General Contractor Insurance
A general contractor's insurance program is mostly a set of questions about other people's insurance. You are responsible for work performed by subcontractors, on sites you control, under contracts you signed with an owner. Your own policy is the last line, and how well it performs depends almost entirely on whether the risk transfer upstream of it worked.
That is why the most valuable thing on a general contractor's program is often not a coverage at all. It is a functioning subcontract agreement and a certificate collection process that someone actually runs. Contractors who have both pay less and sleep better. Contractors who do not tend to discover the gap at audit or at claim, whichever arrives first.
Coverage gaps
Where coverage goes wrong for general contractors
Subcontractor default. When a sub is uninsured, underinsured, or carrying a policy that excludes the work they performed, their claim becomes your claim and their contract value becomes your payroll at audit. Both are expensive and both are preventable.
Risk transfer language that does not hold. An indemnity clause unenforceable in the state where the work sits, or an additional insured requirement without the corresponding endorsement behind it, is a paper transfer rather than a real one. Anti-indemnity statutes vary enough by state that a single national form is rarely sufficient.
Per-project aggregate. Without it, one project's losses erode the aggregate protecting every other job you have open. For a contractor running several projects at once, that is not a technicality.
Work performed by subcontractors exclusions. Some general liability policies restrict or exclude damage arising out of subcontracted work. For a general contractor, that removes most of the exposure the policy exists to cover.
Certificate tracking as an operational problem. Collecting a certificate at the start of a job is not enough. Policies cancel, coverage lapses mid-project, and the certificate on file is a snapshot rather than a monitor.
Residential defect exposure. Contractors who build or substantially remodel homes carry a long-tail exposure that behaves nothing like their commercial work, with its own exclusions and its own market.
Program
Coverages that matter most
- General liability, with close attention to any subcontracted work restrictions and to the per-project aggregate
- Umbrella and excess, sized to the largest contract you sign rather than to the average one
- Workers compensation, where subcontractor documentation drives the audit outcome
- Commercial auto
- Builders risk, on a per-project or blanket basis depending on volume
- Contractors pollution liability, since you inherit exposure from every trade on the site
- Professional liability where design-build or construction management services are provided
- Surety and contract bonds, along with the financial statement work that supports a growing program
Underwriting
Classification and payroll
Subcontractors with acceptable certificates on file are treated one way. Those without are added to your payroll at the rate for the work they performed, which for roofing or steel erection is a substantial number.
General contractors are typically rated on payroll and on the cost of subcontracted work, and the treatment of that subcontracted cost is where the money is.
The other classification issue is self-performed work. Contractors who self-perform framing, concrete, or finish work need that payroll reported under the correct code rather than swept into a supervisory classification.
Contract requirements
On the owner side, expect additional insured status for ongoing and completed operations, primary and non-contributory, waiver of subrogation, per-project aggregate, and a following-form umbrella, with limits scaled to contract value. On the subcontractor side, you should be requiring the same things flowing up to you, and your subcontract agreement needs to say so in language that works in the state where the project actually sits.
Claim scenarios
How these claims actually happen
A framing subcontractor's employee is injured on site. The sub's workers compensation responds, and the employee's attorney then sues the general contractor. The general contractor tenders to the sub's general liability as an additional insured. The sub's policy carries an endorsement limiting additional insured coverage to vicarious liability only. The tender is denied, and the general contractor's own policy responds with its own deductible and its own loss history consequence.
A general contractor completes three projects in a policy year. The second develops a significant water intrusion claim that consumes most of the general aggregate. A claim on the third project arrives four months later and finds very little limit remaining. A per-project aggregate endorsement would have cost a fraction of the shortfall.
At audit, the contractor cannot produce certificates for four subcontractors used on a single job. Their contract values are added to payroll at the applicable rates. The additional premium runs into five figures.
Questions
Frequently asked questions
- Do I need a per-project aggregate?
- If you run more than one job at a time, yes. It is one of the least expensive meaningful improvements available on a contractor's program.
- My subcontractor has insurance. Am I protected?
- Only if the policy covers the work, names you correctly, and is still in force. A certificate is evidence, not coverage. The endorsement sitting behind it is what actually matters.
- What should my subcontract agreement require?
- At minimum: additional insured for ongoing and completed operations, primary and non-contributory, waiver of subrogation, limits appropriate to the trade, and notice of cancellation. The indemnity language also has to be enforceable where the work is performed, which varies by state more than most contractors expect.
- I self-perform some work. How does that affect my policy?
- It changes your classification and your payroll reporting, and it can change carrier appetite. Worth disclosing accurately rather than discovering at audit.
- I build homes as well as commercial work. Is that a problem?
- It can be. Residential construction carries different exclusions and frequently a different market entirely. See our residential new construction page.
Let’s look at what you have
Send us your current policy, including every endorsement, and tell us what your contracts require. We will tell you where the two do not line up. It costs nothing, and it does not obligate you to move anything.
Working with specialty trade contractors in all 50 states, at our best with firms between $500,000 and $20 million in annual revenue.
The information on this page is general in nature and is not a statement of coverage or a contract. All coverage is subject to policy terms, conditions, exclusions, and carrier underwriting. Availability varies by state, class of business, and individual risk.