What contractors insurance covers

General liability pays for bodily injury and property damage you cause to others during the work: a dropped tool that injures a homeowner, a water line cut that floods a neighbour's unit, a fire started by a torch. Completed operations extends that to damage that shows up after the job is done and paid for, which is where a contractor's real long-tail exposure lives. A deck that collapses two summers later, or a plumbing joint that fails behind drywall, is a completed operations claim.

The form's exclusions matter more for contractors than for most businesses. The policy does not pay to redo your own faulty work; it pays for the damage that work causes to other property. Some carriers add exclusions for residential construction, for work on condominiums, or for damage caused by subcontractors, and those exclusions are the first thing a general contractor's contract review will reject.

A property policy covers things at a fixed address. A contractor's tools live in trucks and on sites, so they are insured on an inland marine form called a contractors equipment or tools floater. Small hand tools are covered as a blanket amount; anything valuable, such as a skid steer, a generator or a laser level, is scheduled by serial number and value. Theft from a locked vehicle or a job site is the common claim, and the policy's conditions on locking and site security decide whether it pays.

Installation coverage is the related piece: it insures materials you have bought for a job, at the site or in transit, until the work is accepted. Without it, a pallet of cabinets stolen from a garage the night before install is your loss, not the homeowner's.

A truck titled to the business, or used for the business with tools and ladders aboard, needs a commercial auto policy; a personal auto policy can deny a claim once the vehicle's use is clearly commercial. Hired and non-owned coverage adds liability for employees driving their own vehicles between sites and for rented equipment haulers. Contracts usually set an auto liability limit alongside the general liability one.

Workers compensation pays an injured employee's medical bills and a share of lost wages regardless of fault, and in exchange the employee generally cannot sue. Each of the four states sets its own rules for when a contractor must carry it, and general contractors typically require proof from every sub regardless. Employers liability, packaged with it, responds when an injury suit falls outside the compensation system. If you use subcontractors who carry no coverage of their own, their payroll is charged to your policy at audit, which is the usual source of a surprise bill.

State contractor licensing boards require a license bond as a condition of holding the licence. The bond is not insurance for you; it is a guarantee to the board and the public that you will follow the licensing law, and if the surety pays a claim you repay the surety. Bonds are placed through the same office and are described on the surety page.

Every job then begins with a certificate of insurance. It is a one-page summary the agency issues to the general contractor or owner showing your carriers, limits and policy dates, and stating whether they are an additional insured on your liability policy with primary and non-contributory wording and a waiver of subrogation on the workers compensation policy. Those are endorsements that must be on the policies before the certificate can say they are.