What is general liability insurance?

General liability (CGL — Commercial General Liability) is the core third-party insurance for every contractor business. Understanding what it does and doesn't cover is important for homeowners assessing contractor adequacy.

What CGL covers:

1. Bodily injury to third parties — a visitor trips on a cord at your house; CGL pays medical expenses and any judgment.
2. Property damage to third parties — contractor's saw slips and damages your granite counter; CGL pays.
3. Products-completed operations — defects in completed work that cause damage later (e.g., a roof leak 6 months post-completion damages drywall).
4. Personal and advertising injury — libel, slander, copyright infringement (rarely relevant for residential remodel).

What CGL does NOT cover:

• Employee injuries — workers' compensation handles this.
• Contractor's own tools or materials — inland marine or commercial property handles this.
• Auto accidents — commercial auto handles this.
• Work that must be redone — the faulty workmanship itself typically isn't covered (only the consequential damage it causes).
• Professional errors in design advice — professional liability (E&O).
• Intentional wrongdoing — no insurance covers deliberate harm.

Typical residential GC limits:

• $1,000,000 per occurrence.
• $2,000,000 aggregate.
• Some sophisticated contractors carry higher ($2M/$4M or $1M primary + $5M umbrella).

Important CGL exclusions to understand:

1. Pollution exclusion — asbestos, lead, mold claims often excluded without specific endorsement.
2. Professional services exclusion — design errors.
3. Subsidence and earth movement — common residential exclusion.
4. Residential construction exclusions — some CGL policies exclude NEW residential construction; verify contractor's policy covers their actual work.
5. Hot work / welding — may require specific endorsement.

Additional insured endorsement:

• Homeowner listed as "additional insured" extends CGL coverage to the homeowner for liability arising from contractor's operations.
• Standard request: "Homeowner listed as additional insured on a primary and non-contributory basis with waiver of subrogation."
• Verify this is on the COI.

Claims-made vs occurrence:

• Most CGL is occurrence-based (covers incidents happening during policy period regardless of when reported).
• Occasional claims-made policies exist; if so, verify extended reporting period.

How to verify active coverage:

1. Request COI directly from contractor.
2. Review for correct business name, limits, endorsements.
3. Call carrier to verify COI is current (especially for large projects).
4. Re-request annually if project spans policy renewal.

When CGL isn't enough:

• Projects over $500,000 often warrant higher limits ($2M/$4M or umbrella).
• Complex projects (high-end finishes, expensive materials) warrant higher limits.
• Larger homes with higher rebuild costs warrant matching liability.

AskBaily verifies CGL coverage for every matched contractor and issues a COI naming the homeowner as additional insured at contract signing. See /ask/what-insurance-does-a-general-contractor-need for the broader insurance framework.