What is contractor general liability insurance?
General liability insurance is one of the core policies in many contractor insurance programs. Subject to the policy’s terms, it can address covered claims alleging that your business caused bodily injury, property damage, personal injury or advertising injury to another party.
A general liability policy may also include products-completed-operations coverage. This can be especially important for contractors because a claim may arise after the job has been completed and the contractor has left the site.
General liability is not identical across insurance companies. Classifications, exclusions, endorsements, deductibles and completed- operations provisions can differ substantially. The lowest premium does not necessarily provide the best fit for your operation.
Claims contractor general liability may address
Depending on the policy language and facts of the loss, contractor general liability insurance may respond to claims such as:
- A customer or visitor is injured around an active jobsite.
- Your work accidentally damages another party’s existing property.
- Installed work later causes covered damage to other property.
- A completed project is alleged to have caused bodily injury.
- Your business faces a covered personal or advertising injury allegation.
- Legal defense is required for a lawsuit alleging a covered occurrence.
Coverage depends on the issued policy, endorsements, exclusions, limits, conditions and specific facts of the claim. A general description should never be treated as confirmation that a particular loss will be covered.
General liability is not a workmanship warranty
One of the most important distinctions for contractors is the difference between faulty work and resulting damage.
General liability insurance is generally not designed to pay simply because your work must be corrected, replaced or performed again. In some situations, however, defective work may cause separate bodily injury or damage to other property. Whether coverage applies depends on the policy and the facts.
Contractors should review exclusions and limitations involving:
- Your work and your product
- Damage to the particular part being worked on
- Property in your care, custody or control
- Impaired property
- Recall or withdrawal expenses
- Professional services or design responsibilities
- Pollution conditions
The details matter. Two policies that both say “general liability” on the declarations page may not respond the same way.
Completed-operations coverage
Contractors can face claims long after a job has been finished. Completed-operations coverage generally relates to covered bodily injury or property damage arising from completed work.
Examples might include covered allegations that completed electrical work caused a fire, installed plumbing later caused water damage or a completed component failed and damaged other property.
Completed-operations coverage deserves special attention when reviewing:
- The policy’s completed-operations limit
- Residential or habitational restrictions
- Roofing, welding, excavation or height limitations
- Subcontractor exclusions or conditions
- Prior-work or continuous-damage provisions
- Sunset clauses or designated-project limitations
Contract requirements and additional insured status
A project owner, general contractor, municipality or other contracting party may require specific limits and endorsements before work begins. Common requirements can include:
- Additional insured status
- Primary and noncontributory wording
- Waiver of subrogation
- Per-project or per-location aggregate provisions
- Products-completed-operations coverage
- Specific policy limits
- A certificate of insurance
A certificate of insurance is evidence of coverage at the time it is issued. It does not independently change the policy or provide rights that are not supported by the policy and applicable endorsements.
Ford Agency handles certificates in-house for its insurance clients and can review written insurance requirements against the available policy documentation.
Current clients can use the dedicated Current Clients page to request a certificate or find other service resources.
How subcontractors affect general liability
Using subcontractors can materially change a contractor’s liability exposure and insurance underwriting. Insurance companies may ask about:
- The percentage and cost of work subcontracted
- The types of work performed by subcontractors
- Whether written subcontract agreements are used
- Required subcontractor insurance limits
- Certificates and additional insured endorsements collected
- How subcontractors are selected and supervised
- Whether subcontractors use their own employees or additional tiers
Some policies contain subcontractor warranties, exclusions or higher deductibles when required risk-transfer procedures are not followed. Those provisions should be understood before a claim occurs.
Operations that may require special attention
General liability markets do not treat every contractor operation the same way. Certain activities may require additional underwriting, specialized coverage or a surplus-lines market.
Examples can include:
- Roofing and work at significant heights
- Tree removal and arborist operations
- Welding and hot work
- Kitchen exhaust and hood cleaning
- Excavation and underground utility work
- Fire suppression and sprinkler work
- Structural work and foundation repair
- Demolition
- Environmental remediation
- Large residential or commercial projects
A difficult operation does not automatically mean coverage is unavailable. It may mean that the account must be presented to a different insurance market with more complete underwriting information.
What affects contractor general liability pricing?
Pricing and eligibility can be influenced by the contractor’s:
- Trade and detailed scope of operations
- Annual payroll, sales and subcontracted cost
- Years of experience
- Residential and commercial work percentages
- New-construction and service-work percentages
- Largest current and anticipated projects
- Geographic territory
- Loss history
- Use of subcontractors
- Requested limits and endorsements
- Risk-management and contract procedures
Accurate information helps Ford Agency compare available options on a consistent basis. Premium should be evaluated alongside exclusions, deductibles, classifications, limits and insurer requirements.
General liability is only one part of the program
A contractor may need several policies working together. General liability does not replace coverage for employees, work vehicles, tools, buildings, professional services or pollution exposures.
Depending on the operation, a coordinated program may include:
- Workers’ compensation insurance
- Commercial auto insurance
- Tools and equipment coverage
- Contractor inland marine insurance
- Commercial property or business owners coverage
- Commercial umbrella insurance
- Contractor professional liability insurance
- Contractors pollution liability insurance
- Contractor surety bonds
What to send Ford Agency
A complete submission helps the agency understand the work and approach appropriate insurance markets. Useful information includes:
- A detailed description of every service you perform
- Annual sales, payroll and subcontracted cost
- Residential and commercial work percentages
- New construction, remodeling and service-work percentages
- Your largest completed, current and anticipated projects
- Employee and subcontractor information
- Current insurance policies and limits
- Currently valued loss runs when requested
- Sample contracts or written insurance requirements
- Any specialized operations, equipment or environmental exposures