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Why do general contractors need insurance?
An accident at a construction site could spell disaster for your small business. Business insurance for contractors helps cover expenses related to worksite injuries, stolen equipment, and other risks you face every day.
Find the right coverage
Insureon helps general contractors find construction insurance that matches your unique risks.
Get free expert advice and peace of mind knowing you have the right property and liability coverage for your small business.
What types of insurance do general contractors need?
These commercial insurance policies cover the most common general contractor risks.
General liability insurance
This policy covers basic risks, such as a client who trips over your toolbox and suffers an injury. Bundle with commercial property insurance for savings in a business owner’s policy.
BEST FOR
- Customer bodily injuries
- Damaged customer property
- Product liability insurance
Business owner's policy
A BOP bundles general liability coverage and commercial property insurance at a discount. It's often the most cost-effective type of insurance for general contractors.
BEST FOR
- Accidents that injure clients
- Client property damage
- Damage to your building or its contents
Workers’ compensation insurance
Most states require workers’ comp for general contracting businesses that have employees. It also protects sole proprietors from work injury costs that health insurance might deny.
BEST FOR
- Employee medical expenses
- Disability benefits
- Employee injury lawsuits
Commercial auto insurance
This policy covers the cost of injuries and property damage in accidents involving a general contractor’s vehicle. It can also pay for repairs to vehicles damaged by weather or vandalism.
BEST FOR
- Physical damage and collision coverage
- Medical costs from an auto accident
- Vandalism and theft
Contractor’s tools and equipment insurance
This policy helps pay for repair or replacement of a contractor’s saws, nail guns, hammers, and other tools if they are lost, stolen, or damaged.
BEST FOR
- Tools less than five years old
- Equipment valued at under $10,000
- Items brought to jobsites
Professional liability insurance
This policy is also called errors and omissions (E&O). It covers legal fees when a general contractor is sued over a mistake, such as using the wrong materials.
BEST FOR
- Accusations of negligence
- Failure to complete a project
- Failure to meet specifications
Contractor surety bonds
A bond guarantees reimbursement for the client if a general contractor fails to fulfill the terms of a contract or adhere to building codes. Common bonds include bid bonds, performance bonds, and payment bonds.
BEST FOR
- Compliance with laws
- Incomplete jobs
- Breach of contract
Builder's risk insurance
This policy covers structures in progress and materials, often paying for damage caused by fire, vandalization, and non-severe weather events.
BEST FOR
- New construction
- Building renovation
- Worksite theft and vandalism
Contractors pollution liability insurance
Contractors pollution liability covers costs related to pollution, such as a lawsuit alleging harm caused from exposure to silica dust on a construction job site. It's sometimes referred to as environmental insurance.
BEST FOR
- Pollution events
- Spills during transport
- Lawsuits over contaminants
Looking for different coverage? See more policies.
What insurance is required for general contractors?
General contractors and handymen may need the following types of coverage to comply with state and local laws and license requirements.
General liability insurance is the foundation of a general contractor's protection. It covers accidents that damage a client's property or cause a bodily injury, along with libel and other advertising injuries.
In some states, Georgia and Tennessee for example, contractors are required to maintain general liability insurance coverage with varying minimum requirements.
Workers' compensation insurance covers medical costs and disability benefits when an employee is injured on the job or develops an occupational illness. It's a key policy within the construction industry and related professions. Most state laws require construction and home improvement businesses to carry this coverage – especially high-risk professions like roofing.
Commercial auto insurance protects business vehicles owned by your general contracting company. This policy covers property damage and medical bills in the event of an auto accident, as well as vehicle theft, weather damage, and vandalism. Most states require this coverage for business vehicles.
Surety bonds guarantee reimbursement for the client if a general contractor fails to fulfill the terms of a contract or adhere to building codes. Common bonds include bid bonds, performance bonds, permit bonds, and payment bonds. Some state licensing requirements include a surety bond, depending on the type of services you offer.
How much is general contractor insurance?
