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General Liability Insurance For Contractors - A Complete Overview

3-minute read

Susan Hamilton

Susan Hamilton

23 May 2022

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Contractors who work at various job sites and use dangerous equipment are constantly exposed to risks such as accidental property damage or third-party injuries. That’s a good reason to consider general liability insurance if you’re a carpenter, roofer, painter, electrician, or other type of tradesperson.

General liability insurance for contractors can protect your business when the unexpected occurs. With the right policy, you may not have to pay out of pocket for damages and lawsuits that could be financially devastating to your business.

Ready to take the first step toward getting insured? We’re here to make it easy with a complete overview of general liability insurance for contractors.

Is General Liability Insurance Required by Law for Contractors?

While we’d love to give you a yes or no answer, it’s not that straightforward.

The requirement to hold a general liability insurance for contractors will vary by state, so it’s important that you do research for the state you work in and understand those requirements.

For example, if you’re applying for a contractor license, many states will require you to provide proof of general liability coverage before granting your license. You can learn more about your state’s licensing requirements here.

Whether or not your state requires it, carrying general liability insurance is generally good for your business. Most customers will want to know that you are protected from a potential catastrophe. In fact, many customers won’t want to work with an uninsured contractor. So proof of insurance may be essential if you want to grow and protect your business.

What Does General Liability Insurance Cover for Contractors?

A general liability insurance policy covers many common issues that you might run into as a contractor, particularly if you work on customer properties or interact with customers on a day-to-day basis.

Bodily injury.

With general liability (GL) insurance, your business is generally protected in the event of bodily injury to a client, customer, or another third party. Let’s say you’re building a new deck for a customer and installing some temporary steps. If your customer falls off the steps before they’re finished and gets injured, your liability insurance could help pay for their medical treatment and your legal costs if they sue you.

Property damage.

GL insurance can protect you against any unintentional damages you might cause on a customer’s property. For example, if you accidentally spill paint on a customer’s area rug, your policy may cover the cost of cleaning or replacing it, as well as any resulting legal fees if the customer sues you.

Reputational damage.

Stolen ideas, slander, and invasion of privacy are just a few examples of personal injury claims. As a business owner, you never know when you may be faced with a lawsuit. For example, one of your employees might slander a problematic customer on social media, and they may decide to sue you. A GL policy can cover legal fees, as well as any resulting damage payouts.

For a quick summary, GL insurance usually covers:

  • Third-party bodily injury
  • Third-party property damage
  • Personal and advertising injury
  • Claims arising from product defects
  • Medical expenses
  • And more

Your contracting business may benefit from additional add-ons such as:

How Is General Liability Insurance Calculated for Contractors?

If you’re in the market for insurance, you’re probably asking yourself the following question:

“How is general liability insurance calculated for contractors?”

Insurance providers use general liability class codes to classify small businesses according to their overall risks.

Depending on your industry and services, your general liability policy costs might look different from those of other contractors.

For example, a roofer may pay more for their policy than an interior designer, since a roofer typically carries a higher risk for injury and property damage.

Your general liability insurance cost is usually determined by factors such as:

  • The services you provide
  • Your payroll
  • Your risks
  • Your tools and equipment needs
  • Your contractor insurance policy limits
  • Your policy deductible
  • Any insurance add-ons

How Much Is General Liability Insurance for Contractors?

No two businesses are the same, so your exact cost will depend on your specific coverage needs and your chosen policies.

The best way to get a sense of how much your policy will cost is to get a customized quote from Simply Business.

Try our free quote comparison tool to get quote options in less than 10 minutes.

Plus, you can choose which coverage option works best for you and your budget.

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Does the Homeowner’s Insurance Pay for a Contractor’s On-Site Damage or Injury?

Not usually. Most homeowner policies will not protect your business in the event of on-site injury or property damage. As a small business owner, it’s your responsibility to ensure that you are fully covered if anything goes wrong.

Remember that customers may not want to work with you if you’re unlicensed and don’t carry contractor insurance. If you want to put yourself in a better position to win bids, you’ll want to consider having proof of insurance in hand to show a potential customer if asked.

Protection for Contractors.

Your contracting business may be small, but the consequences can be significant if you were to face a claim. With general liability insurance for contractors, you’ll have the coverage to help protect yourself and keep your business moving forward.

Susan Hamilton

Written by

Susan Hamilton

I've always loved to write and have been lucky enough to make a career out of it. After many years in the corporate advertising world, I'm now a freelance writer—running my own show and contributing to Simply Business. Fun fact: I have three desks in my house, but I still do my best thinking walking in the woods.

Susan writes on a number of topics such as workplace safety, customer sales, and workers' compensation insurance.

This content is for general, informational purposes only and is not intended to provide legal, tax, accounting, or financial advice. Please obtain expert advice from industry specific professionals who may better understand your business’s needs. Read our full disclaimer

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