Contractors manage projects that come with a high injury risk, such as building construction. If you run a contracting business, general contractor insurance can help protect you against legal action and cover the cost of medical bills and property damage. But before signing up for construction liability insurance, it’s important to know the available policy options to keep your costs to a minimum.
General Liability Insurance for Contractors
General liability insurance is a type of coverage that protects a business from injury, whether physical or through reputation damage. If a piece of business equipment injures a customer or another business sues you for false advertising claims, your general liability insurance would kick in to help.
Although contractor general liability insurance isn’t required by law, it’s important coverage to have. Contractors deal with elevated risk in some of the top areas covered by this type of insurance. Your construction sites are full of hazards, and your workers can accidentally damage property while doing their work. The right policy will give you peace of mind.
What Is Covered in General Liability Insurance for Contractors?
If you’re in the market for general contractor insurance, liability insurance should be at the top of your list. It will protect your business against a variety of risks, including:
Bodily Injury
Construction sites can be hazardous. Slippery surfaces and obstacles can lead to slip-and-fall or trip-and-fall accidents. If a non-employee suffers an injury at one of your sites, your general liability insurance would cover the cost of medical bills and/or legal fees. This also covers any subcontractors.
It’s important to note, though, that general liability insurance for construction doesn’t cover injury to one of your employees. For that, you’ll need a workers’ compensation policy.
Property Damage
Contracting comes with some property damage risks, as well. If you or your workers are remodeling a house, for instance, you might cause a wiring issue that causes a fire or a water issue that results in a flood. You’ll ultimately be responsible for repairing that sort of damage. If the incident leads to a lawsuit, you’ll have to pay to fight it.
General contractor insurance won’t cover damage to your own property, though. If your equipment is stolen or your office floods, your claim will need to go through your business’s property insurance provider.
Personal Injury
Construction liability insurance doesn’t just cover you when you’re on a job site. You might deal with claims that you’ve publicly maligned someone else. If your print or media advertising mentions you can do a job better than a specific competitor, for instance, a lawsuit could result, and that’s where your general liability insurance can help.
That doesn’t mean you have free rein to defame others, though. If you’re maliciously slandering others through your business, your insurance policy likely won’t cover it.
Completed Operations
Contractors don’t just worry about liability during construction. Your work can cause injury or property damage for years after you’ve marked the project “complete.” If someone files legal action claiming your work caused harm, having completed operations coverage as part of your general contractor liability insurance policy can help.
Completed operations coverage doesn’t help with perceived issues with work you’ve done. Errors and omissions insurance is designed for that. Liability insurance specifically covers injury or harm your projects cause to property or individuals after the project is complete.
Types of General Liability Insurance for Contractors
When looking at your general contractors insurance requirements, it’s important to note there are two very distinctive types. The biggest difference is in how claims filed after your policy expires will be handled. The two types are occurrence-based coverage and claims-made coverage.
Occurrence-Based Coverage
Claims aren’t always reported when an incident happens. Someone could trip over a stray piece of lumber this year but not file a legal claim until next. With occurrence-based coverage, your insurer will cover the claim even if your policy has expired as long as the incident happened while the coverage was in place.
Occurrence-based coverage is more expensive than the other option, claims-made coverage, but it could give you a little more peace of mind. This type of policy is riskier for insurers, since it gives claimants an indefinite period of time to file a claim, which is why it will cost you a little more.
Claims-Made Coverage
Claims-made general contractor insurance covers any claims filed during the policy period. Your policy is issued a retroactive date, and any claims filed on that date or forward will be covered until the policy expires. If a claim is filed after expiration, a claims-made policy doesn’t cover it, even if the incident happened while the policy was in place.
Claims-made policies usually feature something called tail coverage, which covers you for a short period of time after expiration. This will typically be between 30 and 60 days. So if your coverage expires in January but someone files a claim in February on something that happened during the original policy period, you’ll be covered.
How Much Does General Liability Insurance for Contractors Cost?
There is no one size fits all when it comes to general contractor insurance. Each contractor has different needs. That’s why the cost of general contractor liability insurance can vary dramatically from one policy to the next.
