Your First Line of Defense
General liability insurance is the bedrock of your insurance program. Without it, you're one accident away from a lawsuit that could take everything you've built.
What GL Actually Protects
Think of it this way: GL covers you when third parties say you hurt them or damaged their stuff.
Bodily Injury Claims
A homeowner trips over your extension cord and breaks her ankle. Someone walking by your job site gets hit by debris. A kid wanders onto your project and gets hurt on unsecured materials.
These scenarios happen. Last spring, one of our clients had a framing nail ricocheted off a board and struck a delivery driver walking across the site. $45,000 in medical bills. His GL policy covered the whole thing.
Property Damage Claims
You're installing a water heater and the supply line fails overnight, flooding the finished basement. Your painter's ladder gouges the homeowner's antique hardwood floors. A subcontractor backs their truck through a client's garage door.
Property damage claims are the bread and butter of contractor GL policies. Most working contractors will file at least one property damage claim during their career.
Personal and Advertising Injury
This covers things like defamation claims if someone says you slandered a competitor, or allegations of copyright infringement in your marketing materials. Less common for contractors, but the coverage is there.
What GL Does Not Cover
Understanding exclusions keeps you from getting blindsided.
Your policy won't pay for your own injuries. That's workers' compensation territory. It won't replace your own damaged property or tools. It won't pay to redo defective work, though it may cover damage that defective work causes to other property. Professional mistakes fall under errors and omissions coverage, not GL. Vehicle accidents are excluded since that's what commercial auto is for.
And if you intentionally damage something or hurt someone, no insurance policy is going to bail you out.
Reading Your Limits
GL policies have two numbers you need to understand.
Per occurrence is the maximum the policy pays for any single incident. General aggregate is the total pool available for all claims during the policy period.
| Limit Type | Common Amount | What It Means | |-----------|---------------|---------------| | Per Occurrence | $1,000,000 | Cap on any single claim | | General Aggregate | $2,000,000 | Cap for the entire year |
Standard commercial contracts require $1 million per occurrence and $2 million aggregate at minimum. Larger projects want more, which is where umbrella policies come in.
Choosing Appropriate Limits
Start with what your contracts require. If you're working for commercial GCs or government agencies, they'll specify minimums. Match those or you won't get the job.
Beyond that, think about the size of your projects. A bathroom remodeler working on $30,000 jobs has different exposure than a contractor building $2 million custom homes. Bigger projects mean bigger potential claims.
Consider what you'd lose in a worst-case judgment. Your house, your equipment, your business accounts. Limits should provide meaningful protection for your actual assets.
Endorsements Worth Understanding
Additional Insured Status
General contractors and property owners routinely require you to add them as additional insureds. This extends your coverage to protect them from claims arising out of your work. It's a standard request and your policy should be able to accommodate it.
Waiver of Subrogation
This prevents your insurance company from going after the project owner or GC to recover claim payments. Construction contracts commonly require this language.
Primary and Non-Contributory
This makes your policy respond before the additional insured's own coverage kicks in. It's another standard contract requirement.
How Premiums Get Calculated
Your GL premium comes from a combination of your trade classification, which reflects your risk profile, plus your annual revenue or payroll depending on how your class is rated. Claims history affects pricing, and newer businesses sometimes pay a premium until they establish a track record.
Roofers and demolition contractors pay significantly more than painters or landscapers. High revenues mean higher premiums. Major claims push rates up for several renewal cycles.
Getting Better Rates
Make sure your classification is accurate. Being coded wrong can mean overpaying substantially.
Document your safety practices. Written programs, training records, and meeting notes help during the underwriting process.
A clean claims record is your best leverage. Carriers compete aggressively for contractors who haven't cost them money.
Bundle your policies when it makes sense. Most carriers offer discounts for packaging GL with auto and property.
Work with an agent who knows construction. Generic business insurance agents don't know which carriers write your trade or how to position difficult risks.
Certificates of Insurance
When you land a job, you'll need to prove you're covered. Certificates show your policy details, limits, and any special endorsements like additional insured status.
Good agencies turn around certificate requests the same day. If you're waiting days for certificates, you've got the wrong agency.
Common Questions
Is general liability legally required?
California doesn't mandate GL by law, though you do need a license bond. But practically speaking, you can't work without it. Clients require proof of coverage before you set foot on their property.
Can I get coverage with prior claims?
Yes, though you'll pay more and have fewer carrier options. Specialty markets exist for contractors with claims history. We've placed risks that standard carriers declined many times.
What's the difference between occurrence and claims-made policies?
Occurrence policies cover incidents that happen during your policy period, no matter when the claim gets filed. Claims-made policies only cover claims filed while the policy is active. For contractors, occurrence policies are standard and strongly preferred.