Close this search box.

General Liability Insurance for Contractors: Protecting Your Business

If you’re a contractor, general liability insurance is an essential safeguard for your business. This type of insurance covers bodily injury, property damage, and other risks that can arise during your work. Here’s a quick rundown of why it’s so important:

At Schneider and Associates Insurance Agencies, we know that your contracting work is complex and filled with various risks. We strive to simplify insurance for you, offering robust and affordable solutions tailored to your needs. With our expertise, you can focus on your business while we handle the coverage.

importance of liability insurance for contractors - general liability insurance for contractors infographic pillar-5-steps

I’m Paul Schneider, and with over 20 years of experience in insurance, I ensure general liability insurance for contractors is comprehensively covered. My expertise includes working with top insurance companies to find you the best policy that protects your business, staff, and assets.

Stay tuned as we dive deeper into why general liability insurance is vital for your contracting business and how Schneider and Associates Insurance Agencies can help ensure you’re covered.

What is General Liability Insurance?

General liability insurance, often called business liability insurance, is a crucial safeguard for contractors. It protects your business from a variety of claims that can arise during normal operations. Whether you’re a general contractor, landscaper, or IT consultant, this coverage can help shield you from financial losses due to unexpected events.


A general liability insurance policy typically covers:

Bodily Injury

Bodily injury coverage is essential for contractors. It protects you if someone is hurt due to your business activities. For example, if a client trips over your equipment and breaks an arm, your policy can cover their medical expenses.

Example: A piece of unsecured equipment falls off the roof and hits a passerby, causing a concussion. Your general liability insurance would cover the medical costs and any legal fees.

Property Damage

This part of the policy covers damage to third-party property. If you accidentally damage a client’s property while working on a project, this coverage kicks in.

Example: You are fixing a client’s chimney, and it collapses onto the neighbor’s house. The damage to the neighbor’s property would be covered under your policy.

Personal and Advertising Injury

Personal and advertising injury coverage protects against claims of libel, slander, and copyright infringement. This is especially important if you use marketing materials or social media to promote your business.

Example: You use a photo in your promotional materials without the proper permissions, and the person in the photo sues for unauthorized use. Your general liability insurance would cover the legal costs.

Medical Payments

This coverage pays for medical expenses if someone is injured on your business premises or due to your business operations, regardless of who is at fault.

Example: A client visits your shop to discuss a project and is accidentally hit by a piece of equipment. The medical costs for treating their injury would be covered.

Contractors working safely

Understanding what general liability insurance covers can help you better protect your contracting business from unexpected financial burdens. Stay tuned as we explore why this insurance is essential for contractors and how Schneider and Associates Insurance Agencies can tailor a policy to fit your needs.

Why Contractors Need General Liability Insurance

Running a contracting business comes with its fair share of risks. Whether you’re a carpenter, plumber, or electrician, general liability insurance for contractors is essential. Here’s why:

Financial Protection

Mistakes happen, and accidents are sometimes unavoidable. Without general liability insurance, you could be held financially responsible for these incidents. For example, if a passerby gets injured at your job site, the medical expenses and potential legal fees could be overwhelming. This insurance helps cover those costs, protecting your business from significant financial loss.

Case Study: Imagine you’re installing a new roof, and a tool accidentally falls and injures someone below. Without general liability insurance, you would have to pay for their medical bills out of pocket. With coverage, these expenses are taken care of, allowing you to focus on your work.

Client Requirements

Many clients insist that contractors have general liability insurance before starting a project. This requirement ensures that any accidents or damages during the project won’t result in unexpected costs for the client.

Quote: “Many clients want reassurance that if an accident occurs, your business won’t close and the work will be completed,” says an expert from Schneider and Associates Insurance Agencies.

Project Acceptance

Some projects, especially larger ones, require proof of insurance before you can even bid on them. General liability insurance can be the key to unlocking these opportunities, giving you a competitive edge.

Fact: In most states, having general liability insurance is required by law to get a contractor’s permit. This makes it not just a good idea, but a necessity for staying in business.

Proof of Insurance

Having proof of insurance can help build trust with potential clients. It shows that you are a responsible business owner who takes their work seriously. This proof can often be the deciding factor in whether a client chooses to work with you over a competitor.

