General Liability Insurance for Contractors: Coverage & Cost

What general liability insurance covers for contractors

Commercial general liability insurance protects contractors against claims from people outside the business — customers, bystanders, property owners, and other third parties.

The policy covers three categories of loss: third-party bodily injury, third-party property damage, and personal and advertising injury (which includes claims like slander or false advertising). It also pays for legal defense, settlements, and court judgments — even if the claim turns out to be groundless.

A plumber accidentally ruptures a gas line while working in a customer's home. The resulting fire damages the kitchen. GL covers the homeowner's property damage claim and the cost to defend the plumber in court.

GL is liability coverage, not a warranty. It does not pay to redo your own defective work. It covers damage your work causes to someone else's property.

Three categories of covered claims

How GL differs from other contractor policies

GL covers third-party claims only. It does not cover your employees (that is workers compensation), your business vehicles (that is commercial auto), your own tools and equipment (that is inland marine), or professional design errors (that is professional liability).

Most contractor GL policies are written on an occurrence basis. That means the policy in force when the damage happened responds to the claim, even if the claim is filed years later. Check your declarations page to confirm whether your policy says occurrence or claims-made.

Why completed operations coverage matters after the job ends

GL splits into two insuring agreements: premises and operations (covering claims during active work) and products and completed operations (covering claims after the job is done).

Many contractor claims arrive weeks or months after the crew leaves. A roof leaks six months after installation. A tile floor buckles after a winter heating cycle. An electrical connection fails and starts a fire in a finished wall.

These post-job claims fall under completed operations coverage. Without it, the contractor has no GL response to claims arising from finished work.

Why contracts require a completed operations aggregate

GCs and property owners know that construction defect claims surface after project completion. That is why contracts frequently require additional insured wording that covers both ongoing operations and completed operations.

ISO form CG 20 10 provides additional insured status for ongoing operations. CG 20 37 provides it for completed operations. Using only CG 20 10 leaves the hiring party exposed to claims that arise after the contractor finishes work.

What general liability does not cover

GL has specific exclusions that catch contractors off guard. Knowing what the policy will not pay helps you buy the right additional coverage before a claim arrives.

The damage-to-your-work exclusion

GL generally excludes property damage to the contractor's own completed work. If a newly built garage roof collapses because of faulty construction, the cost to tear off and rebuild the roof is not covered. However, if that collapse damages the homeowner's car parked inside, the damage to the car may be covered as third-party property damage.

There is a subcontractor exception: if a subcontractor's work causes damage to the general contractor's completed project, the GC's GL policy may treat that differently than damage to the GC's own work.

Find out which gaps apply to your business

Answer four questions about your operations and see which additional policies you need beyond GL.

Contract requirements: limits, endorsements, and certificate details

Contract compliance is the most common reason contractors buy GL. GCs, property owners, and government agencies do not just ask for "insurance" — they specify limits, endorsement forms, and policy wording.

Standard limit structures

Most commercial contracts require at least $1,000,000 per occurrence and $2,000,000 general aggregate. Public-works contracts often add umbrella or excess liability requirements that scale with project size.

Private contracts vary. A residential GC may accept $1M/$2M with no umbrella. A commercial owner may require $5M or $10M in umbrella coverage even for a small subcontract.

Endorsements contracts commonly require

Beyond limits, contracts specify endorsement wording that changes how the policy responds. Here are the five most common requirements.

An additional insured endorsement names the hiring party on your GL policy so they have coverage if sued over your work. CG 20 10 covers ongoing operations. CG 20 37 covers completed operations. Many contracts require both forms.

Primary and noncontributory wording requires your policy to pay first, before the hiring party's own insurance, and without seeking contribution from other policies.

A waiver of subrogation prevents your carrier from suing the hiring party to recover money it paid on your claim. Contracts require this because additional insured status alone does not eliminate every subrogation issue — losses outside endorsement scope, losses above agreed limits, and excess layers where the party is not included can still trigger subrogation.

Check which endorsements your contract requires

Select the terms you see in your contract. The tool returns the endorsement form numbers and a plain-English explanation of what each one does.

A certificate is not the policy

A certificate of insurance shows evidence of coverage. It does not create coverage or guarantee endorsement wording. Some contracts — especially public works — require copies of the actual policy, declarations, endorsements, riders, and modifications.

If your certificate shows $1M/$2M limits but the contract requires primary and noncontributory wording and your policy does not have that endorsement, the certificate may be rejected. The hiring party checks the actual policy details, not just the ACORD form.

Downloadable contract requirements checklist

Use this checklist when reviewing a new contract. It lists the standard insurance requirements, endorsement form numbers, and certificate details contractors commonly need to verify before signing.

How carriers price a general liability policy

There is no single national average for contractor GL. A solo handyman, a mid-size roofing crew, and a subcontracting-heavy general contractor should not expect the same premium. Carriers use different rating factors depending on your trade, state, and business size.

What carriers use to set your premium

• Class code and work type — roofers, electricians, and painters each carry different loss expectations
• Payroll or gross receipts — the rating basis that scales the premium with business size
• State and territory — a Texas filing showed territory factors developed from ZIP-code-level variables
• Limits and deductibles — higher limits cost more; higher deductibles reduce premium
• Claims history — prior losses raise future premiums
• Number of employees — more workers mean more exposure

Hiscox advertises GL starting at $30 per month for small businesses. That figure assumes a low-risk operation with minimal payroll and no significant claims history. Contractors in higher-risk trades — roofing, excavation, demolition — pay substantially more because their class codes carry higher expected losses.

Rates change by state

Carrier rate filings show how much GL pricing varies by location. A Utah filing showed a 4.0% overall increase tied to ISO loss costs and increased limit factors. A Washington filing showed a 6.94% rate increase tied to loss cost multiplier changes. Meanwhile, a Montana program was filed at a rate level 20% lower than the existing GL program.

The same contractor doing the same work can see meaningfully different GL premiums in different states. That is why comparing quotes from carriers licensed in your state matters.

The marketplace compares your account with carriers from 400+ options that insure your specific trade and state. Licensed support is available in 22 states for contractors with complex accounts or contract questions.

How a third-party damage claim works in practice

A real settlement shows what happens when a contractor's work damages neighboring property — and why pollution exclusions matter.

This scenario illustrates two points. First, third-party property damage claims from contractor operations can reach seven figures. Second, standard GL pollution exclusions can leave a contractor without coverage for contamination-related claims — even when the underlying work (painting) seems routine.

Contractors working with lead paint, asbestos, mold, fuel, solvents, or other environmental materials should ask specifically whether their GL policy's pollution exclusion applies to their work. If it does, a separate contractors pollution liability policy fills the gap.

Compare general liability quotes from carriers that insure your work

Submit one quick form. The marketplace compares your account with carriers that insure your kind of work, and licensed insurance professionals can review the options with you.

You answer a few questions about your trade, state, payroll, and contract requirements. The marketplace compares your account with carrier options that may fit your work, and licensed support is available to help you review what comes back.

Prefer to talk? Call (888) 698-7698 for licensed support. Complex accounts — high limits, multiple endorsements, unusual trades — sometimes benefit from a conversation with a licensed representative who can review the options with you.