What insurance does a general contractor need?

A properly-insured GC protects both the contractor and the homeowner. Homeowners should always verify coverage before signing a contract — an uninsured contractor's liability falls back on the homeowner in most scenarios.

Coverage every residential GC should carry:

1. General Liability (CGL) — protects against third-party bodily injury and property damage claims arising from contractor's operations. Residential GCs typically carry $1M per occurrence / $2M aggregate. Some jurisdictions require higher limits.

1. Workers' Compensation — required in all US states except Texas if the contractor has employees. Covers medical expenses and lost wages for employees injured on the job. Without it, injured employees can sue the homeowner directly in many cases.

1. Commercial Auto — for trucks and company vehicles. Required by most state motor vehicle laws for business-owned vehicles.

1. Inland Marine / Tools & Equipment — covers tools, materials, and equipment in transit or on job sites.

1. Builder's Risk — for new construction and substantial renovations, covers the work-in-progress against fire, theft, vandalism, and weather damage. Can be carried by contractor or homeowner; verify who is responsible in contract.

1. Professional Liability (E&O) — covers errors in design advice or project management. Less common for pure GCs; more common for design-build firms.

1. Umbrella — excess coverage above primary limits. Sophisticated GCs often carry a $1M-$5M umbrella over primary policies.

What the certificate of insurance (COI) should show:

• Contractor's name and business entity.
• Carriers and policy numbers for each coverage.
• Effective and expiration dates.
• Coverage limits.
• Homeowner listed as "additional insured" on the CGL for the specific project.
• Project address.
• Cancellation notice requirement (30 days typical).

Red flags on a COI:

• Expired policies.
• Lower limits than project size warrants.
• Insurance in a different business name than contract.
• Missing workers' comp (potentially state violation).
• Missing additional-insured endorsement.

Homeowner's complementary coverage:

• Course-of-construction rider on homeowners insurance — notify your insurer of construction project.
• Liability for accidents on site — verify your homeowners policy's liability extends to incidents during construction.
• Builder's risk if contractor doesn't carry.

State-specific requirements:

• California — CSLB-licensed contractors required to disclose workers' comp coverage or sole-proprietor exemption.
• New York — Disability Benefits Law in addition to workers' comp.
• Florida — workers' comp required for construction contractors with 1+ employee.
• Washington — Industrial Insurance (L&I) instead of private workers' comp.

AskBaily verifies general liability, workers' comp, bond, and license for every contractor in our pool. COI is issued naming homeowner as additional insured at contract signing.