General liability insurance for construction businesses

General liability insurance covers basic risks in the construction industry, like accidental damage to a client's property or a customer injury. It protects your small business from the high costs of lawsuits and helps you qualify for leases and contracts.

Why is general liability insurance important for construction businesses?

Whether a customer trips over a welder’s power cord, a carpenter installs an unstable staircase, or an excavation contractor accidentally damages a homeowner’s property, working in the construction industry comes with a lot of potential risks.

Without the proper insurance, your small business could be stuck paying for an incident out of pocket—and the costs can be substantial.

General liability insurance provides contractors and construction businesses with crucial financial protection against these risks, helping to pay expenses related to third-party bodily injuries and property damage.

Plus, a general liability insurance certificate can help you comply with insurance requirements for contracts, leases, and trade licenses.

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What can general liability insurance cover for construction businesses and contractors?

If a visitor is injured at a commercial builder's construction site or a renovation company accidentally damages a client's home, the cost of medical care, property repairs, or a proper legal defense can be devastating for a small business.

General liability insurance can help cover these expenses, paying for:

Customer injuries

Jobsites can be dangerous places, filled with tools, equipment, and other potential hazards. If a customer trips and falls while you’re installing their new flooring, you could be blamed for their injury.

A general liability policy covers:

Attorney fees
Court-ordered judgments
Settlements
Medical payments
Funeral expenses in fatal incidents

Keep in mind, this policy covers third-party injuries but not employee injuries. For that, you’ll need to purchase workers’ compensation insurance.

Customer property damage

Accidents can be costly for builders and contractors. General liability insurance safeguards your small business if client property is damaged during a construction project.

For example, if a client’s furniture is damaged during a drywall repair job, your general liability policy would help pay for the cost of repair or replacement. This policy would also cover the cost of a lawsuit if a client decides to take you to court over damaged property.

Defamation and infringement

While advertising your company and its construction services, it’s possible to inadvertently copy a competitor’s slogan or mimic another advertising campaign. Accidental personal and advertising injuries are covered by general liability insurance, including:

Copyright infringement
Defamation, including libel and slander
Invasion of privacy, such as using a photo of a customer without permission

Product liability

Construction businesses should make sure their contractor liability insurance includes product liability insurance, also known as products-completed operations coverage. This insurance protects your business if your finished work causes a bodily injury or property damage due to faulty workmanship or a defective part.

For example, a door and window contractor installs defective window seals, which allow water to seep in and create a substantial mold problem inside the house. This policy will help pay for mold remediation and repairs of any water damage caused by the leaking windows.

Is construction liability insurance coverage required?

While laws vary by state, contractors often need construction liability insurance to obtain the proper licensing or work with certain clients. Even when it's not required, general liability insurance is strongly recommended, due to the hazardous nature of the construction industry and the high cost of litigation and medical bills.

Here’s an overview of the requirements and benefits of liability insurance for some common types of construction contractors:

General contractors

Some states, including Florida and Nevada, require general contractors to purchase general liability insurance to obtain a license.

Construction liability insurance protects general contractors from potentially devastating financial losses due to third-party claims of bodily injury or property damage.

For example, if a general contractor’s scaffolding falls over and injures a passerby, general liability would cover the cost of medical treatment, including legal fees if the injured person files a lawsuit.

Handymen

General liability insurance is key for handymen, whose work on client property presents many risks for accidental property damage or customer bodily injury. Liability insurance is required in some states in order to get a contractor's license, which you may need for larger jobs.

For example, in Georgia, any handyman who works on projects worth more than $2,500 must have a Residential Contractor license. To obtain this license, you must show proof of general liability insurance and workers' compensation insurance.

If a bystander is injured by a tool dropped from a ladder, this policy will handle their medical bills, including an emergency room visit and medications.

Roofing contractors

Roofing is a hazardous profession with a high rate of third-party injuries and property damage, which can lead to expensive lawsuits, medical expenses, and other catastrophic costs.

Let’s say a homeowner sues a roofer for water damage after they’ve gotten a new roof installed. General liability insurance would cover the roofing contractor’s legal defense, including attorney fees, a settlement, or a judgment.

Plus, many states require liability insurance to obtain a roofing license. For example, Florida requires roofers to hold a license, which requires proof of liability insurance.

Concrete contractors

If a concrete contractor unintentionally damages a client’s property or causes an injury, general liability insurance is vital for covering claims and protecting against legal costs. A general liability policy also helps you fulfill contractual requirements for projects.

