Navigating general contractor insurance requirements can be confusing, particularly with varying rules set by state laws, differing project owner requirements, and industry standards. As a contractor, understanding exactly what coverage you need, such as General Liability, Workers’ Compensation, and Commercial Auto, is essential for protecting your business, staying compliant, and winning new projects.

We break down the core insurance policies general contractors are typically required to carry, Whether you’re new to contracting or reviewing your current policies, here’s everything you need to know to meet general contractor insurance requirements with confidence.

What Critical Coverages Should Contractors Carry, and When Are They Required?

Take a look at the following coverages, which comprise a comprehensive insurance program for contractors, and when they are required.

General Liability Insurance for Contractors

Protects against third-party bodily injury (excluding employees), property damage, medical payments, and personal and advertising injury. For example, if a client slips on your job site or you accidentally damage their property, a General Liability policy will respond.

When Is General Liability Coverage Required?

  • Licensing: Some states require proof of General Liability coverage as part of the contractor licensing process.

  • Contracts: Property owners and project managers almost always require contractors to carry General Liability insurance as part of a contractual agreement. A Certificate of Insurance (COI) is typically needed to demonstrate coverage.

Workers’ Compensation Insurance for Contractors

Covers medical bills and lost wages (up to a specific limit) for employees who are injured on the job. Workers’ Comp insurance also protects your business from employee injury lawsuits.

When Is Workers’ Comp Required?

  • State Law: Mandated in most states for businesses with employees. Even if you’re a sole proprietor, some clients may require you to carry Workers’ Comp to be hired on a job.

  • Licensing: Certain states require proof of Workers’ Compensation coverage in order to issue or renew a contractor license if you employ workers.

Contractors Tools & Equipment Insurance

Protects your tools, power equipment, motorized gear, and safety equipment against theft or damage, whether in transit, in storage, or on a job site. Contractors Tools & Equipment coverage may also extend to rented equipment.

When Is Contractors Tools & Equipment Coverage Required?

This coverage is highly recommended for operational continuity. 

What Additional Coverages Should Contractors Consider?

Commercial Property Insurance: Covers damage to buildings or property you own or lease, along with business contents such as equipment, computers, or furniture. Lenders or landlords typically require this coverage if you lease office or storage space.

Excess Liability: Provides additional liability limits that extend beyond the underlying General Liability, Commercial Auto, or Employers’ Liability policies. Coverage is often required in large-scale construction contracts or by government agencies for projects above a certain value.

Builder’s Risk Insurance: Covers buildings under construction or renovation, insuring materials, fixtures, equipment, and labor costs in the event of damage or theft. Builder’s Risk insurance is frequently required by property owners, lenders, or developers for active job sites.

Contractors Professional Liability: Provides coverage against claims of negligence, design flaws, or professional errors in planning, design, or construction that result in financial loss. Coverage may be required as part of the terms of a contractual agreement on design-build or construction management projects, especially where the contractor provides both labor and design services.

Contractors Pollution Liability: Covers third-party bodily injury, property damage, legal defense, and cleanup costs related to pollution conditions caused by contracting operations (e.g., mold, asbestos, fuel spills). Typically required in environmentally sensitive projects or when disturbing potentially hazardous materials, even if the contractor isn’t an “environmental” company.

Commercial Auto Insurance: Provides coverage for business-owned vehicles, including liability for accidents, property damage, theft, medical payments, and legal defense. Commercial Auto insurance is legally required in all states for vehicles used in business. Some project owners may also ask for a COI showing coverage if vehicles are used on-site.

Subcontractor Insurance Requirements

Do Subcontractors Need Their Own Insurance?

Yes, subcontractors are typically required to carry their own insurance policies to work on a job site, to both protect themselves and meet the legal or contractual requirements set by general contractors (GC), project owners, and sometimes state licensing boards. This includes General Liability, Workers’ Compensation, Contractors Tools & Equipment, and Commercial Auto insurance.

General contractors will typically require subcontractors to name them as an “additional insured” on the General Liability policy. This means the GC is also covered under the subcontractor’s policy for claims arising out of the subcontractor’s work.

A subcontractor must also provide a COI as proof of insurance coverage before being allowed to work on most projects. The COI should detail policy types, limits, effective dates, and any additional insured endorsements.

Frequently Asked Questions

Q. Can CCIS help me determine the exact insurance requirements for my state or specific type of contracting work?

A. CCIS can help you find out if the state requires certain General Liability limits to be purchased as part of the contractor’s licensing process. For example, in Oregon, contractors are required to purchase and provide proof of General Liability insurance in a specified amount to obtain a contractor’s license. We have provided the list of required limits here. In addition, the General Liability policy must name the Oregon Construction Contractors Board (CCB) as the certificate holder.

In Washington state, the Department of Labor & Industries (L&I) requires contractors to carry a minimum of $200,000 in public liability and $50,000 in property damage or a $250,000 combined single limit in coverage as part of the licensing process. The L&I Department must be listed as a certificate holder on your Liability insurance.

Q. How can I get proof of insurance or a certificate of insurance from CCIS?

A. It’s easy. Our policyholders can request a certificate of insurance online here. Alternatively, you can email the CCIS certificates department directly at certificates@ccisbonds.com with your request.

Q. Does CCIS Insurance offer bundled policies to help contractors meet all insurance requirements affordably?

A. CCIS offers access to a wide range of coverage options. While some insurance companies provide bundling discounts, most clients find greater value in the time-saving convenience of a one-stop shop. Our goal is to deliver tailored solutions that fit your unique needs.

*NOTE: The insuring agreement in a policy sets out the covered perils, assumed risks, and nature of coverage that the insurance company provides to its insured in exchange for the premiums paid. Thus, the terms and conditions of the policy will dictate whether coverage exists and the nature of any potential benefits.