General Contractor Insurance

General contractor oversight and subcontractor risks

A general contractor may hire trade subcontractors, schedule work, manage access to the site, and coordinate work around employees, visitors, and an owner’s property. For example, a visitor might trip over materials, or a subcontractor’s work might damage another part of a building. The general contractor could face allegations concerning supervision or coordination even when another company performed the work.

Safety duties do not disappear when work is subcontracted. OSHA’s multi-employer policy recognizes that more than one employer may have responsibilities for a jobsite hazard, depending on its role and actions. Coordinate safety expectations, communicate hazards, and establish how they will be reported and corrected. Insurance does not replace a safety program.

Insurance and bonds to consider

There is no single policy that addresses every construction risk. Depending on your operations and project agreements, consider the following types of coverage:

• General liability may help with covered third-party bodily injury or property-damage claims arising from business operations, and may provide a defense for covered claims.
• Workers’ compensation may provide benefits for eligible work-related employee injuries or illnesses. Requirements and worker classifications vary by state and circumstances.
• Builders risk is project property coverage that may protect eligible work in progress and materials against covered physical loss. The contract may assign responsibility for obtaining it to the owner, contractor, or another party.
• Commercial auto, tools and equipment coverage, or professional liability may be worth discussing when vehicles, equipment, or design and professional services create exposures not addressed by other policies.

Bonds, exclusions, and subcontractor coverage

Some public or private projects require bid, performance, or payment bonds. A surety bond is not insurance for the contractor’s own losses: it is a three-party commitment involving the contractor, the protected party, and the surety. For example, a performance bond backs a contract performance obligation, while a payment bond backs specified payment obligations. The bond and contract set the terms, and the contractor may have to reimburse the surety under an indemnity agreement.

Do not assume your policy automatically covers subcontractors or all claims arising from their work. Review subcontractor restrictions, excluded operations, completed-operations terms, and any conditions requiring proof of subcontractor insurance. General liability may also limit or exclude the cost to correct faulty work, professional errors, employee injuries, and damage involving vehicles or your own property. Review each policy and its endorsements.

Request current certificates of insurance from subcontractors and compare their coverage with your written requirements. A certificate summarizes reported coverage; it does not change policy terms. If a contract calls for the general contractor or owner to be an additional insured under a subcontractor’s policy, review the actual endorsement. Its protection may be limited to specified operations, parties, dates, or liability connected to that subcontractor’s work; it is not unlimited protection for the additional insured’s own operations.

What affects general contractor insurance cost

Insurers may consider the type of work and its hazards, project size and location, annual revenue and payroll, the amount and type of subcontracted work, prior claims, and the limits and deductibles requested. The coverage selected and the insurer’s underwriting and rating rules also matter. Some policies are audited, so accurate records of payroll and subcontractor payments and insurance can be important. A quote depends on the individual business and policy.

Prepare for a general contractor insurance quote

Before discussing options with ABC Contractor Insurance, gather information about what your business does and the jobs it expects to take. Include both work your employees perform and work you subcontract. Bring any customer or project insurance and bond requirements so they can be compared with proposed terms.

• Your work locations, types of projects, typical and largest project values, and estimated schedules.
• Estimated annual revenue and payroll by job duty, owner and employee details, and prior coverage and claims information.
• The trades and estimated payments involved in subcontracted work, along with subcontractor insurance requirements and available certificates.
• Contract language requesting specific limits, additional-insured or completed-operations terms, builders risk, or bonds; include the bond form and amount if requested.