General Liability Proof - general liability insurance for contractors

Example: A homeowner is deciding between two contractors for a home renovation project. One provides proof of general liability insurance, while the other does not. The homeowner is more likely to choose the insured contractor, knowing they are protected if something goes wrong.

Understanding these benefits can help you see why general liability insurance is crucial for your contracting business. Next, we’ll dive into the specifics of what this insurance covers and how Schneider and Associates Insurance Agencies can help tailor a policy to fit your needs.

Coverage Details of General Liability Insurance for Contractors

General liability insurance for contractors is more than just a safety net—it’s a must-have for protecting your business from unexpected claims. Here’s a closer look at what this insurance covers:

Bodily Injury

Accidents happen, even to the most careful contractors. Bodily injury coverage helps protect your business if someone gets hurt on your job site. For example, if a client trips over a power cord and breaks their arm, this part of your policy can cover their medical expenses and any legal fees if they decide to sue.

Property Damage

Working on a client’s property always carries a risk of causing damage. Property damage coverage helps pay for repairs or replacements if your work accidentally damages someone else’s property. Imagine you’re installing a new roof and a heavy tool slips, crashing through a window. This coverage ensures you won’t have to pay out-of-pocket for the repairs.

Medical Payments

Sometimes, minor injuries can happen that don’t lead to lawsuits but still require medical attention. Medical payments coverage takes care of these small claims. For instance, if a visitor gets a small cut while walking through your work area, this coverage can handle their medical bills, typically up to $5,000.

Personal and Advertising Injury

It’s easy to unintentionally harm someone’s reputation. Personal and advertising injury coverage protects against claims of libel, slander, or copyright infringement. For example, if you use a photo in your marketing materials without permission and the owner sues, this coverage can help with legal costs.

Product and Completed Operations

The work you do today can lead to claims down the road. Product and completed operations coverage protects your business from liability after a project is finished. If a deck you built collapses a year later, causing injury or damage, this coverage can help with the resulting claims, as long as the work was done during the policy period.

These coverage details illustrate how comprehensive general liability insurance for contractors can be. Next, we’ll explore the factors affecting the cost of this essential insurance.

Factors Affecting the Cost of General Liability Insurance

When it comes to general liability insurance for contractors, several factors influence the cost of your premium. Understanding these can help you better anticipate expenses and choose the right coverage for your business.

Business Type

The type of work you do plays a big role in determining your insurance costs. A contractor specializing in high-risk jobs like roofing or electrical work will generally pay more than one focused on less risky tasks like painting or landscaping. This is because the likelihood of accidents and claims is higher in more hazardous fields.


Your business experience also impacts your premium. Established contractors with a proven track record of safety and few claims typically enjoy lower rates. On the other hand, newer contractors or those with a history of frequent claims may face higher premiums due to perceived higher risk.

Number of Employees

The size of your workforce affects your insurance costs too. More employees mean more potential for accidents, which can lead to higher premiums. Insurance companies often ask for payroll information to assess this risk.


Where your business operates can significantly influence your insurance costs. Contractors in densely populated or high-crime areas may pay more due to the increased likelihood of claims. Additionally, local laws and regulations can also affect premiums, as some states have stricter requirements than others.

Policy Details

The specifics of your policy, including coverage limits and deductibles, will also impact the cost. Higher coverage limits provide more protection but come with higher premiums. Conversely, choosing a higher deductible can lower your monthly costs but means you’ll pay more out-of-pocket in the event of a claim.

Claims History

Your previous claims history is another crucial factor. Contractors with a clean record and few or no claims in the past five years often benefit from lower premiums. Insurers view them as lower risk compared to those with a history of frequent claims.

Understanding these factors can help you navigate the complexities of general liability insurance for contractors. In the next section, we’ll dive into the specifics of how much this insurance typically costs.

How Much Does General Liability Insurance Cost?

The cost of general liability insurance for contractors can vary widely. Several factors influence the premium, including the type of work you do, your payroll, and your claims history. Let’s break down these elements to give you a clearer picture.

Average Cost and Cost Range

In California, the cost for a Contractor General Liability policy typically ranges from $796 to $1,230. The average monthly cost for general liability insurance is around $42, which translates to $504 annually. However, this can be lower or higher depending on your specific situation.

