General contractor insurance: coverage, requirements and costs

Why general contractors need business insurance

A general contractor is the party an owner sues. When a framing subcontractor's ladder falls on a passerby, a window leaks two winters after turnover, or an uninsured drywall crew's worker is hurt, the claim reaches your policies first, whatever the subcontract says about fault. You carry the risk of everyone on the site, and your price depends on how well you have pushed that risk down the chain.

The injury data explains the underwriting. The Bureau of Labor Statistics counted 1,034 fatal work injuries in construction in 2024, 220 of them in construction of buildings (BLS census of fatal occupational injuries, Table A-1). BLS put the 2024 total recordable case rate at 2.2 per 100 full-time workers for both construction and construction of buildings (BLS Table 1). OSHA calls falls the leading cause of death in construction, 389 of those 1,034 deaths in 2024, and its residential fall-protection rule applies at 6 feet (29 CFR 1926.501(b)(13)).

Defect claims arrive late. In Florida, suits over the construction of an improvement face a 4-year limitation period and a 7-year outer limit measured from the earliest of the temporary certificate of occupancy, certificate of occupancy, certificate of completion or abandonment (Fla. Stat. 95.11(3)(b)). Other states set different periods, so your completed-operations exposure outlives the job by years.

Core coverages

• Commercial general liability. The commercial general liability policy, usually written on ISO CG 00 01, pays third-party bodily injury and property damage from your operations and, through the completed operations hazard, after you leave. Read exclusions j(5) and j(6) (the part of the property you are working on, and property that must be redone because your work was faulty) and exclusion l (damage to your work). Exclusion l has an exception for completed work done by a subcontractor on your behalf, and endorsement CG 22 94 removes that exception. Ask for a per-project aggregate (CG 25 03). Manuscript and carrier forms differ.
• Workers' compensation and employers liability. Statutory benefits under the NCCI-style policy, rated on payroll by class code and your experience modification rate.
• Commercial auto and hired and non-owned auto. Pickups, trailers and employees driving their own vehicles to sites; see hired and non-owned auto.
• Umbrella and excess. Owners scale this to contract size. UNLV's published construction terms ask for $5 million of excess on contracts from $1,000,001 to $5 million and $10 million above that (UNLV).
• Builders risk and contractors equipment. builder's risk covers the work under construction; an inland marine floater covers your tools (contractor's equipment insurance: covering tools, machinery and rentals).
• Surety bonds. Bid, performance and payment bonds, covered in bid, performance and payment bonds: how contract surety works.

Coverage you may be required to carry

Licensing. California requires a $25,000 contractor license bond, and an LLC license adds a $100,000 wage bond and liability insurance of at least $1 million for five or fewer personnel of record, plus $100,000 for each additional person up to $5 million (CSLB bond requirements; CSLB LLC page). Washington requires a $30,000 bond for general contractors and liability limits of $50,000 property damage, $100,000 for one person and $200,000 for more than one (RCW 18.27.040; RCW 18.27.050). Washington is also a monopolistic workers' comp state, so that coverage comes from the state fund. See workers' comp and benefits requirements by state.

Contracts. Public university templates show the usual ask. Indiana University requires $1 million per occurrence, $2 million aggregate and $1 million products-completed operations, a per-project aggregate, additional insured status on CG 20 10 and CG 20 37, waivers of subrogation, and completed-operations coverage through the warranty period, usually five years (Indiana University). A private owner or lender may ask for more.

Bonds. Federal construction contracts above $150,000 need performance and payment bonds (FAR 28.102-1); state "Little Miller Acts" set their own thresholds.

Anti-indemnity law. Several states limit how much risk a contract can shift. Texas voids indemnity for the indemnitee's own negligence in construction contracts, with an exception for the indemnitor's employee claims (Tex. Ins. Code 151.102). New York voids it too (GOL 5-322.1). Florida requires a monetary cap, not less than $1 million per occurrence for indemnity owed to the owner unless the parties agree otherwise (Fla. Stat. 725.06). Have a lawyer read the indemnity clause; see contractual risk transfer: shifting liability by contract and insurance.

Common claims and how to prevent them

• Uninsured subcontractor injuries. Auditors usually charge a general contractor for the payroll of subs who cannot show comp coverage. Collect certificates and endorsements before mobilization (managing subcontractor insurance and certificates).
• Water intrusion and defect suits. Inspect flashing and window installs before they are covered, keep dated photos, and follow manufacturer details.
• Falls. Write a fall-protection plan for work at 6 feet and above and enforce it on subs.
• Third-party property damage. Locate utilities before excavating, and survey neighboring structures before vibration-heavy work.
• Fire and theft. Permit hot work, control temporary heat, lock storage and log tools.

What drives the cost

• Workers' comp is payroll times the class rate, adjusted by the mod. NCCI-style classes include 5645 (residential carpentry), 5403 (carpentry, not otherwise classified) and 5606 (executive supervisors who work through foremen); California uses its own WCIRB classes. Payroll is audited. Try the workers' comp premium calculator.
• General liability is rated on payroll, gross receipts or, for subcontracted work, the cost of the subs. Underwriters weigh the share of work sublet, whether subcontracts carry indemnity and additional insured wording, residential versus commercial, tract housing, condominiums and wood-frame multifamily, exterior finishes, building height and loss history.
• Businessowners programs rarely fit. ISO's program overview shows contractor eligibility of about $300,000 payroll, three stories and 10% subcontracted (ISO Businessowners overview, Feb 2025); most general contractors exceed it.
• Auto follows vehicle count, driver records and radius. Builders risk follows project value, location and duration. Surety follows contract size and financials (surety bond cost calculator).

Specialized coverages to consider

• Contractors pollution liability. The CGL's pollution exclusion leaves gaps; owners such as Indiana University require separate pollution coverage scaled to project size (pollution liability insurance and the pollution exclusion).
• Professional liability for design-build. CG 22 79 excludes professional services, so design work needs its own policy (Professional liability (E&O) insurance explained).
• Wrap-up programs. An owner-controlled or contractor-controlled program replaces each sub's coverage on large projects (Wrap-up programs: how OCIPs and CCIPs work).
• Employment practices liability once you carry a field and office staff (Employment practices liability insurance (EPLI): what it covers).

How to buy

Use a broker with a construction book. Bring five years of loss runs, payroll by class, annual subcontracted cost, your standard subcontract, a work-in-progress schedule and your largest projects. Travelers describes wrap-up, surety, loss-sensitive and group captive options for contractors on its construction page; Amerisure markets commercial construction insurance with a Contractors Advantage Program; NEXT Insurance lists general contractors among the trades it quotes online. Compare the endorsements, not only the premium, and run your contracts through the contract insurance requirements checker.

Key takeaways

• Your subcontract and certificate process decides how much risk stays with you, so audit them before renewal.
• Ask for CG 20 10, CG 20 37, primary and noncontributory wording and a per-project aggregate, and check what your state's anti-indemnity law allows.
• Plan for completed-operations claims years after turnover; repose periods vary by state.
• A standard businessowners policy rarely fits a general contractor with real payroll or subcontracting.
• Match umbrella, pollution and professional limits to the contracts you sign, not to the minimum.