If you’re a general contractor, general liability insurance is one of the most important policies you can carry. It helps protect your business from third-party injuries, property damage, and costly lawsuits that can arise on or off the job site.
But simply having a policy isn’t enough. Understanding what general liability insurance actually covers, how premiums are calculated, and where coverage gaps exist can help you avoid expensive mistakes that could put your business at risk.
This guide breaks down everything general contractors need to know about general liability insurance.
What Is General Liability Insurance for General Contractors?
General liability insurance is designed to protect your contracting business if you’re held legally responsible for bodily injury or property damage to a third party.
For general contractors, this coverage is often required by:
- Project owners
- Property managers
- Developers
- Lenders
- Municipalities
It also plays a critical role in protecting your balance sheet if a claim turns into a lawsuit.
What Does General Liability Insurance Cover?
Bodily Injury
If someone is injured due to your operations — such as a slip and fall at a job site — general liability can help cover medical costs, legal defense, settlements, and judgments.
Property Damage
If your work causes damage to someone else’s property, general liability insurance helps cover repair or replacement costs.
Products & Completed Operations Coverage
This is a key coverage area for general contractors.
Products and completed operations coverage applies to claims that arise
after your work is finished, such as:
- Faulty installation
- Structural issues
- Damage caused by completed construction work
Many contractors don’t realize this coverage is included under general liability — but it’s one of the most important parts of the policy.
How Are General Liability Premiums Determined for General Contractors?
General liability insurance premiums are not one-size-fits-all. Insurance companies look at several factors when pricing a policy.
Payroll and Revenue
Higher payroll and revenue generally mean higher exposure, which can increase premiums.
Job Classifications
The type of work you perform matters. Residential, commercial, and specialty construction work are often rated differently.
Subcontracted Work
How much work you subcontract — and how those subcontractors are insured — plays a major role in pricing and underwriting.
Claims History
Past claims can significantly impact your premium and your ability to access better insurance markets.
Risk Management for General Contractors
One of the most overlooked risk management tools for general contractors is a
formal subcontractor agreement.
A strong subcontractor agreement should clearly require:
- General liability insurance
- Workers’ compensation insurance
- Additional insured status
- Waivers of subrogation
Failing to properly manage subcontractor risk is one of the most common reasons contractors face uncovered claims.
General Liability Coverage Limits and Umbrella Policies
Standard General Liability Limits
Most general contractors carry:
- $1,000,000 per occurrence
- $2,000,000 aggregate
These limits are often the minimum required by contracts and project owners.
When an Umbrella Policy Makes Sense
An umbrella policy provides additional liability limits above your general liability, auto liability, and employers liability coverage.
Umbrella insurance is commonly recommended for:
- Larger projects
- Higher-risk operations
- Contractors working on commercial or public projects
- Businesses with contractual liability requirements
Common General Liability Exclusions Contractors Should Watch For
Not all general liability policies are the same.
Some policies may exclude or restrict:
- Residential or commercial construction work
- Certain types of subcontracted work
- Height restrictions
- Specific trades or operations
Always review exclusions carefully — especially if you’re switching insurance companies or buying a lower-cost policy.
What General Liability Insurance Does NOT Cover
General liability insurance is essential, but it doesn’t cover everything.
Here are some common exposures that require separate policies:
Employee Injuries
Employee injuries are covered under
workers’ compensation insurance, not general liability.
Defective Workmanship
Faulty or professional errors typically fall under
contractors errors & omissions (E&O) coverage, not general liability.
Cyber Liability
Data breaches, ransomware attacks, and electronic data losses require
cyber liability insurance.
Pollution Liability
Environmental hazards, contamination, and pollution-related claims are excluded and require a
pollution liability policy.
Why Choosing the Right Insurance Company Matters
Price is important — but it shouldn’t be the only factor.
Some insurance companies specialize in working with general contractors and offer:
- Better coverage terms
- Fewer exclusions
- More competitive pricing
- Stronger claims handling
Working with a reputable, financially stable insurer can make a significant difference when a claim occurs.
Final Thoughts
General liability insurance is a foundational coverage for general contractors, but understanding the details matters just as much as having a policy in place.
Knowing what’s covered, how premiums are calculated, and where exclusions exist can help protect your business, your reputation, and your long-term financial stability.
Need Help Reviewing Your General Liability Coverage?
If you’re a general contractor and want help reviewing your general liability insurance, coverage limits, or exclusions, we’re here to help.
Contact us today to make sure your business is properly protected before a claim happens.
