What Is General Liability Insurance for Contractors?
By BRIX Editorial Team · Updated
General liability insurance pays for bodily injury and property damage your business causes to other people, plus the cost of defending those claims. For a contractor that means a customer tripping over your cords or a water line you nicked flooding a kitchen. It does not cover your own employees' injuries, your tools or faulty workmanship itself.
Key takeaways
- Covers third-party injury and property damage, medical payments, and legal defense, including libel and slander.
- Does not cover your employees (that's workers' comp), your vehicles (commercial auto) or your own tools and equipment.
- Some states make it a license condition: Washington requires $250,000 combined single limit; Oregon requires $500,000 per occurrence for residential general contractors.
- Policies have a per-occurrence limit and an annual aggregate; most contracts ask for $1 million / $2 million.
- Premium is driven by trade, payroll or revenue, limits, location and claims history.
What does general liability insurance cover?
General liability insurance covers financial loss from bodily injury and property damage you cause to others, along with medical expenses, libel, slander, the cost of defending lawsuits, and settlements or judgments, as Wisconsin's insurance regulator describes it. For a trades business, the common claims look like this:
- Bodily injury to a third party. A homeowner trips over a hose on the walkway and breaks a wrist.
- Property damage. A plumber's torch scorches cabinets; a landscaper's mower throws a rock through a window.
- Completed operations. A water heater you installed last spring leaks and ruins the flooring below. Oregon's licensing board specifically requires that a contractor's certificate show products and completed operations coverage is included.
- Personal and advertising injury. A competitor claims your ad disparaged them.
- Defense costs. Lawyers and court costs for a covered claim, often paid in addition to the policy limit.
What does general liability not cover?
| Not covered by general liability | What covers it |
|---|---|
| Injuries to your own employees | Workers' compensation |
| Accidents in your work trucks | Commercial auto |
| Your tools, equipment and materials, on site or in the truck | Inland marine (tools and equipment) coverage |
| Redoing your own faulty work | Generally excluded; a warranty or a performance bond covers the owner, not you |
| Design or advice errors | Professional liability (design-build, consulting) |
| The building under construction itself | Builder's risk |
| Claims above your limits | Commercial umbrella |
| Pollution, mold, asbestos | Often excluded; needs a pollution endorsement or policy |
Which states require general liability insurance for a contractor license?
Several states tie general liability insurance to the contractor license or registration, and many cities require proof before issuing permits. Here's what five state sources say as of October 12, 2026:
| State | Requirement | Source |
|---|---|---|
| Washington | To register, contractors must carry general liability of $250,000 combined single limit, or $200,000 public liability and $50,000 property damage, plus the surety bond. | Washington L&I |
| Oregon | Residential general contractor endorsement: $500,000 per occurrence. The certificate must name the CCB as certificate holder and state that products and completed operations coverage is included. | Oregon CCB |
| Florida | Certified contractors must show public liability and property damage insurance in amounts set by board rule, plus workers' comp or an exemption. Local governments can deny or suspend permits without proof. | Fla. Stat. ch. 489 (§ 489.115(5)) |
| California | No minimum liability coverage is required for most licenses, but every home improvement contract must carry a notice stating whether the contractor carries commercial general liability insurance, the insurer's name and a phone number to verify it, or that it has none. | CSLB, Contracting for Success |
| Texas | No statewide general contractor license, so no statewide liability minimum for building work. Cities commonly require proof of insurance to register and pull permits. | See contractor license |
How do limits work?
A general liability policy has two main limits: a per-occurrence limit, the most it pays for one incident, and an aggregate limit, the most it pays in the policy year. The common small-contractor policy is $1 million per occurrence and $2 million aggregate, which is what most general contractors and property managers ask for on a certificate of insurance. Larger commercial jobs may require higher limits or an umbrella.
How much does general liability insurance cost for contractors?
Cost depends more on what you do than on how big you are. The one clearly attributed benchmark we found: Insureon reports that construction businesses buying through its platform pay an average of $89 a month, or $1,069 a year, for general liability (page updated July 21, 2026, based on its own small-business customer data). Roofers and electricians sit well above that average; a one-person handyman sits below it.
What drives the premium, per the same source and the structure of standard policies:
- Trade and work type. High-risk trades such as roofing, electrical and steel cost more than lower-risk ones; commercial versus residential matters too.
- Payroll or revenue. Most policies are rated on exposure and audited at year end.
- Limits and deductible. Higher limits and lower deductibles raise premium.
- Location. Litigation climate and disaster exposure vary by state and metro.
- Claims history. Prior claims push premium up for several years.
- Subcontractor use. Uninsured subs are often charged to your policy at audit, so collect their certificates.
For how general liability fits with bonds, workers' comp and auto in a total insurance budget, see contractor bonding and insurance cost.
