What Is General Liability Insurance for Contractors?

General liability insurance is what protects you as a homeowner if a contractor damages your property or someone is injured during the project. Without it, you could be left paying for damage your contractor caused. Understanding what it covers — and what it does not — is essential before you let anyone start work.

What is general liability insurance for contractors?

General liability (GL) insurance is a commercial insurance policy that covers a contractor for third-party bodily injury and property damage arising from their work. If a contractor's crew breaks a water line and floods your basement, or drops a beam on your neighbor's fence, their GL policy pays for the damage. It does not cover the contractor's own tools, vehicles, or workers' injuries — those require separate policies.

• Covers third-party property damage caused by the contractor's work
• Covers bodily injury to third parties on or around the job site
• Does not cover the contractor's own equipment or tools
• Does not cover worker injuries (that requires workers' comp)
• Does not automatically cover your home contents

How much general liability insurance should a contractor carry?

For most residential projects, you should expect a contractor to carry at least $1,000,000 per occurrence and $2,000,000 aggregate in general liability coverage. Larger projects or those involving structural work warrant higher limits. Some states set minimum GL requirements for licensed contractors — California requires a minimum of $1,000,000, for example. For projects over $100,000, request higher limits or ask to be named as an additional insured on the policy.

• Minimum: $1,000,000 per occurrence for most residential projects
• $2,000,000 aggregate is a common industry standard
• Large structural or renovation projects may warrant $2,000,000 per occurrence
• Request to be added as an additional insured on significant projects

What is a certificate of insurance and how do I read one?

A certificate of insurance (COI) is a one-page document issued by the contractor's insurer that summarizes the key policy details. It shows the policy limits, the effective dates, the insurer, the insured (the contractor), and whether you have been added as an additional insured. A COI is not the same as the policy itself, but it provides the essential information you need to verify coverage.

• Named insured: must be the contractor's business entity, not a different company
• Policy effective and expiration dates: confirm coverage spans your entire project
• Coverage limits: verify they meet your minimums
• Additional insured: your name and address should appear here for larger projects
• Issuing insurer: verify the insurer is licensed in your state (check your state insurance commissioner)

What does “occurrence” versus “claims-made” mean for contractor GL policies?

An occurrence policy covers claims based on when the incident happened, regardless of when the claim is filed. A claims-made policy only covers claims filed while the policy is active. For construction work where defects can surface months or years later, an occurrence policy provides significantly stronger protection. Most reputable contractors carry occurrence-based GL policies — if a contractor presents a claims-made policy, ask about their tail coverage.

What should I do if a contractor does not have general liability insurance?

If a contractor cannot produce a current certificate of insurance, do not hire them. This is a non-negotiable requirement for any project of meaningful scope. Without GL insurance, any damage to your property caused by the contractor becomes your financial problem to resolve through civil litigation — a process that is slow, expensive, and often unsuccessful against small operators. The presence of valid GL insurance is as important as a valid contractor license.

Does the homeowner's insurance cover contractor damage?

Your homeowner's insurance is not a substitute for the contractor's GL policy. While your policy may cover some accidental damage, filing a claim for contractor-caused damage may raise your premiums, and your insurer may subrogate (pursue reimbursement from) the contractor anyway. The right approach is to require the contractor to carry their own GL policy and have their insurer pay directly for any damage they cause.

How do I verify a contractor's insurance is actually active?

Always request a certificate of insurance directly from the contractor's insurance agent — not from the contractor themselves — to reduce the risk of a forged COI. You can also call the insurer listed on the certificate to verify the policy number and confirm it is active. According to the NICB, fraudulent certificates of insurance are common enough to warrant direct insurer verification for any significant project.

How does CheckLicensed fit into verifying contractor insurance?

State licensing boards often track bond and insurance status as part of a contractor's active license record. CheckLicensed.com pulls official state contractor license data for $14.99, giving you a verified starting point for any contractor's credentials — including what insurance is on file with their licensing board — before you request a certificate of insurance directly.