For example, a project owner might require a concrete contractor to have liability coverage before they'll hire them to pour a foundation at a construction site. Having an active general liability insurance policy helps the contractor get the job—and it may be needed to bid on projects.

Additionally, some states mandate general liability insurance for licensed concrete contractors, including Utah and Washington.

Plumbers

On top of jobsite risks, many claims can happen after a plumbing project is complete, making general liability insurance extremely important for plumbers. This policy covers claims of faulty workmanship, shielding you from costly repairs due to water damage or other harm.

Some states and cities require liability insurance as a condition for a plumbing license. For example, although New York doesn't have a statewide mandate for insurance or bonding, New York City requires plumbers to have a minimum of $1 million in general liability insurance, per occurrence, as well as workers’ compensation insurance.

Should a plumber install a faulty sink that floods a homeowner’s kitchen and destroys their expensive wood floor, general liability insurance would cover the bill to replace the floor and any other damage caused by the incident.

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How much is general liability insurance for a construction company?

Construction contractor calculating insurance costs.

Construction companies and contractors pay an average of $89 per month for general liability insurance.

Insurance costs for construction companies are based on several factors, including business size, location, and revenue.

Small, low-risk construction businesses are often eligible for a business owner's policy (BOP), which bundles general liability and commercial property insurance at an average cost of $125 per month.

What factors affect construction general liability insurance costs?

Here are some of the top factors used to calculate general liability premiums for construction businesses during the underwriting process:

Industry risks. General liability costs depend on the specific risks of your profession. For example, roofers and builders have a higher rate of accidents and third-party claims than handymen and paperhangers.
Business property and equipment. Expect to pay more to insure a building and heavy equipment than basic tools and supplies brought to jobsites.
Number of workers. Every subcontractor or employee added to a project increases the risk of workplace accidents and mistakes, which raises the cost of workers' comp, general liability, and similar policies.
Annual revenue. Increased revenue is associated with bigger projects, higher risks, and more frequent claims, which results in higher insurance costs.
Coverage limits and deductibles. Policies with higher limits cost more but cover more expensive claims. Choosing a higher deductible can lower your premium, but your insurance won't activate until you pay the full amount.
Claims history. A construction business that has filed an insurance claim in the past can expect higher rates than one that has a clean history of claims.
Business location. Crime rates, population density, healthcare costs, property values, and other regional factors affect how much your business pays for insurance.
Safety and security measures. Insurance companies may offer lower rates to construction companies that implement workplace safety programs to reduce claims. Fencing and security systems at construction sites can also help bring down your costs.

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How can I get general liability insurance for my construction business?

It’s easy to get business insurance for your construction company with Insureon. Whether you're a general contractor or the owner of a demolition or framing business, you’ll need to have some basic information about your business available.

Our application will ask you for your annual revenue and payroll, among other details. You can buy a policy online and get a certificate of insurance with Insureon in three easy steps:

Fill out our easy online application.
Compare free quotes and choose a policy.
Pay for your policy and download a certificate for proof of insurance.

Insureon's licensed insurance agents work with top-rated U.S. providers to find the right insurance solutions for contractors and construction companies, whether you work as a sole proprietor or you hire employees.

FAQs about general liability insurance for construction companies and contractors

Get answers to frequently asked questions about general liability coverage for construction businesses and contractors.

Do I need a certificate of liability insurance for my construction business?

A certificate of insurance (COI) is the official proof of coverage that you receive from your insurance provider when you purchase a policy. Also known as an ACORD 25 form, COIs are often required to work with certain clients, sign a lease, or take out a loan. They can also help you win project bids over uninsured competitors.

A COI includes important information about your policy, such as:

Type of coverage
Policy number
Per-occurrence and aggregate coverage limits
Exclusions
Effective policy term dates

To obtain a certificate of liability insurance, you must have an active insurance policy. If you already have an active policy, contact your Insureon agent or log in to your account with our Customer Portal to download or request a certificate.

What is often excluded from builders general liability insurance?

While general liability insurance provides crucial protection for construction businesses, it doesn’t cover all the risks your business can face. You might need to purchase other business insurance policies to fill coverage gaps and make up for general liability insurance exclusions.

