Business insurance is important to the construction and contracting companies where injuries, equipment damage, and property damage are all commonplace. To cover yourself for employee injuries, you need workers’ compensation coverage, and for other job site injuries, you likely will need general liability coverage. Equipment damage repair or replacement costs require a property and liability policy. When Keslar Insurance’s licensed commercial agents quote your insurance needs, we will discuss with you how your business runs, so we can recommend the products that best suit your needs.
What are the insurance policies we recommend for Contractors & Construction Workers?
Business Owner’s Policy (BOP)
Worker’s Compensation
General Liability
Commercial Auto
Commercial Umbrella
*In addition to these policies, we also recommend Equipment coverage and a Builder’s Risk policy. To learn more about these types of coverages, give our agency a call today.
Contractors & Construction Insurance – FAQs
1. What types of insurance are essential for contractors and construction businesses?
Core coverages typically include:
- General Liability
- Workers’ Compensation
- Commercial Auto
- Tools & Equipment (Inland Marine)
- Contractor’s E&O (Errors & Omissions)
- Builder’s Risk (for new construction or renovations)
- Optional but valuable: Umbrella Liability, Bonding, and Cyber Liability
2. Why is General Liability insurance so important in construction?
This protects you from claims of property damage or bodily injury caused by your work. It’s often required to get jobs or permits and can cover everything from a client tripping at a job site to accidental damage caused during a remodel.
3. What is Builder’s Risk insurance and when do I need it?
Builder’s Risk covers damage to a building under construction—whether it’s from fire, theft, vandalism, or weather. It typically covers materials, equipment, and even labor costs. You need it for any new construction, major renovation, or installation job.
4. What if I hire subcontractors—am I responsible for their insurance?
Yes and no. You should require all subs to carry their own insurance and provide Certificates of Insurance. However, if a sub doesn’t have proper coverage and a claim arises, you could be held liable, especially if your policy doesn’t include a subcontractor exemption.
5. Does my personal auto insurance cover my work truck or van?
No. If you’re using a vehicle for business purposes—especially if it’s titled to your business, wrapped with your logo, or carries tools—you need Commercial Auto insurance. Personal auto policies typically exclude work-related use.
6. What is Inland Marine insurance and why do contractors need it?
This covers tools, machinery, and equipment that travel with you or are stored on job sites. If your tools are stolen from your trailer or damaged in transit, Inland Marine (also called Equipment Floater) fills the gap standard property policies leave behind.
7. Do I need Workers’ Compensation if I only hire independent contractors?
That depends on state laws—but be careful. Many states scrutinize whether your “independent contractors” are truly independent. If the state determines they’re effectively employees, you could face penalties and be on the hook for injury costs. When in doubt, carry Workers’ Comp.
8. What are surety bonds—and are they the same as insurance?
Surety bonds are not insurance, but they’re often required by clients, especially in public works or larger contracts. They guarantee you’ll fulfill the terms of your contract. Common bonds include bid bonds, performance bonds, and license/permit bonds.
9. What is Contractor’s E&O and how is it different from General Liability?
Errors & Omissions (E&O) covers financial losses due to mistakes in your work—even when no physical damage occurs. For example, faulty design advice or an incorrectly installed HVAC system that later requires a costly fix could trigger an E&O claim.
10. Do I need Cyber Liability if I don’t sell anything online?
If you store employee data, customer contracts, or use email/invoicing software, yes. Cyber Liability covers ransomware attacks, data breaches, and fraud—things that can happen even from a simple phishing email.
11. Are there insurance options for small or solo contractors?
Yes. Some carriers offer Contractor’s BOPs (Business Owner Policies) that bundle General Liability, Property, and Tools coverage into an affordable package designed for smaller operations.
12. What limits of liability should a contractor carry?
Most contractors carry at least $1M/$2M in General Liability. Higher-risk trades (roofing, structural work) or government/commercial contracts may require higher limits—sometimes $5M or more, which can be achieved through an Umbrella policy.
13. How can I keep my insurance premiums manageable?
- Maintain strong safety practices and training
- Document subcontractor insurance
- Avoid frequent claims
- Use written contracts with hold-harmless and indemnification clauses
- Work with an agent who understands construction and can shop specialized markets
14. Why work with an agency that specializes in contractor insurance?
Not all insurance policies are built the same. We understand the difference between framing and finish work, between seasonal roofers and year-round GCs. We’ll help you find the right coverage, avoid gaps, and stay compliant—without paying for what you don’t need.
