General liability insurance is the foundation of every contractor insurance program. Without it, a single accident on a job site can result in a lawsuit that wipes out everything you have built.
Here is what contractor general liability covers, what it does not, and how to make sure you have the right limits for your trade.
What General Liability Covers for Contractors
Bodily injury to third parties. If someone other than your employee is injured on a job site — a homeowner, a visitor, a passerby — your GL policy covers their medical expenses and legal defense if they sue.
Property damage. If you or your employees accidentally damage a client's property — break a window, damage a floor, crack a pipe — your GL policy covers the repair or replacement cost.
Completed operations. This is one of the most important coverages for contractors. Completed operations covers claims that arise after a job is finished — a roof you installed that leaks two years later, a deck you built that collapses, a plumbing repair that fails. Claims can come years after the work is done.
Personal and advertising injury. Covers claims of libel, slander, copyright infringement, or invasion of privacy arising from your business activities.
Legal defense. Even if a claim against you is ultimately unfounded, legal defense is expensive. GL coverage includes defense costs, which can easily reach $20,000–$50,000 for a contested case.
What General Liability Does NOT Cover for Contractors
Your own employees' injuries. Employee injuries are covered by workers compensation, not general liability.
Your own tools and equipment. GL covers damage you cause to others' property, not damage to your own tools and equipment. Tools and equipment coverage is a separate policy.
Professional errors. If you make a design error or give bad advice that causes a loss, that is a professional liability (E&O) claim, not a GL claim. Design-build contractors and contractors who provide design services need professional liability coverage.
Intentional acts. Intentional damage or fraud is excluded.
Auto liability. Accidents involving your vehicles are covered by commercial auto insurance, not GL.
Pollution. Standard GL policies exclude pollution claims. Contractors who work with hazardous materials need a pollution liability endorsement or standalone policy.
How Much General Liability Do Contractors Need?
The right GL limit depends on your trade, your project sizes, and your clients' requirements. Common benchmarks:
$1 million per occurrence / $2 million aggregate: The minimum for most contractors. Required by most commercial clients and general contractors.
$2 million per occurrence / $4 million aggregate: Appropriate for larger projects or higher-risk trades (roofing, structural work, excavation).
$5 million+ per occurrence: Required for some commercial projects, government contracts, and high-value residential work.
Trade-specific considerations:
- Roofing: Higher limits due to fall risk and property damage exposure
- Plumbing and HVAC: Water damage exposure warrants adequate limits
- Electrical: Fire risk warrants adequate limits
- General contractors: Often need higher limits to satisfy subcontract requirements
The Additional Insured Requirement
Most general contractors and property owners require subcontractors to name them as additional insureds on the subcontractor's GL policy. This means the GC or property owner is covered under your policy for claims arising from your work.
When you receive a contract that requires additional insured status, contact your agent to add the required endorsement. Failing to do so can result in contract disputes and potential liability.
Occurrence vs. Claims-Made Policies
GL policies come in two forms:
Occurrence policies cover claims for incidents that occurred during the policy period, regardless of when the claim is filed. If you had an occurrence policy in 2023 and a claim is filed in 2026 for work done in 2023, the 2023 policy responds.
Claims-made policies cover claims that are both made and reported during the policy period. If your policy lapses, you lose coverage for past work unless you purchase tail coverage (extended reporting period).
For contractors, occurrence policies are generally preferable because completed operations claims can come years after the work is done.
The Bottom Line
General liability is not optional for contractors — it is the foundation of your insurance program and a requirement for virtually every commercial relationship. Make sure your limits are adequate for your trade and your projects.
Talk to a RightQuote advisor about contractor insurance, or explore business insurance options.
Part of the Contractor Insurance Guide.