General Contractors Insurance

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General Contractors Insurance Policy Information

General Contractors Insurance

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:


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?

Subcontractor Of General Contractor

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

General Contractors On Phone

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.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 1521 General Contractors - Single Family Homes, 1522 General Contractors-Residential Buildings, Other Than Single-Family, 1541 General Contractors-Industrial Buildings and Warehouses, 1542: General Contractors-Nonresidential Buildings, Other than Industrial Buildings and Warehouses
  • NAICS CODE: 236117 New Housing For-Sale Builders, 236116 New Multifamily Housing Construction (except For-Sale Builders), 236115 New Single-Family Housing Construction (except For-Sale Builders), 236118 Residential Remodelers, 236220 Commercial and Institutional Building Construction, 236210 Industrial Building Construction
  • Suggested ISO General Liability Code(s): 91580, 91582, 91583, 91584, 98502
  • Suggested Workers Compensation Code(s): 5606, 5403

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.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

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.


Construction Contractors Insurance

Construction contractors have substantial needs for many types of insurance coverage. Most would point to the importance of coverage for completed operations, premises liability coverage during construction operations at jobsites and professional or design errors and omissions insurance.

Such coverages can be provided only when the interests of the contractor and of the property owner are understood; particularly the contractual obligations assumed by the contractor. Next in significance is the workers compensation exposure followed by business automobile. Inland marine coverage for expensive mobile equipment, supplies, other tools of the trade and builders' risk can be vital.

Liability coverage is needed by a construction contractor in order to obtain most jobs. In addition, if a contractor wants to stay in business, it must be obtained to protect it from lawsuits due to its premises operations, off-site locations and products/completed operations exposures. Owners and contractors protective liability and railroad protective liability coverages may also be required in certain cases in order for a contractor to meets its obligations for particular jobs.

Many construction contractors do not have the usual location-specific buildings and business personal property exposures. Their business property is more mobile and, therefore, better covered with inland marine coverage forms. However, for those larger construction contractors that own buildings and/or maintain business inventory there are many coverage forms and choices available to them.

Construction contractors use their vehicles to get to and from their workplaces and jobsites. They also use vehicles to transport equipment and inventory to those locations. It is important to cover the liability of these vehicles for injury or damage they may cause, as well as to provide coverage for damage to the vehicles themselves.

Employers are required to provide coverage for injuries sustained by their employees while on the job. Construction contractors must comply with these requirements but some try to avoid them by hiring subcontractors. These subcontractors may actually operate and qualify as employees. The relationship between a contractor and its subcontractors must be carefully evaluated in order to determine if workers compensation coverage is still needed.

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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