Contractors face a unique set of risks daily, from job site accidents to property damage. Having the right insurance coverage is crucial to protect your business, employees, and clients. Here's a breakdown of essential insurance types every contractor should consider:​

1. General Liability Insurance (GL)

This foundational coverage protects against third-party claims of bodily injury, property damage, and personal or advertising injury. For instance, if a client's property is accidentally damaged during a project, GL insurance can cover repair costs and legal fees.​

2. Workers’ Compensation Insurance

Mandatory in most states, including California, this insurance covers medical expenses and lost wages for employees injured on the job. It also limits the employer's liability for workplace injuries. ​

3. Commercial Auto Insurance

If your business uses vehicles for transporting tools, equipment, or personnel, commercial auto insurance is essential. It covers vehicle damage and liability in case of accidents during business operations.

4. Builder’s Risk Insurance

Also known as course of construction insurance, it covers buildings and structures under construction against damage from events like fire, theft, or vandalism.

5. Professional Liability Insurance

Also called errors and omissions insurance, it protects against claims of negligence or mistakes in professional services provided. This is particularly important for design-build contractors or those offering consulting services.​

6. Surety Bonds

While not insurance per se, surety bonds are often required for licensing and project bidding. They guarantee contract completion and compliance with regulations. In California, licensed contractors must maintain a $25,000 contractor license bond.

California-Specific Requirements

In California, contractors must adhere to specific insurance requirements:​

• General Liability Insurance: While not mandatory for licensure, it's highly recommended. If obtained, contractors must provide clients with the insurer's name and contact information.

• Workers’ Compensation Insurance: Required for all contractors with employees. Those without employees must file an exemption with the Contractors State License Board (CSLB).

• Contractor License Bond: A $25,000 bond is mandatory for all licensed contractors. Additional bonds may be required depending on business structure and history.

Additional Coverage Options

Depending on your business operations, consider these additional policies:

• Pollution Liability Insurance: Covers claims related to environmental damage caused by construction activities.​

• Inland Marine Insurance: Protects tools and equipment in transit or stored off-site.​

• Umbrella Insurance: Provides additional liability coverage beyond the limits of your primary policies.​

Final Thoughts

Navigating the complexities of contractor insurance can be daunting, but securing the right coverage is vital for your business's longevity and reputation. Regularly review your policies to ensure they align with your current operations and risk exposures.​

Managing risk is a critical part of running a successful business. We’re here to help ensure your company complies with state regulations and arrange coverage to transfer potential risks from your operations to a trusted insurance carrier.

If your business assets or exposures require specialized coverage, consider a complimentary Commercial Insurance Review with UWIB Risk. This thorough assessment can identify gaps in your current policies and provide tailored solutions to protect your business effectively.

Take the first step towards comprehensive protection. Schedule your cost-free Commercial Insurance Review today!