Contractors are one of the most underinsured classes of business owners in America. Most carry general liability — and think that's enough. It's not. Here are the gaps that end contracting businesses.
Gap 1: No Tools and Equipment Coverage
General liability covers third-party property damage — not YOUR tools and equipment. A stolen truck full of power tools, a generator damaged on a job site, or a compressor that falls off a trailer: none of these are covered by GL. You need an Inland Marine policy specifically for your tools, equipment, and mobile property.
Gap 2: No Completed Operations Coverage
General liability has two parts: premises/operations (while work is in progress) and products/completed operations (after the job is done). Many cheap GL policies limit or exclude completed operations. If a deck you built collapses after the client moves in, you're unprotected.
Gap 3: Subcontractor Liability
If you hire subs without certificates of insurance, their mistakes become YOUR liability. Require COIs from every subcontractor, verify they name you as additional insured, and check that their coverage is active before work starts.
Gap 4: No Commercial Auto
Personal auto insurance does NOT cover a vehicle used for business. If you're driving to job sites, hauling materials, or using your truck for work, you need commercial auto. A single accident while working without commercial auto can result in a denial and personal financial exposure.
Gap 5: No Workers Compensation
Most states require workers comp once you have any W-2 employees. Even some states require it for subcontractors classified as employees. An injured worker without workers comp coverage can sue you personally — and win significantly more than a workers comp claim would have paid.