A general contractor who works alone will pay less for insurance than a small construction company.
Insurance providers look at several factors during underwriting that affect contractor insurance costs, including:
- General contracting services offered, such as residential or commercial
- Business property and equipment
- Business income and size
- Types of insurance purchased, such as builder's risk insurance or pollution liability insurance
- Policy limits, deductibles, and claims history
- Number of employees
State insurance requirements
See general contractor insurance requirements in your state
Choose your state to learn about insurance requirements for general contractors.
How do I get general contractor's insurance?
It’s easy to get insurance coverage and surety bonds as a general contractor or commercial builder if you have your business information on hand. Our insurance application will ask for basic facts about your business, such as revenue and number of employees. You can buy policies online and get a certificate of insurance with Insureon in three easy steps:
- Complete a free online application
- Compare insurance quotes and choose policies
- Pay for your policy and download a certificate
Insureon's licensed insurance agents work with top-rated U.S. insurers to find the most affordable coverage that fits your general contracting business, whether you work independently or hire employees.
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Common questions about general contractor insurance
Review answers to frequently asked questions about general contractor insurance policies.
Do I need a license, permit, or bond for my contracting business?
Depending on where you are located, you may need to obtain a general contractor license from the state licensing board or secretary of state before you accept your first job. For instance:
- California requires all contractors who build or modify buildings to be licensed with the state if the job cost exceeds $1,000 or if the project requires permits or employees.
- New York mandates that home improvement businesses carry a license only if they operate in certain cities.
- Texas does not require a license or registration for general contractors at the state level, but some city and county governments do require it.
Even if it's not required in your state, it’s important to check county and city jurisdictions as professional licensing could be required by your local government.
Those involved in small home improvement projects for different homeowners might not need a general contracting license, though it can depend on the type of work and the size of each project.
What is the difference between a general contractor and a subcontractor?
Simply put, contractors work directly with a client on a project, while subcontractors assist contractors in completing the project. Because of this, contractors and subcontractors have a different set of liabilities that can affect the insurance policies they need.
In fact, there are a few policies your general contractor business should consider, especially if you hire subcontractors to help you with your projects.
- General liability insurance can sometimes be required for general contractors by clients before they'll sign a work agreement. Subcontractors can choose to get their own general liability insurance policy, or request to be listed as an additional insured on the contractor's policy.
- Workers' compensation insurance may be required by some companies for both general contractors and subcontractors. State law may also mandate businesses to carry workers' comp for any licensed worker, even a contractor or subcontractor.
- Surety bonds are usually only purchased by general contractors to fulfill contract or license requirements. In most cases, any subcontractor work is covered by the contractor's surety bond.
What other types of coverage do general contractors need?
In addition to the policies mentioned above, general contractors should consider:
- Commercial property insurance covers your building and its contents, such as tools, furnishings, and computers. It protects against financial losses from fires, storms, and burglaries.
- Business personal property (BPP) coverage can be added to your general liability policy to protect business property kept at a designated location, though you may not have a building.
- Inland marine insurance protects construction tools and equipment in transit, stored off-site, or at a jobsite. Common types of inland marine insurance include contractor's tools and equipment insurance, which provides protection for newer items valued at less than $10,000, and installation floater insurance, which covers materials being installed or built by a contractor during a construction project.
- Commercial umbrella insurance boosts the coverage on your general liability, commercial auto, or employer's liability insurance once the policy limit is reached.
How do I find cheap general contractor insurance?
General contractors and construction businesses can save money on insurance by comparing quotes from different insurance companies. With Insureon, you can get free quotes from top-rated insurance carriers by filling out one easy application.
There are a few other ways to save, such as:
- Bundle your policies. The most popular option is a business owner's policy (BOP), which pairs your liability policy with property insurance to save money.
- Customize your policy. You can choose lower limits, a higher deductible, or certain exclusions to save on your premium.
- Focus on workplace safety. Fewer accidents means fewer liability claims, which helps lower your insurance costs.
Learn more about how to find cheap contractor's insurance.