Most contractors begin with general liability, but that is only one part of the picture. Employees, vehicles, tools, materials, design responsibilities, pollution exposures and project requirements can each require a different policy.
1. Contractor general liability insurance
General liability commonly addresses certain covered third-party bodily injury, property damage and personal or advertising injury claims arising from contracting operations.
Examples can include allegations that:
- A visitor was injured at a jobsite
- A contractor damaged a customer’s property
- Completed work later caused covered property damage
- Business advertising allegedly violated another party’s rights
General liability does not replace every other contractor policy, and it is not a workmanship warranty. The cost of correcting defective work may be treated differently from resulting damage to other property.
Learn more about contractor general liability insurance .
2. Workers’ compensation
Workers’ compensation can provide benefits for employees who suffer covered work-related injuries or occupational illnesses. It can also provide employers liability coverage for certain related claims.
Virginia requirements depend on current law and the facts of the operation. Contractors should carefully disclose:
- The number of workers
- Employee duties and payroll by trade
- Owners and officers
- Temporary or part-time labor
- Independent contractors and subcontractors
- Work performed outside Virginia
Classifying everyone as an independent contractor does not automatically remove workers’ compensation exposure. Uninsured subcontractors can also affect an audit.
Learn more about contractor workers’ compensation .
3. Commercial auto insurance
Personal auto insurance may not be designed for vehicles owned by a business or regularly used for contracting operations. Commercial auto can address business-owned trucks, vans and other scheduled vehicles.
Underwriters commonly review:
- Every vehicle and its registered owner
- Every driver and driving history
- Vehicle radius and territory
- Equipment or materials carried
- Towing and trailer use
- Employee use and take-home vehicles
Vehicles employees own or vehicles the business rents can create hired and non-owned auto exposure that may require additional coverage.
Explore commercial auto and hired and non-owned auto.
4. Tools and equipment coverage
General liability does not insure a contractor’s own tools. Commercial property coverage may also be limited when property is away from the insured premises.
Inland marine or contractor equipment coverage may protect certain tools and equipment that move between the shop, work vehicles, temporary storage locations and jobsites.
Contractors should identify:
- Total unscheduled hand-tool value
- High-value scheduled equipment
- Rented, leased or borrowed equipment
- Property stored in vehicles or trailers
- Property left at jobsites overnight
- Employee-owned tools
Review contractor tools and equipment coverage and coverage for tools in work trucks .
5. Commercial property or a business owners policy
Contractors who own or lease an office, shop, warehouse or yard may need commercial property insurance. Coverage may be needed for:
- Buildings
- Office contents
- Shop equipment
- Inventory and materials
- Computers and records
- Business income following a covered loss
A business owners policy may combine certain property and liability coverage for eligible smaller contractors. Contractors with larger, specialized or difficult operations may need a different package.
Learn more about contractor property insurance and BOP coverage .
6. Commercial umbrella insurance
A commercial umbrella may provide additional liability limits over specified underlying policies. Larger customers and project owners commonly require limits exceeding a basic general liability or auto policy.
An umbrella does not simply cover every exclusion in an underlying policy. The required underlying limits, covered policies and umbrella terms should be reviewed.
Explore commercial umbrella insurance for contractors .
7. Builders risk insurance
Builders risk can protect a building or construction project while it is being built or renovated. The owner or general contractor commonly purchases it, but the construction agreement should specify who is responsible.
Coverage questions can involve materials in transit, temporary storage, existing structures, testing, theft, flood and when protection ends.
Learn more about builders risk insurance.
8. Installation floater coverage
An installation floater may protect materials or equipment a contractor owns, sells or is responsible for installing. Coverage may follow the property through transit, temporary storage and installation.
It can be especially relevant for HVAC, electrical, plumbing, alarm, fire-protection, cabinet and equipment-installation contractors.
Explore installation floater coverage and our comparison of builders risk versus an installation floater .
9. Contractor professional liability or E&O
Contractors who design, advise, prepare specifications, select systems, program equipment or provide other professional services can face allegations not addressed by ordinary general liability.
Contractor professional liability may address certain covered errors in professional services, including some claims involving financial loss without bodily injury or physical property damage.
Review contractor professional liability and contractor E&O versus general liability .
10. Contractors pollution liability
Fuel, refrigerants, mold, silica dust, coatings, contaminated soil, runoff and waste can create pollution claims during routine contracting operations.
General liability policies commonly contain pollution exclusions or limitations. Contractors pollution liability may address certain covered bodily injury, property damage, cleanup and defense costs arising from pollution conditions.
Learn more about contractors pollution liability and common pollution risks for contractors .
11. Employment practices liability
Contractors with employees can face allegations involving discrimination, harassment, retaliation, wrongful termination or other employment practices.
Employment practices liability is separate from workers’ compensation and general liability. Available coverage varies by insurer and policy.
Explore employment practices liability .
12. Contractor surety bonds
A surety bond is not the same as insurance coverage. It generally protects the obligee when the bonded principal fails to meet a covered obligation. The principal may have to reimburse the surety after a paid claim.
Contractors may be asked for:
- License or permit bonds
- Bid bonds
- Performance bonds
- Payment bonds
- Maintenance or warranty bonds
- Subdivision or site-improvement bonds
Explore contractor surety bonds .
13. Cyber and crime coverage
Contractors increasingly store customer information, use online payment systems, access project platforms and rely on electronic communications. Cyber coverage may address certain data breaches, ransomware, network interruption and related events.
Crime coverage may address specific theft, employee dishonesty, forgery or funds-transfer exposures. Coverage varies considerably, and social-engineering losses may require specific protection.
Contract requirements affect the answer
Even when a contractor has a sensible basic program, a customer or project owner may require particular limits, endorsements or policy types.
Requirements can include:
- Additional insured status
- Primary and noncontributory wording
- Waiver of subrogation
- Specific general liability or umbrella limits
- Completed operations protection
- Professional or pollution liability
- Commercial auto liability
- Workers’ compensation and employers liability
- Surety bonds
Send the complete written requirement to your agent. A certificate of insurance cannot add coverage that does not exist in the policy.
Subcontractors must be considered
Contractors who subcontract work should establish consistent insurance and documentation procedures. Uninsured or underinsured subcontractors can create liability, audit and workers’ compensation problems.
Common procedures include:
- Written subcontractor agreements
- Certificates of insurance
- Additional insured requirements
- Workers’ compensation documentation
- Appropriate liability limits
- Records of subcontracted cost and work performed
Learn more in our guide to insurance for subcontractors .
A practical contractor coverage checklist
The following questions can help organize a contractor insurance review:
- What exact work does the business perform?
- Which operations does the business never perform?
- Does the contractor work residentially, commercially or industrially?
- Does the contractor perform new construction, service, repair or renovation?
- Who works for the business and what does each person do?
- Which vehicles are used and who drives them?
- What tools, equipment and materials move between projects?
- Does the contractor rent or borrow equipment?
- Does the contractor use subcontractors?
- Does the contractor design, advise or program systems?
- Could the work create or disturb a pollution condition?
- What do customers, landlords and project contracts require?
Most contractors need more than one policy. The right program should coordinate liability, employees, vehicles, equipment, property and specialized project exposures around the contractor’s actual work.