< Back

Choosing the Right General Liability Insurance for Contractors

Author: Kimberlee | January 21, 2025

Edited by: Kimberlee and Reviewed: Kimberlee

General liability insurance may not always be required, but it is an important insurance policy for contractors to get. It pays for the costs of medical bills or damages incurred when a third party has an accident on your property or place of work. This article will cover the key features of general liability insurance and go over the factors when choosing a carrier. Keep in mind that some contractors get general liability insurance in a business owners policy that combines the coverage with commercial property coverage.  

Key Features of Commercial General Liability Insurance 

Let’s look at the key features of commercial general liability insurance

Coverage Types

There are three types of coverage in commercial general liability:

  • Bodily injury: Pays the medical bills of those injured through an accident.
  • Property damage: Will repair or replace third-party belongings damaged in an accident. 
  • Personal and advertising injury: Pays to defend and settle accusations that you defamed or slandered someone or violated copyright laws. 

Policy Limits and Deductibles

Policies may start with limits as low as $100,000 in coverage. Most contractors will take out policies for at least $1 million in coverage to ensure they have enough to cover claims that can happen on the job. 

A deductible may apply to the business. The deductible is your portion of the claim. The higher the deductible, the lower the premium, which can help save independent contractors money. 

Benefits of Having Commercial General Liability Insurance for Contractors

There are some key benefits to having commercial general liability insurance:

  • Legal protection: The policy pays for legal defense in claims that is over and above the policy limits. This helps ensure you don’t get unfairly targeted in a claim. 
  • Financial security: Without the policy, contractors would have to pay all incident fees (legal and settlements) out of their own pockets. 
  • Client confidence and compliance: Some contractor licensing boards require contractors to have general liability insurance for their licenses to be valid. In addition to compliance adherence, it gives clients the confidence that they are dealing with a professional who is looking to protect all parties. 

Common Risks Faced by Contractors

Independent contractors face risks every time they take on a job. The nature of working with tools and equipment increases the risk that someone will get hurt. For example, someone may accidentally trigger a nail gun, leading to an injury. This would be paid by general liability insurance. Likewise, if the contractor damages property, this would be covered. 

How to Choose the Right Policy

Here’s what you need to know about choosing the right policy.

Assessing Business Needs

Work with an agent to identify your business’s risks and determine the amount of coverage you need to be fully protected (for you and independent contractors). Risk is determined by how many jobs you take on annually, the revenues you generate, and the types of jobs they are. 

Comparing Insurance Providers

Once you have an idea of what you need for your business, shop for a policy among top insurance carriers. The best carriers have a strong AM Best rating and a reputation for handling claims fairly. 

Customizing Coverage Options

Once you have found a carrier you are comfortable with, discuss any customizations that they may offer to make sure the policy meets your business needs. 

Cost Factors of Commercial General Liability Insurance

Several factors affect the cost of a commercial general liability insurance policy:

  • Business size and revenue: The bigger your business, the more revenues you will generate. This increases the risk of an accident happening and will increase the cost of your general liability policy. 
  • Project types and locations: If your sites are in remote locations where there are a lot of hazards, such as terraces or cliffs, you will pay more for insurance because the risk is higher. 
  • Claims history: Those who maintain fewer or no claims will pay less for general liability insurance. 

Managing and Maintaining Your Insurance Policy

When you get any insurance policy, set a plan to review it at least once per year. You may require independent contractors under you to get a policy as well. If you have any significant business changes, you will also want to review the policy coverages and limitations. Report claims quickly to ensure they are covered properly and work with the insurance carrier to fight any false claims. Talk to your agent about any amendments or endorsements that may apply to your business to customize the policy and ensure it is tailored to your needs. 

Shield Yourself with Commercial General Liability Insurance for Contractors

Check with your local licensing body to see if general liability insurance is required for your business. Shop among top carriers to get a policy that fits your business risk profile and covers you from accidents on the job.

You might also like

View All Articles