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General liability insurance for contractors can protect you from third-party claims of bodily injury or property damage as a result of business activity. General contractors, carpenters, roofers and other construction workers should carry general liability insurance and may be required to do so by their employer, city or state.
Here’s what you need to know about general liability insurance for contractors and construction businesses, as well as how to find the right business insurance for you.
🤓 Nerdy Tip
Are you a contractor outside the construction industry? Check out our guide to independent contractor insurance for more information.What types of contractors need general liability insurance?
Contractors, tradespeople and construction businesses that may need this type of liability coverage include:
- General contractors, masonry contractors, concrete contractors, drywall contractors, excavation contractors, paving contractors and permanent yard contractors.
- Roofers, carpenters, plumbers, welders, electricians, painters, landscapers, appliance repair technicians, home inspectors and handypeople.
- Debris removal businesses, snow and ice removal businesses, tree service businesses, interior and exterior construction businesses.
Clients may require that you show proof of general liability insurance before agreeing to work with your business. Your contract may stipulate that you provide a certificate of liability insurance, or COI, as part of the agreement.
Similarly, depending on the project or type of construction your business performs, your city or state may also require that you meet general liability insurance requirements when seeking a permit or license for that work.
What does general liability insurance for contractors cover?
Typically, general liability insurance for contractors covers risks including:
Bodily injury. If a customer trips and falls at a job site where you’re doing construction work, you could be held liable for their injuries. If the person sues you, your general liability insurance can help cover associated legal, medical and settlement costs.
General liability insurance doesn't, however, cover injuries sustained by employees — for that coverage, you’ll need workers’ compensation insurance.
Property damage. If you’re renovating a client’s house and accidentally damage some of their furniture in the process, you could be held responsible for that damage. Your general liability insurance can cover the cost to replace or repair the furniture, as well as any legal costs if the client sues over the property damage.
A general liability policy will cover damage to third-party property only. You’ll need business property insurance to protect your commercial assets.
Personal and advertising injury. If an employee who works for your contracting company makes false statements about another general contracting company and that company sues you for slander, a general liability policy can help cover legal and settlement costs. Your policy also can cover personal injury claims associated with copyright infringement and libel.
Completed operations liability. If you repair plumbing at a client’s home and a pipe you installed bursts a few months later, you could still be held liable for the damage since you performed the work. General liability insurance for contractors can help cover your legal costs and any court-ordered damages.
Add-ons for general liability policies
Some insurance companies offer add-ons for general liability policies. Add-ons offer extra protection that basic coverage doesn’t provide. Here are a few examples of add-ons that may be available for contractors and construction businesses:
Equipment coverage. An equipment add-on can help cover the cost to replace or repair your tools and equipment in the event that they break, are damaged or are stolen. This coverage bridges the gap between general liability and commercial property insurance.
Data breach coverage. If a hacker breaks into your computer systems and steals customer information, data breach insurance can help cover the costs associated with notifying clients, offering credit monitoring and improving security.
» More NerdWallet resources for construction businesses:
- How to get construction business insurance.
- NerdWallet’s best credit cards for construction businesses.
- NerdWallet's best accounting software for construction businesses.
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How much does general liability insurance for contractors cost?
The cost of general liability insurance will vary based on a variety of factors, including:
- Business location.
- Previous claims history.
- Business size.
- Policy limits.
Data from Insureon customers indicates that contractors and construction companies pay a median premium of less than $70 per month, or $825 per year, for general liability insurance. According to Insureon, higher-risk businesses, like roofers, pay more for general liability insurance compared with lower-risk companies like paving contractors and locksmiths.
The best way to get a sense of how much a policy will cost is to get a customized business insurance quote for your business.
Where to get general liability insurance for contractors
When getting general liability insurance for a contracting or construction business, NerdWallet recommends getting quotes from multiple providers. This will allow you to compare coverage details, cost, policy limits, customer reviews and more.
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Start your search with our picks for the best construction insurance companies or consider the following providers:
- If you want to buy coverage online: Next Insurance sells general liability insurance online, as well as workers’ compensation insurance, tools and equipment insurance and other policies. You can share your certificate of insurance digitally as needed and get a 10% discount if you bundle multiple policies. Read our Next business insurance review.
- If you need coverage for just one job: Thimble sells general liability insurance policies by the job, month or year. Like Next customers, Thimble users can generate and share unlimited copies of their certificates of insurance. Unlike Next, Thimble’s general liability policies are underwritten by other insurance companies — Markel Insurance Company and National Specialty Insurance Company — so if you have to file a claim, you’ll deal with those companies rather than with Thimble. Read our Thimble business insurance review.
- If you want hands-on support from a professional: Allstate topped J.D. Power’s 2021 commercial insurance customer satisfaction survey and has agents nationwide. Allstate sells general liability insurance as part of a business owner’s policy. Read our Allstate business insurance review.
» MORE: How to get business insurance
Other types of business insurance for contractors and construction businesses
Although general liability insurance can protect against common risks associated with running a business, it doesn’t offer complete coverage.
The chart below shows some contractor insurance policies that construction businesses may need.
Type of insurance | What it covers |
Claims against your business for mistakes or oversights in performing a service, breach of contract, professional negligence or failure to deliver a service on time. If a client sues your general contracting company for missing the deadline on a construction project, your professional liability policy would cover legal and settlement costs. | |
Vehicles that you use in the course of doing business. Protects you from expenses related to accidents, such as property damage and injuries. If you’re backing up your electrician's van and collide with another driver, your commercial auto insurance will cover damage to the car and any injuries the driver receives. | |
Damage or loss to buildings during construction or renovation as a result of fire, weather events, vandalism or other hazards. If the windows of a house that your company is building are broken during a windstorm, builder’s risk insurance can cover the cost to replace them. | |
Business property while it is being transported, or while it is being stored by a third party. If you’re driving from one landscaping project to another and supplies are stolen from your truck while you’re stopped at a gas station, inland marine insurance will cover replacement costs. |
