What Does General Liability Insurance Cover For Contractors


Business owners need insurance to protect themselves and their businesses from financial losses due to accidents, injuries, or property damage. As a contractor, you face unique risks on the job site every day, making it essential to have proper insurance coverage in place.

General liability insurance is a type of coverage that helps protect contractors against claims made by third parties for bodily injury or property damage caused by their operations. This coverage is crucial for contractors, as even minor accidents can result in costly lawsuits and potential financial ruin.

General Liability Insurance is vital for contractors because it shields them from financial losses that could derail their business. Construction sites are riddled with risks – from physical hazards such as falling objects and dangerous machinery to human errors, which can lead to severe injuries or property damage.

Toth-Felty Insurance, a leading provider of contractor insurance solutions, highlights that General Liability Insurance can cover various expenses such as medical bills, legal fees, and property damage costs. In this guide, we will discuss in more detail what General Liability Insurance policy covers for contractors and why it is a must-have for any contracting business.

General Liability Insurance | A Basic Know-How

General Liability Insurance is a crucial form of contractor protection, providing coverage for accidents, injuries, and property damage during business operations.

This type of insurance often covers expenses related to third-party claims, such as legal fees and settlement costs. The coverage provided by General Liability Insurance typically includes bodily injury, property damage, and personal and advertising injury.

Why Do Contractors Need General Liability Insurance

Contractors face various risks while on the job site, including injuries to workers, damage to client property, and other incidents that may occur during their work. Without proper insurance coverage, these risks can result in expensive lawsuits and potential financial ruin for the business.

Protection Against Third-Party Claims

General liability insurance is a crucial contractor safeguard, providing robust protection against third-party claims. In the construction industry, accidents and property damage are inherent risks if a contractor’s activities result in bodily injury or property damage to a third party—such as a client, bystander, or neighboring property owner—contractor liability insurance covers legal expenses, medical costs, and property repairs.

Without this coverage, contractors may be personally responsible for significant financial liabilities, putting their business at risk and potentially leading to legal complications.

Legal Compliance And Contractual Requirements

Maintaining general liability insurance is often a legal requirement and a contractual obligation. Many clients, especially in the commercial and government sectors, contractors general liability insurance, insist that contractors carry this insurance to mitigate their risks. Please comply with these contractual stipulations to avoid the loss of valuable contracts and business opportunities.

Additionally, certain states and municipalities may mandate contractors to have general liability coverage to obtain the necessary licenses and permits.

Thus, this business insurance protects contractors from unforeseen liabilities and ensures compliance with legal and contractual obligations and construction insurance, fostering trust and credibility within the industry.

Coverage For Property Damage And Bodily Injury

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Accidents are inherent in the construction process, and property damage or bodily injury can occur unexpectedly. General liability insurance covers these incidents, offering financial protection for damages caused by the contractor’s work.

Whether it’s a construction site mishap that damages a neighboring property or an accident that causes bodily harm to a third party, this insurance helps cover the associated medical expenses, legal fees, and settlement costs. With such coverage, contractors can avoid substantial financial strain and potential legal actions that could jeopardize the stability of their businesses.

Reputation Management And Client Confidence

Maintaining a positive reputation is paramount in the highly competitive construction industry. Clients, both residential and commercial, are more likely to hire contractors who carry general liability insurance. This coverage demonstrates a commitment to professionalism, responsibility, and financial stability.

Clients feel more confident knowing that any unexpected issues or accidents during construction are covered by insurance, providing them with peace of mind.

In contrast, contractors without this coverage may find it challenging to secure contracts and may be viewed as unreliable or financially insecure, negatively impacting their business reputation.

Protection Against Advertising And Personal Injury Claims

General liability insurance extends beyond physical damage and bodily injury claims, also protecting against advertising and personal injury claims. In the digital age, defamation, libel, or copyright infringement allegations can arise from advertising, marketing materials, or social media posts.

General liability coverage covers legal expenses associated with these claims, offering financial protection and safeguarding the contractor’s business against reputational damage and legal complications.

Safeguarding Business Assets And Long-Term Viability

For contractors, their business assets are invaluable, and general liability insurance plays a pivotal role in safeguarding them. With adequate coverage, a single lawsuit or significant financial loss could ensure the long-term viability of the business.

General liability insurance acts as a financial safety net, allowing contractors to focus on their work without the constant fear of crippling legal and economic consequences. It provides a sense of security vital for any contracting business’s sustainable growth and success.

General liability insurance is not just a prudent choice for contractors but a fundamental necessity. Toth-Felty Insurance can provide comprehensive and customized general liability insurance solutions tailored to contractors’ specific needs and risks.

General Liability Insurance | Coverage

Now that we understand the importance of general liability insurance for contractors, let’s dive into what this coverage includes. Public liability insurance typically protects against claims related to physical injury, property damage, personal and advertising injury (such as libel or copyright infringement), and products and completed operations.

Bodily Injury Coverage

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One of the primary areas of protection provided by General Liability Insurance is coverage for bodily injury. This includes injuries sustained by individuals who are not employees of the business.

Whether a customer slips and falls on a wet floor, gets injured on the premises, or experiences harm due to a product or service, the policy may cover medical expenses, legal fees, and settlement costs associated with bodily injury claims.