Payroll Tiers

Your payroll significantly impacts your insurance premium. Here’s a quick look at how payroll affects costs:

Payroll TierAverage Policy Cost
$0 Payroll$790 – $1,050
$1 – $30k Payroll$925 – $1,460
$30k – $60k Payroll$1,062 – $2,118
$60k – $100k Payroll$1,338 – $2,934
$100k+ Payroll$1,965+

Coverage Limits

A common misconception is that higher coverage limits drastically increase the cost. However, the difference in premium between a $1 million and a $2 million aggregate limit is usually only around $15. Most clients require a $2 million aggregate limit, so it’s wise to opt for this higher coverage.


The deductible is the amount you pay out of pocket before your insurance kicks in. Choosing a higher deductible can lower your premium, but it also means you’ll pay more in the event of a claim. It’s essential to balance the deductible with what you can afford to pay upfront.

Additional Factors

Other factors that can influence the cost include:

Understanding these cost factors will help you make informed decisions when purchasing general liability insurance for contractors.

Next, we’ll explore additional liability insurance coverage options that contractors should consider.

Additional Liability Insurance Coverage for Contractors

When it comes to running a contracting business, general liability insurance for contractors is just the beginning. To fully protect your business, you should also consider the following additional insurance coverages:

Commercial Property Insurance

This insurance helps protect the physical assets of your business, whether you own or rent your workspace. It covers:

For example, if a fire destroys your rented warehouse and the tools inside, commercial property insurance would help cover the costs of rebuilding and replacing your equipment.

Business Income Insurance

If your business can’t operate because of covered property damage, business income insurance can help cover lost income. This ensures that you can continue to pay bills and salaries even when your operations are halted.

Imagine a scenario where a severe storm damages your workshop, making it impossible to work for several weeks. Business income insurance would help you cover your ongoing expenses during this period.

Data Breach Insurance

Protecting customer information is crucial. Data breach insurance helps you respond if personally identifiable information gets lost or stolen. This coverage can assist with:

For instance, if a hacker gains access to your customer database, data breach insurance would help you manage the fallout and mitigate potential damages.

Workers’ Compensation Insurance

Workers’ compensation insurance is essential for safeguarding your employees. It covers medical expenses and lost wages if they suffer a work-related injury or illness. This coverage not only protects your employees but also shields your business from potential lawsuits.

Consider a situation where an employee falls off a ladder and breaks a leg. Workers’ compensation insurance would cover their medical bills and provide benefits to help them recover and return to work.

Next, we’ll address some frequently asked questions about general liability insurance for contractors.

Frequently Asked Questions about General Liability Insurance for Contractors

How much is a $2 million dollar insurance policy for a business?

The cost of a $2 million general liability insurance policy for contractors can vary based on several factors. Typically, the price range is between $796 to $1,230 annually. Factors influencing the cost include:

For example, a contractor with $30k to $60k in payroll might pay between $1,062 and $2,118 per year. Higher payrolls will generally result in higher premiums. Additionally, the difference in price between a $1 million and a $2 million aggregate limit is usually minimal, around $15. This small price difference makes it advisable to opt for the higher limit to meet most third-party requirements.

What damages are covered by a CGL policy?

A Commercial General Liability (CGL) policy covers various types of damages, including:

Is contractors protective liability the same as general liability?

No, contractors protective liability (CPL) is not the same as general liability insurance. While both offer crucial protections, they cover different risks:

Both types of insurance are important for comprehensive protection, but they serve different purposes and cover different risks.

Next, we’ll discuss additional liability insurance coverage options for contractors to further protect your business.


In summary, general liability insurance for contractors is a critical safeguard for your business. It provides protection against claims of bodily injury, property damage, medical payments, and personal/advertising injury that may arise from your operations. This type of insurance is not just a regulatory requirement in many states, but also a necessity for securing contracts and maintaining client trust.

Without adequate coverage, your business could face devastating financial losses from lawsuits or accidents. For instance, a single incident of property damage or a workplace injury could lead to significant out-of-pocket expenses, potentially bankrupting your business.

At Schneider and Associates Insurance Agencies, we understand the unique risks faced by contractors. Our team works diligently to offer tailored insurance policies that address your specific needs. We partner with top-rated insurance carriers to ensure you get the best coverage at competitive prices.

We are committed to helping you protect your business and ensure its longevity. Contact us today for a free quote and discover how we can help you secure the right general liability insurance for your contracting business.

For more detailed information on our services and to get started with a quote, visit our General Liability Insurance page. Your peace of mind is our priority.