Here are some factors influencing your monthly premiums:
- Claims history: As with any insurance, a provider will look at your history of filing claims to assess the risk you pose as a policyholder.
- Type of policy: Are you choosing an occurrence-based or claims-made policy?
- Location: Insurance rates from one geographic area to the next. Insurers will base your premiums on the city and state where your business is located.
- Business size: An insurer’s risks increase as your business grows. The number of employees and value of your assets will impact your premiums.
- Policy limits: One way to save money on insurance is to lower your policy limits. Yes, you’ll pay more out of pocket if you have a high-dollar claim, but you’ll reduce your monthly costs.
Generally speaking, the cost of liability insurance for contractors ranges from $30 to $200 a month. With a typical policy, though, you’ll pay somewhere around $70-$80 a month. You can keep your general liability insurance contractor costs at the lower end by setting higher policy limits and comparing quotes from multiple providers.
Where Can You Get General Liability Insurance for Contractors?
Comparing policies is easier than ever. Some providers will even let you get a quote online. Here are some general contractor insurance providers to consider in your search.
Travelers Insurance
When you’re building a policy, it helps to work with a company that has diverse offerings. Travelers Insurance offers a variety of business insurance types, including contractor general liability insurance. It’s a stable company with a superior AM Best rating, but customer service does get plenty of negative reviews.
Unfortunately, you won’t be able to get an online quote with Travelers. You’ll need to go through an agent to set up your policy.
CNA Insurance
Another insurer with a solid history is CNA Insurance, which has a variety of policies tailored to general contractors. Like Travelers, you’ll have to go through an agent to set up your policy, but you can kick off the process by requesting a quote on the website.
Although CNA Insurance has an excellent AM Best rating, there are some negative reviews. Most reviewers cite disappointing customer service and trouble with claim payouts.
Gallagher
Gallagher specializes in small business insurance, including liability insurance for construction businesses. Policies are tailored to your needs, and Gallagher’s insurance can handle a variety of project types, from single-family homes to sports arenas to high-rise office buildings.
Gallagher’s customer service gets better-than-average reviews. However, this is another insurer that requires going through an agent for a quote and policy setup. You can fill out the form on Gallagher’s website or call a toll-free number to speak with an agent.
Next Business Insurance
For a convenient online quote process, take a look at Next, which lets you apply and manage your policy online. Next offers bundling discounts for construction liability insurance, allowing you to save money by adding on property insurance, workers compensation insurance, or one of the other policy types you’ll need.
Customer reviews are largely favorable, but there are some complaints about premiums increasing without notice. Next is a newer but stable provider, with an AM Best rating of Excellent.
Thimble Business Insurance
Another option for a quick online quote is Thimble. Founded in 2016, Thimble offers online quotes for its business insurance policies, which include general liability and other options. Thimble doesn’t offer commercial auto insurance, so you’ll have to go through a separate provider.
If you need a more personalized approach to your construction liability insurance, note that Thimble only provides customer support online. The online customer service reviews are overwhelmingly positive, though, and chat is available Monday thru Friday, from 9 am to 6 pm EST.
Allstate Business Insurance
Allstate is another established player in the general contractor insurance space. You can’t purchase general liability insurance through Allstate, though. Policies are only available when bundled with property insurance as a business owners policy.
With an AM Best rating of Superior, Allstate is a stable company with decent reviews. Many negative reviews reference high prices, so be sure you comparison shop before going with Allstate.
The Hartford
Another solid insurer with a superior AM Best rating is The Hartford, which offers general liability coverage limits of up to $2 million. You can request a quote online, but you’ll have to speak to an agent to complete your purchases.
Although The Hartford has a solid reputation among small business owners, there are more than a few complaints about customer service and claims payouts. Some reviewers also report sudden policy cancelations.
Conclusion
When you’re in the market for general contractor insurance, it helps to shop around. You can reduce your premiums by not only comparing multiple providers, but also reducing your policy limits and keeping claims to a minimum.
FAQs
Who Needs Construction Insurance?
All contractors should sign up for general liability insurance. In some states, proof of insurance is required to apply for building permits.
