cranes, for subcontractors to use, either with or without operators. The contractual agreements between the general contractor and the rental firms determine who is responsible for any damage to the rented equipment.

Equipment may be subject to water hazards, overturns, drop, and fall from heights, or being struck by other vehicles. Materials and equipment left at job sites are subject to theft and vandalism loss. Equipment should be secured and rendered inoperable when not in use.

Crime exposures are from employee dishonesty, including theft of customers' goods by the insured's employee. Background checks, including criminal history, should be performed on all employees handling money. There must be a separation of duties between persons handling deposits and disbursements and reconciling bank statements.

Surety bond exposures can be high should the general contractor not comply with the terms of the contract with the customer, such as not completing the project, not completing it on time, or not paying for labor and supplies. The inability of the contractor to qualify for these bonds due to their prior experience and financial condition may indicate a moral hazard.

Commercial auto exposures may be limited to private passenger vehicles if executive supervisors simply travel from site to site. If the general contractor handles part of the construction, workers, equipment, and supplies may be transported to and from job sites.

Vehicles may have special modifications or built-in equipment such as lifts and hoists. Large materials such as air conditioners may be awkward and require special handling and tie-down procedures. Shifting of loads could result in overturn. If vehicles are provided to employees, there should be written procedures regarding personal use by employees and their family members.

All drivers must have appropriate licenses and acceptable MVRs. Random drug and alcohol testing should be conducted. Vehicles must be maintained, and the records kept in a central location.

What Does General Contractors Insurance Cover & Pay For?

General Contractors Insurance Claim Form

General Contractors can be sued for a variety of reasons, including:

Personal Injury Claims: General Contractors can be held liable for personal injury claims if someone is injured on the construction site. This can include injuries from falling debris, slip and fall accidents, and other hazards.
Insurance protection: General Liability Insurance can help cover the costs of lawsuits related to personal injury claims, including legal fees, settlements, and judgments.

Property Damage Claims: General Contractors can also be sued for property damage claims. This can include damage to nearby buildings or structures, damage to the property being worked on, and damage to equipment.
Insurance protection: General Liability Insurance can help cover the costs of lawsuits related to property damage claims, including legal fees, settlements, and judgments.

Breach of Contract Claims: General Contractors can be sued for breach of contract if they fail to meet the terms of the agreement they have with the property owner, such as not completing the work on time or not performing the work to the agreed-upon standards.
Insurance protection: Professional Liability Insurance can help cover the costs of lawsuits related to breach of contract claims, including legal fees, settlements, and judgments.

Employment Practices Claims: General Contractors can be sued for employment practices claims, including discrimination, harassment, and wrongful termination.
Insurance protection: Employment Practices Liability Insurance can help cover the costs of lawsuits related to employment practices claims, including legal fees, settlements, and judgments.

Defective Workmanship Claims: General Contractors can be sued for defective workmanship claims if the work they performed was not done correctly, which can result in property damage or personal injury.
Insurance protection: Professional Liability Insurance can help cover the costs of lawsuits related to defective workmanship claims, including legal fees, settlements, and judgments.

In summary, insurance can help protect General Contractors from various types of lawsuits by providing coverage for legal fees, settlements, and judgments. It is important for General Contractors to have adequate insurance coverage to protect their business from potential liabilities.

Commercial Insurance And Business Industry Classification

1521: General Contractors - Single Family Homes

Division C: Construction | Major Group 15: Building Construction General Contractors And Operative Builders | Industry Group 152: General Building Contractors-residential

1521 General Contractors - Single Family Homes: General contractors primarily engaged in construction (including new work, additions, alterations, remodeling, and repair) of single-family houses.

Building alterations, single-family-general contractors
Building construction, single-family-general contractors
Custom builders, single-family houses-general contractors
Designing and erecting combined: single-family houses-general con-
Home improvements, single-family-general contractors
House construction, single-family-general contractors
House: shell erection, single-family-general contractors
Mobile home repair, on site-general contractors
Modular housing, single-family (assembled on site)-general
One-family house construction-general contractors
Prefabricated single-family houses erection-general contractors
Premanufactured housing, single-family (assembled on site)-general
Remodeling buildings, single-family-general contractors
Renovating buildings, single-family-general contractors
Repairing buildings, single-family-general contractors
Residential construction, single-family-general contractors
Rowhouse (single family) construction-general contractors
Townhouse construction-general contractors

1522: General Contractors-Residential Buildings, Other Than Single-Family

Division C: Construction | Major Group 15: Building Construction General Contractors And Operative Builders | Industry Group 152: General Building Contractors-residential

1522 General Contractors-Residential Buildings, Other Than Single-Family: General contractors primarily engaged in construction (including new work, additions, alterations, remodeling, and repair) of residential buildings other than single-family houses.

