In this guide
Contractors carry one of the more complex insurance profiles in commercial insurance. A single job can involve general liability, workers comp, commercial auto, tools and equipment coverage, and a certificate with very specific contract language. This guide is a practical, plain‑English overview of what most contractors should think about — whether you’re a one‑truck operation or running a growing crew.
Quick takeaway
The core coverages
Contracts and clients drive a lot of decisions, but most trades end up with the same building blocks:
- General Liability (GL) — third‑party bodily injury and property damage.
- Workers Compensation — required in most states for employees.
- Commercial Auto — for vehicles used in the business.
- Tools & Equipment — inland marine coverage for gear you own or rent.
- Umbrella / Excess Liability — additional limits over GL and auto.
- Builders Risk — for new construction or renovation projects (often job‑specific).
General Liability for contractors
GL is the most asked‑for coverage by clients. It generally responds to third‑party bodily injury and property damage caused by your operations. Pay attention to per‑project aggregate endorsements — without it, every claim on every job draws from the same annual bucket.
Watch for residential construction restrictions
Workers Compensation
WC is generally required where you have employees. Premium is based on payroll and class codes for the specific work being performed. Owners and certain officers may be eligible to elect inclusion or exclusion under state rules.
Commercial Auto
If you drive a vehicle for the business — especially one with tools or trailers — a commercial auto policy is usually the right fit. See our commercial vs. personal auto guide for a side‑by‑side breakdown.
Tools & equipment
General Liability does not cover damage to your own tools. Inland marine coverage (often called “tools & equipment”) can help with theft or damage to gear, including items at the job site, in your truck, or in storage. Pay attention to per‑item limits, deductibles, and whether rented or borrowed equipment is included.
Need a certificate for a job?
We can prepare certificates once your policy is in force — usually quickly.
Certificates & contract language
The contract is usually where the action is. Look for these clauses and bring them up front when you request a certificate:
Common contract requirements
- Certificate Holder listed exactly as the contract states
- Additional Insured for ongoing and completed operations
- Waiver of Subrogation in favor of the client / GC
- Primary & Non‑Contributory wording
- Per‑project General Liability aggregate
- Specific limits, often $1M / $2M or $2M / $4M
- Umbrella / excess liability layered above GL and auto
Subcontractors
If you use subs, most carriers want certificates from each one showing their own GL and workers comp. Uninsured subs are often added to your payroll at audit, which can increase premium and create exposure if something goes wrong on the job.
Contractor quote checklist
What to gather
- Legal business name, entity type, and FEIN
- Description of work / trade and project types
- Annual gross sales and payroll by class
- Subcontractor cost, if any, and whether they carry coverage
- Vehicle list — VIN, year, make, model, drivers
- Tools & equipment list with values
- Active contracts and their insurance requirements
- Prior loss runs (3–5 years if possible)
Frequently asked questions
What insurance is typically required to bid on jobs?+
Most projects ask for General Liability, often workers comp, and sometimes commercial auto. Higher‑value or commercial projects can require higher limits, umbrella coverage, or specific endorsements.
What is “additional insured”?+
It’s an endorsement that adds another party (often a general contractor or property owner) to your policy for the work you’re doing for them. Wording matters — match the contract exactly.
What does “waiver of subrogation” mean?+
It’s a clause that prevents your carrier from pursuing the other party after paying a claim. Many commercial contracts require it.
What is “primary and non‑contributory”?+
Wording that says your policy responds first, before the other party’s policy. Often required by general contractors and large clients.
Do I need coverage for my tools?+
GL doesn’t cover your own tools. Inland marine / tools & equipment coverage may help with theft or damage to gear, subject to limits and deductibles.
Do I need to insure subcontractors?+
Most carriers want to see that subs carry their own GL and workers comp. Uninsured subs may be included in your audit and treated as employees.
Next step
Need help choosing the right coverage path?
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OpenThis article is for general educational purposes only and does not constitute legal, financial, or insurance advice. Coverage options, eligibility, limits, pricing, and availability may vary by carrier, state, underwriting, and policy terms. Submitting a quote request does not bind coverage. Coverage is not effective unless confirmed in writing by the agency or insurance carrier.