Contracting is one of the most insurance-intensive industries. Every job site introduces bodily injury risk, property damage exposure, vehicle liability, tool theft, and contract requirements that demand proper coverage.
Without the right insurance, you can't bid on jobs, you can't protect your crew, and a single accident can wipe out years of work. Here's what every trade contractor needs.
General Liability Insurance
General liability is the foundation of every contractor's insurance program. It covers:
- Third-party bodily injury: A homeowner trips over your equipment, a passerby is hit by falling debris
- Property damage: You accidentally damage a client's property during the job
- Completed operations: Your work causes damage after you leave the site
- Personal/advertising injury: Libel, slander claims
Required limits: Most contracts require $1M per occurrence / $2M aggregate. Government and large commercial jobs often require $2M/$4M or higher.
Critical note: Products-completed operations coverage is essential for contractors. This is what protects you when your work causes a problem months or years after the job is done. Never let a carrier exclude or reduce this coverage.
Workers Compensation
Required in almost every state if you have employees — and many general contractors require subs to carry it even if the state doesn't. Workers comp for contractors covers:
- Falls from heights (ladders, scaffolding, roofs)
- Electrocution and electrical burns
- Struck-by injuries (tools, materials, equipment)
- Repetitive motion and overexertion injuries
- Exposure to hazardous materials
Cost factor: Contractor workers comp rates are among the highest of any industry. Your rate depends on your classification code, payroll, experience modification rate (EMR), and state. An EMR below 1.0 means you're safer than average — and earns significant premium discounts.
Commercial Auto Insurance
Contractors drive more than almost any other industry — to job sites, suppliers, and client meetings. Commercial auto covers:
- Owned vehicles: Trucks, vans, and work vehicles titled to the business
- Hired vehicles: Rental trucks and equipment haulers
- Non-owned vehicles: Employee personal vehicles used for work
Important: Personal auto policies exclude commercial use. If an employee has an accident while driving to a job site in their personal truck, your business can be liable — and their personal policy won't cover the commercial exposure.
Inland Marine / Tools & Equipment
Your tools and equipment travel with you — and they're not covered by standard commercial property insurance once they leave your premises. Inland marine (also called contractors' equipment or tools floater) covers:
- Tools and equipment in transit
- Equipment on the job site
- Rented or leased equipment
- Theft from vehicles (the most common claim)
Cost: Typically 1–3% of the total value of tools and equipment insured. $50,000 in tools = $500–$1,500/year. Worth every penny after one truck break-in.
Builder's Risk Insurance
Covers buildings and structures under construction against fire, wind, theft, and vandalism. Required on most commercial construction projects and many residential new builds. Key details:
- Covers the structure, materials on site, and materials in transit
- Policy period matches the construction timeline
- Usually purchased by the general contractor or property owner
- Subcontractors may need their own coverage for their materials and equipment
Surety Bonds
Bonds are not insurance — but they're often required alongside insurance:
- License/permit bonds: Required by many states and municipalities to hold a contractor's license
- Bid bonds: Guarantees you'll honor your bid if selected for the project
- Performance bonds: Guarantees you'll complete the work per contract terms
- Payment bonds: Guarantees you'll pay subcontractors and suppliers
Coverage by Trade
Different trades have different risk profiles and insurance needs:
- Electricians: Higher GL rates due to fire risk from completed operations. Products-completed operations coverage is critical.
- Plumbers: Water damage is the primary exposure. Make sure property damage limits are adequate.
- HVAC: Equipment value is high — inland marine is essential. Refrigerant handling adds liability exposure.
- Painters: Generally lower GL rates. Lead paint exposure on older homes requires pollution liability.
- Roofers: Among the highest workers comp and GL rates due to fall risk. Many carriers restrict roofing.
- General contractors: Need all of the above plus additional insured requirements for subcontractor management.
How to Reduce Contractor Insurance Costs
- Maintain a low EMR — Safety programs and claims management directly reduce workers comp cost
- Accurate classification — Make sure your workers comp class codes reflect what your employees actually do
- Separate payroll — Office staff should be classified differently than field workers
- Work with an independent agent — Access to multiple carrier markets gets you the most competitive rates
- Annual policy review — Payroll, revenue, and fleet changes should be updated to avoid audit surprises