General Contractor Insurance Requirements: 7 Must-Have Policies

Worker reviewing general contractor insurance requirements

Owning a contracting business comes with its fair share of uncertainties. There are many possibilities for people to suffer injuries or for properties to sustain damage. The work environment can change on any given day, and risks become all too real.

Accidents happen, and when they do, the burden often falls on your shoulders as the business owner. But with a proper safety net, you can weather the storms, protect your livelihood, and keep the doors to your business open without interruptions. Ensuring you have the appropriate general contractor insurance requirements is critical.

Here are some types of insurance a contractor should have or consider getting:

General Contractor Insurance Requirements: Top 7

Insurance requirements for general contractors can vary based on factors like the location, type of projects, and contractual agreements. However, here are some common types of insurance coverage that general contractors might need to have:

1. General Liability Insurance

This is the foundation of contractor insurance. This policy protects against a range of potential risks that can show up on any job site. It covers claims of bodily injury, property damage, and personal injury. General liability insurance can cover medical expenses, legal fees, and settlements resulting from accidents or damage on the worksite.

For example, what if construction materials or debris from your site injure a passerby? This insurance protects you by covering medical expenses and legal fees, financially securing your business.

2. Worker’s Compensation Insurance

If you have employees, this insurance is typically required by law. Furthermore, it’s also considered a lifeline for both you and your employees. This general contractor insurance requirement supports you when the unthinkable happens – an incident that results in an employee getting injured on the job.

Without worker’s compensation insurance, the cost of an injury can be catastrophic for the worker and their family. It covers medical expenses and lost wages for employees, and it helps protect your business from potential legal action.

3. Commercial Auto Insurance

Commercial auto insurance is necessary if your business owns vehicles used for work purposes. This general contractor insurance requirement ensures that your vehicles, from heavy-duty trucks to trusty vans, are protected from unforeseen accidents and damage. Some policies also protect against theft of contents, such as valuable tools, that are stored in those vehicles, but check your policy details to confirm.

4. Professional Liability Insurance

This insurance is particularly relevant if your work involves providing professional advice or services. Suppose a client believes that a mistake or oversight in your work led to issues in their property. In that case, this general contractor insurance requirement covers claims related to those mistakes, errors, or negligence. Your legal fees and settlements are covered, and your reputation remains intact.

5. Builder’s Risk Insurance

This insurance requirement guards your projects while they’re a work in progress. In fact, a builder’s risk policy covers you from the beginning of a project until completion.

Also known as construction insurance, this coverage is like an invisible shield against property damage, theft, or vandalism. Most policies also cover fire, hail damage, and acts of God, such as hurricanes, tornadoes, and lightning.

6. Umbrella Insurance

This is the general contractor insurance requirement you hope you’ll never need. Think of it as an additional layer of protection. It’s a type of liability coverage that kicks in when the limits of your other liability policies are exceeded, usually in the event of a severe incident or significant property damage.

In short, if your other liability policies are maxed out due to a large settlement or multiple claims in a year, the umbrella policy becomes your ultimate safety net.

7. Subcontractor Insurance

If you work with subcontractors (and subcontractors), you must ensure a relationship built on safety, compliance, and trust. As part of that professional relationship, you might need them to carry their own insurance coverage, including general liability and worker’s compensation, and provide proof of their coverage. This protects your business and shows your clients that you prioritize compliance and accountability in all your projects.

Having the Proper General Contractor Insurance Requirements Builds Trust

Your contracting business is more than just your livelihood and the livelihood of your workers; it’s also a commitment to quality work and the safety of your workers. Contractors must be well-insured to run their business smoothly. In addition to that, a well-insured contractor appeals to clients because the certificate of insurance proves to them that they will be compensated promptly and professionally in case something goes wrong.

Workers also are likely to remain employed with a construction business longer when that business has the proper insurance. In the event that they are in an accident, they can rest easy knowing the medical bills will be taken care of, in addition to income replacement for the days they are unable to work.

In many industries where the unexpected is often the norm, insurance isn’t just a policy, it’s a partner in success and sustainability. Allow Veriforce’s insurance experts to guide you in the right direction and help you get the protection your business needs.

Contact us today to learn more.

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