Apartment building construction-general contractors
Building alterations, residential: except single-family-general
Building construction, residential: except single-family-general
Custom builders, residential: except single-family-general contractors
Designing and erecting, combined: residential, except single-family-
Dormitory construction-general contractors
Home improvements, residential: except single-family-general
Hotel construction-general contractors
Motel construction-general contractors
Prefabricated building erection, residential: except
Remodeling buildings, residential: except single-family-general
Renovating buildings, residential: except single-family-general
Repairing buildings, residential: except single-family-general
Residential construction, except single-family-general contractors

1541: General Contractors-Industrial Buildings and Warehouses

Division C: Construction | Major Group 15: Building Construction General Contractors And Operative Builders | Industry Group 154: General Building Contractors-nonresidential

1541 General Contractors-Industrial Buildings and Warehouses: General contractors primarily engaged in the construction (including new work, additions, alterations, remodeling, and repair) of industrial buildings and warehouses, such as aluminum plants, automobile assembly plants, pharmaceutical manufacturing plants, and commercial warehouses.

Aluminum plant construction-general contractors
Building alterations, industrial and warehouse-general contractors
Building components manufacturing plant construction-general
Building construction, industrial and warehouse-general contractors
Clean room construction-general contractors
Cold storage plant construction-general contractors
Commercial warehouse construction-general contractors
Custom builders, industrial and warehouse-general contractors
Designing and erecting, combined: industrial-general contractors
Drycleaning plant construction-general contractors
Factory construction-general contractors
Food products manufacturing or packing plant construction-general
Grain elevator construction-general contractors
Industrial building construction-general contractors
Industrial plant construction-general contractors
Paper pulp mill construction-general contractors
Pharmaceutical manufacturing plant construction-general contractors
Prefabricated building erection, industrial-general contractors
Remodeling buildings, industrial and warehouse-general contractors
Renovating buildings, industrial and warehouse-general contractors
Repairing buildings, industrial and warehouse-general contractors
Truck and automobile assembly plant construction-general contractors
Warehouse construction-general contractors

1542: General Contractors-Nonresidential Buildings, Other than Industrial Buildings and Warehousesl

Division C: Construction | Major Group 15: Building Construction General Contractors And Operative Builders | Industry Group 154: General Building Contractors-nonresidential

1542 General Contractors-Nonresidential Buildings, Other than Industrial Buildings and Warehouses: General contractors primarily engaged in the construction (including new work, additions, alterations, remodeling, and repair) of nonresidential buildings, other than industrial buildings and warehouses. Included are nonresidential buildings, such as commercial, institutional, religious, and amusement and recreational buildings. General contractors primarily engaged in the construction of industrial buildings and warehouses are classified in Industry 1541.

Administration building construction-general contractors
Auditorium construction-general contractors
Bank building construction-general contractors
Building alterations, nonresidential: except industrial and
Building construction, nonresidential: except industrial and
Church, synagogue, and related building construction-general
Civic center construction-general contractors
Commercial building construction-general contractors
Custom builders, nonresidential except industrial and
Designing and erecting, combined commercial-general contractors
Dome construction-general contractors
Farm building construction, except residential-general contractors
Fire station construction-general contractors
Garage construction-general contractors
Hospital construction-general contractors
Institutional building construction nonresidential-general contractors
Mausoleum construction-general contractors
Museum construction-general contractors
Office building construction-general contractors
Passenger and freight terminal building construction-general
Post office construction-general contractors
Prefabricated building erection, nonresidential except industrial and
Remodeling buildings, nonresidential except industrial and
Renovating buildings, nonresidential except industrial and
Repairing buildings, nonresidential except industrial and
Restaurant construction-general contractors
School building construction-general contractors
Service station construction-general contractors
Shopping center construction-general contractors
Silo construction, agricultural-general contractors
Stadium construction-general contractors
Store construction-general contractors

General Contractors Insurance - The Bottom Line

To find out more about the specific types of general contractors insurance policies you'll need, how much coverage your GC business needs - speak with an experienced insurance broker.

Additional Resources For Construction Contractors Insurance

Learn about construction contractors insurance, including how much the premium costs and what is covered - and how business insurance can help protect your construction business from lawsuits.

The construction industry is a high-risk industry that requires business insurance to protect against potential losses. There are several reasons why the construction industry needs business insurance:

Liability risks: Construction projects often involve working on other people's property, which can lead to potential liability risks if any damages or accidents occur. Liability insurance helps to protect against these risks by providing coverage for any legal fees or damages that may arise.

Property damage: Construction projects can also be at risk for property damage, whether it's the company's own equipment or tools, or the property being worked on. Commercial property insurance including inland marine helps to cover the cost of repairs or replacement of any damaged property.

Worker injuries: Construction is a physically demanding industry, and accidents and injuries are a common occurrence. Wrokers comp helps to cover the cost of medical treatment and lost wages for injured workers.

Financial losses: Construction projects can be disrupted by a variety of factors, such as weather, delays, or changes in scope. Business insurance helps to protect against financial losses that may occur as a result of these disruptions.

Overall, insurance is an essential component of the construction industry as it helps to protect against a range of potential risks and losses. Without it, companies in the construction industry would be vulnerable to financial ruin and may not be able to continue operating.

Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Surety Bonds, Accounts Receivable, Builders' Risk, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Umbrella Liability, Business Automobile Liability and Physical Damage, Hired and Nonowned Auto Liability & Workers Compensation.

Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Contractors' Equipment, Goods in Transit, Installation Floater, Cyber Liability, Employment-related Practices Liability, Environmental Impairment Liability, Stop Gap Liability, Unmanned Aerial Vehicles (UAV) (Drones).

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