Overview
Contractors carry more risk than most businesses: crews on job sites, expensive tools and equipment, vehicles on the road, and contracts that often require proof of insurance before work can begin. The right program protects against injuries, property damage, and the gaps that can stall a project.
This guide covers the coverages most construction and contracting businesses need, why each one matters, and how they fit together. For the full picture for your trade, see our construction and contractors industry hub.
The coverages most contractors need
Most contracting businesses build their program from a common set of policies. The exact mix depends on your trade, your crew, and what your contracts require, but these are the building blocks.
- General liability — for third-party injury and property damage on the job.
- Workers compensation — for injuries to your crew, and usually legally required.
- Business auto — for trucks and vehicles used on the job.
- Inland marine — for tools and equipment in transit and at the job site.
- Builders risk — for a structure while it is under construction.
- Surety bonds — often required to bid or be licensed.
Core contractor coverages
Why general liability is the foundation
General liability is the policy clients and general contractors ask for most. It responds to third-party claims — a passerby injured near your site, damage to a client's property, or a subcontractor's mistake that harms someone else.
Many contracts will not let you start work without proof of general liability, and you may be asked to add the client as an additional insured. It is the backbone of nearly every contractor's program.
Workers comp and your crew
If you have employees, workers compensation is almost certainly required by law in your state. It pays for medical care and lost wages when a worker is hurt on the job — a real and frequent exposure in construction.
Premiums are driven largely by your payroll and the job class codes for the work your crew performs, so higher-risk trades pay more for the same coverage.
Tools, equipment, and vehicles
A contractor's tools and vehicles are the business. Standard property policies often will not cover gear once it leaves your premises, which is where inland marine comes in — it follows your tools and equipment to and from the job site. Business auto covers your trucks, and equipment breakdown can protect powered machinery.
Protect your tools and vehicles
Bonds and project coverage
Many jurisdictions and project owners require surety bonds to bid on work or hold a contractor's license — a bond guarantees you will meet your obligations. For a building under construction, builders risk covers the structure and materials against fire, theft, and weather until the project is complete.
Project requirements
What contractor insurance costs
Because contractors carry several policies, the combined cost is higher than for a typical office business — but it scales with your payroll, vehicles, and the limits your contracts require. To get an illustrative range, run the construction trade through the cost estimator, then get a real quote when you are ready to bid.
Related coverages
Explore by industry
Frequently asked questions
Is general liability enough for a contractor?
Rarely. General liability handles third-party claims, but most contractors also need workers compensation for their crew, commercial auto for vehicles, inland marine for tools, and often bonds — because contracts and licensing require them.
Do independent contractors and sole proprietors need insurance?
Often yes. Even without employees, a sole proprietor usually needs general liability to win work, and many clients require proof of coverage before signing a contract. Tools coverage is common too.
Why do clients ask to be added as an additional insured?
It extends your general liability protection to the client for claims arising from your work. It is a routine contract requirement in construction, and an agent can add it to your policy.