Here are the most common exclusions from a commercial general liability policy:

Criminal acts: General liability doesn’t cover illegal actions or criminal acts, such as assault, battery, and fraud.
Preventable risks: Third-party bodily injury and property damage claims caused by preventable risks are generally excluded. So, if a customer slips on the icy walkway outside your office because you didn’t put salt down, the claim wouldn’t be covered.
Subcontractors: General liability insurance doesn’t cover damage caused by a subcontractor who is working for you. Additionally, an action over exclusion clause can deny coverage for bodily injuries suffered by a subcontractor if the claim is passed on to the insured party through a lawsuit.
Intentional acts: If you or an employee cause deliberate damage or harm, such as if a disgruntled contractor destroys a homeowner’s property, a general liability policy wouldn’t cover the damages.
Theft: General liability won't cover theft of business property. For that, you'd need commercial property insurance for items at your main business location and tools and equipment insurance (also called inland marine insurance) for items in transit, stored off-site, and used at jobsites.

Can I extend my general liability coverage to subcontractors?

If a subcontractor you hire causes damage, such as breaking a homeowner’s window, and they’re uninsured and not included in your policy, you could be responsible for repair costs and legal expenses.

To avoid these financial risks, you can extend your general liability insurance coverage to your subcontractors by adding them to your policy as an additional insured endorsement. Or, you might require them to have their own coverage as a condition of working for you.

Another option is a controlled insurance program (CIP). Also called wrap insurance, CIPs bundle general liability, workers’ comp, and other types of coverage into one project-specific policy for all contractors and subcontractors involved.

There are two types of coverage options for CIPs:

Contractor-controlled insurance program (CCIP): With CCIPs, the general contractor purchases and manages the policy. This option streamlines claims and is typically cheaper when the risk is assumed by an experienced general contractor.
Owner-controlled insurance program (OCIP): OCIPs are purchased by the project or property owner. This option is often used for larger projects as they tend to be more expensive and offer broader coverage.

What other types of insurance should construction companies and contractors consider?

While commercial general liability insurance covers basic third-party risks, it does not offer absolute protection. Other types of construction insurance to consider include:

Workers’ compensation insurance: Workers’ comp covers medical costs for work-related injuries and illnesses. Most states require this coverage for businesses with employees, and more states are starting to mandate it for contractors, even if they don’t have employees.
Commercial auto insurance: This policy covers the cost of an accident involving your business vehicle. Almost every state requires this coverage for business-owned vehicles.
Owners and contractors protective (OCP) liability insurance: This special kind of liability coverage is often purchased by independent contractors on behalf of a general contractor or project owner to protect that party from costs related to incidents caused by the contractor.
Professional liability insurance: Also called errors and omissions insurance (E&O), this policy covers professional mistakes and oversights, such as a contractor missing a deadline for a project.
Surety bonds: These bonds reimburse your clients for financial losses if your company is unable to fulfill the terms of its contract.
Builder’s risk insurance: Builder’s risk insurance can pay for damage done to a structure still under construction, such as a fire or vandalism at a construction site.
Contractors pollution liability (CPL) insurance: This type of environmental insurance covers pollution liability risks for contractors and their subcontractors.
Railroad protective liability insurance: If you’re doing construction work near railroad tracks or crossings, then more than likely you’ll need this special type of liability insurance to protect the railroad company in the event of a lawsuit.
Cyber insurance: Any construction company that handles customers' credit cards or other sensitive information should have a cyber policy. Also called data breach insurance, this coverage handles the significant recovery expenses after a security breach.

How do I save money on general liability insurance for my construction business?

If you run a small construction company or are an independent contractor, there are ways you can save on your business insurance. You may be able to bundle general liability coverage with commercial property insurance in a business owner’s policy (BOP). A BOP offers more complete coverage at a lower cost than purchasing each policy separately.

Businesses that are eligible for a BOP typically:

Have fewer than 100 employees
Have a small office or workplace
Make less than $1 million in annual revenue
Operate in a low-risk industry
Need less than 12 months of business interruption insurance

A business owner's policy covers damage to your building and its contents, such as fires and storm damage. If you don’t have a building, you can add business personal property (BPP) coverage to your general liability policy, or buy tools and equipment insurance to protect items brought to jobsites.

Talk to a licensed Insureon agent to find out if your construction business is eligible for a BOP.

Updated: September 1, 2026

The average costs on this page were derived from our data on small business owners in the construction field who purchased policies through Insureon. Most of our customers have less than five employees, annual revenue ranging from around $50,000 to more than $200,000, and five years or less in business.

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