Property Damage Coverage

General Liability Insurance also covers property damage caused by the business’s operations, products, or services. This can encompass damage to third-party property, such as a client’s home or business premises. If a contractor accidentally damages a client’s property during a project, this coverage can help mitigate the financial impact by covering the cost of repairs or replacement.

Personal And Advertising Injury Coverage

Beyond physical harm and property damage, General Liability Insurance often includes coverage for personal and advertising injuries.

This category encompasses non-physical injuries, such as libel, slander, defamation, and copyright infringement, that may occur during advertising or other business-related activities. This protection is crucial in today’s digital age, where online interactions and marketing activities can potentially lead to legal disputes.

Medical Payments Coverage

In addition to covering the costs of injuries through bodily injury coverage, general liability insurance may include medical payment coverage.

This facet of the policy is designed to pay for immediate medical expenses incurred by individuals injured on the business premises or due to the business’s operations. It swiftly resolves minor injuries, regardless of fault, helping avoid protracted legal battles.

Products And Completed Operations Coverage

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For businesses involved in manufacturing, distributing, or selling products, General Liability Insurance typically includes coverage for products and completed operations.

This aspect protects against claims arising from injuries or damages caused by the business’s products, even after they have left the premises. It also covers liabilities related to services the company has completed, ensuring ongoing protection for completed projects.

Legal Defense Costs

One of the significant advantages of General Liability Insurance is the coverage of legal defense costs. This includes attorney fees, court costs, and other expenses associated with defending against covered claims. Whether the business is found liable or not, the insurance policy helps alleviate the financial burden of legal proceedings, allowing the company to focus on its operations without fearing excessive legal costs.

General Liability Insurance is a versatile and indispensable risk management tool for businesses. From bodily injury and property damage to personal and advertising injuries, this coverage safeguards businesses from various liabilities that could result in substantial financial losses.

What’s Excluded From General Liability Insurance?

General liability insurance is a crucial tool for businesses, offering protection against various liabilities that may arise during operations. However, companies need to understand that this insurance policy does not cover all risks. This guide explores critical exclusions from general liability insurance, shedding light on areas where additional coverage may be necessary.

Intentional Acts

One significant exclusion from general liability insurance is coverage for intentional acts. The insurance policy typically does not protect if a business or its representatives intentionally cause harm or damage. This exclusion emphasizes the importance of ethical business practices and discourages deliberate actions that may lead to liabilities.

Professional Services

Liabilities arising from professional services are generally excluded from general liability insurance. Businesses requiring coverage for errors, omissions, or professional negligence should seek professional liability insurance, known as errors and omissions (E&O) insurance. This specialized coverage addresses claims related to inadequate or faulty professional services.

Employee Injuries

While general liability insurance covers third-party injuries, it typically excludes injuries sustained by employees. Workers’ compensation insurance is specifically designed to address this gap, providing coverage for medical expenses, rehabilitation, and lost wages in the event of a work-related injury or illness. Businesses must usually carry workers’ compensation insurance to comply with legal regulations.

Contractual Liabilities

Unless specified in the policy, liabilities assumed under a contract may not be covered by general liability insurance. Businesses often need to assess and manage contractual risks and, if necessary, obtain additional coverage to protect against potential liabilities arising from contractual agreements.

Pollution And Environmental Damage

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General liability insurance commonly excludes coverage for pollution and environmental damage. Businesses engaged in activities that pose environmental risks should consider obtaining ecological liability insurance. This specialized coverage addresses the costs associated with pollution cleanup, property damage, and legal expenses related to environmental liabilities.

Product Liability

While general liability insurance covers bodily injury or property damage caused by products, it may exclude coverage for the product itself. Product liability insurance is a distinct policy explicitly addressing claims related to defective products, manufacturing errors, or product-related injuries.

Addressing specific risks through specialized insurance policies ensures businesses have the coverage they need to navigate the complexities of the modern business landscape. Regular assessments of insurance policies and consultation with insurance professionals can help companies identify gaps in coverage and make informed decisions to mitigate potential liabilities.

How Much Does General Liability Insurance Cost?

The cost of general liability insurance for a business can vary significantly depending on various factors, including the type and size of the business, industry, location, and coverage limits.

On average, small businesses in low-risk industries with minimal coverage needs may pay anywhere from $400 to $600 annually for general liability insurance. However, companies with higher risks or more significant coverage needs may pay significantly more.

Insurance providers consider various factors to determine the cost of general liability insurance for a particular business. These may include:

  • The size and revenue of the business
  • The industry and type of operations
  • The location(s) of the business and its customers/clients
  • Previous claims history
  • Risk management practices and safety protocols in place


Businesses can also lower their general liability insurance costs by implementing risk management strategies, such as conducting regular safety training and maintaining proper records. Additionally, bundling different insurance policies with the same provider may lead to discounts.


In conclusion, the importance of general liability insurance for contractors must be balanced. This coverage provides crucial financial protection by addressing liabilities arising from third-party bodily injury, property damage, and associated legal costs.

For contractors who often work in dynamic and unpredictable environments, the comprehensive coverage offered by general liability insurance is essential for mitigating risks and safeguarding against unforeseen events.

This insurance not only serves as a shield against the inherent risks of the construction industry but also enhances a contractor’s professional reputation, instilling trust and reliability in clients.

Toth-Felty Insurance is committed to helping contractors navigate the intricacies of insurance and find the right coverage for their unique needs. Please contact us today to learn more about our comprehensive insurance solutions for contractors.

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