General Contractor Insurance in Pennsylvania

Pennsylvania’s Home Improvement Consumer Protection Act (HICPA) requires contractors who do home improvement work that totals $5,000 annually to register with the Attorney General's Office. As part of that process, contractors must carry the following amount of general liability insurance:

• Personal injury liability coverage: $50,000
• Property damage coverage: $50,000

General liability insurance is the most common type of liability insurance for contractors. It protects your construction business from expenses associated with third-party mishaps, such as customer injuries and accidental property damage.

Counties and cities often have their own requirements for this type of insurance. For example, Philadelphia requires contractors to carry a general liability policy with a $500,000 per-occurrence limit.

Most commercial leases also require businesses to carry this coverage. Adding commercial umbrella insurance can boost your coverage on general liability insurance and other policies.

Contractor general liability insurance can also help protect against advertising injuries, such as libel, slander, and copyright infringement. So, for example, if an employee at your business posts false negative comments about a competitor on social media, your policy would help pay for legal costs if the other business sues.

To comply with Pennsylvania law, general contractors that have one or more employees must have workers’ compensation insurance. That includes full-time, part-time, and seasonal workers. Clients might also require you to carry this coverage.

Workers' comp covers medical bills for work-related injuries and provides disability benefits while an employee is recovering and unable to work. It's especially important for those in high-risk professions, such as roofing, tree service, and HVAC installation.

Sole proprietors and others who are not required to carry coverage can still buy workers' comp for themselves. If you're injured on the job, your health insurance provider can deny the claim. That could leave you paying for an expensive medical treatment, or out of work with no recourse for your lost wages.

When you buy a workers' comp policy in Pennsylvania, it comes with employer's liability insurance. This policy helps pay for legal fees if an employee files a lawsuit blaming your construction business for their injury.

Commercial auto insurance is required in Pennsylvania for all vehicles owned by your general contracting company. This policy covers legal expenses resulting from an accident that injures someone or damages their property. It can also cover vehicle theft, weather damage, and vandalism.

Auto insurance requirements for all Pennsylvania vehicles include a minimum of:

• Bodily injury liability per person: $15,000
• Bodily injury liability per accident: $30,000
• Property damage liability per accident: $5,000

In addition, personal injury protection (PIP) insurance is required in Pennsylvania, though here it's referred to as first-party benefits (FPB). This coverage provides medical payments coverage after a car accident, regardless of who was at fault.

If you drive your own vehicle for work purposes, or rent or lease a vehicle for business use, you'll need a separate policy called hired and non-owned auto insurance (HNOA). Your personal auto insurance policy won't cover incidents that happen while you're driving for work, with the exception of a commute.

As with other types of insurance, your county or city may require a specific amount of auto liability insurance. In Philadelphia, contractors must carry a $300,000 auto liability policy. You may need additional coverage depending on the kind of work you do and the business vehicles you own.

Many counties and cities in Pennsylvania require contractors to purchase a surety bond before they begin work. Your clients might also require a bond.

A surety bond guarantees reimbursement if a general contractor fails to fulfill the terms of a contract. Unlike an insurance claim, this amount must be paid back to the company that issued the bond.

Different types of bonds act as financial guarantees for a contracting business. For example, you might need a bid bond to bid on a construction project, or a performance bond to sign a contract with a client.

Even when it's not required, contractors often choose to be bonded and insured to protect themselves and their clients and to show they are reliable.