General liability by trade
| Trade | Typical claim | What to check on the policy |
|---|---|---|
| Roofing | Water intrusion after a tear-off; falls by non-employees | Open-roof and completed-operations wording; many insurers restrict roofers |
| HVAC | Refrigerant or condensate damage, carbon monoxide claims | Completed operations; pollution exclusion for refrigerant |
| Plumbing | Water damage from fittings and water heaters | Completed operations; damage to work you performed |
| Electrical | Fire claims from wiring | Completed operations limits and fire legal liability |
| Landscaping | Thrown debris, damaged irrigation and utilities | Herbicide and pesticide exclusions |
| Cleaning | Damaged floors and furnishings; lost keys | Care, custody and control exclusion; lost-key coverage |
General liability vs. a business owner's policy (BOP)
A business owner's policy bundles general liability with commercial property coverage for your shop and contents, and often business interruption, in one package priced for small businesses. Many small contractors buy a BOP plus separate commercial auto, workers' comp and tools coverage.
Common general liability mistakes
- Assuming it covers your crew. Employee injuries are excluded; you need workers' comp.
- Assuming it covers your work. Fixing your own defective installation is usually excluded.
- Buying the minimum. State minimums like $250,000 are far below what a serious water or fire claim costs.
- Letting it lapse. Boards like Oregon's and Washington's can suspend your license or registration when coverage ends.
- Not collecting sub certificates. You'll pay for uninsured subs at audit and may be exposed to their claims.
- Wrong named insured. The policy should name the same legal entity that holds the license and signs contracts.
Frequently asked questions
Is general liability insurance required for contractors?
It depends on the state and city. Washington requires it to register as a contractor, and Oregon requires it for a CCB license, each with set minimums. Florida requires liability insurance for certified contractors in amounts set by its board. Even where the state doesn't require it, most commercial customers and many permits do.
How much general liability insurance should a contractor carry?
Most general contractors and commercial customers ask for $1 million per occurrence and $2 million aggregate. State minimums, such as Washington's $250,000 combined single limit, are a floor, not a recommendation. Larger commercial jobs may require higher limits or an umbrella policy.
Does general liability cover faulty workmanship?
Generally not the cost of redoing your own work. It can cover resulting damage to other property, such as a floor ruined by a leaking fitting you installed, under products and completed operations coverage. Read the exclusions for damage to your work and your product.
Does general liability cover tools stolen from my truck?
No. Theft or damage to your own tools and equipment is covered by inland marine or tools and equipment coverage, not general liability. A business owner's policy may add property coverage for your shop but usually not for tools in transit.
What is the difference between general liability and workers' comp?
General liability pays for injuries and property damage to other people. Workers' compensation pays medical bills and lost wages for your own employees hurt on the job. A standard general liability policy excludes employee injuries, so contractors with a crew need both.
How much does general liability cost for a one-person contractor?
Less than for a crew, because premium is rated on payroll or revenue and trade. Insureon reports an average of $89 a month across construction businesses on its platform, with low-risk one-person operations often below that and roofers or electricians above it. Get quotes from several carriers.
Related
- What Is Workers' Compensation Insurance?When contractors must carry workers' compensation, how employee thresholds differ by state, and how premiums are calculated from payroll and class rates.
- What Is a Certificate of Insurance?What a certificate of insurance is, what it does and doesn't prove, how to read one from a sub, and what licensing boards and GCs require on it.
- How Much Do Contractor Bonding and Insurance Cost?What contractors pay for bonds, general liability, workers' comp and auto, with sourced benchmarks, the cost drivers and how to price it into your rates.
- What Is a Surety Bond?How contractor surety bonds work: license, bid, performance and payment bonds, state bond amounts, the federal Miller Act, and what a bond costs.
- What Is a Contractor License?What a contractor license is, when you need one, and how six states set dollar thresholds, bonds and insurance, with links to each licensing board.
- What Is Overhead, and How Do Contractors Calculate It?What counts as overhead in a trades business and how to calculate your overhead rate per revenue dollar, billable hour, job and day, with a worked example.
- AI automation for small business, built around how your shop already worksCustom AI automations built and set up for your trades business: the follow-ups, reminders and hand-offs your office does by hand, done for you.
- What Is a Mechanic's Lien?How a mechanic's lien works for contractors, with notice, filing and enforcement deadlines from six state statutes and a worked example.
- What Is a Lien Waiver?What a lien waiver is, conditional vs. unconditional and progress vs. final waivers, and which states require statutory forms, with sources.
- Contractor Deposit Laws: How Much Can You Collect Up Front?How much deposit a contractor can legally collect: California's $1,000 or 10% cap, one-third limits in Maryland and Massachusetts, New York trust rules.
Sources
- Wisconsin Office of the Commissioner of Insurance, Business Insurance (liability) (checked October 12, 2026)
- Washington L&I, Register as a contractor (insurance and bond) (checked October 12, 2026)
- Oregon CCB, CCB License (insurance requirements) (checked October 12, 2026)
- Oregon CCB, License Endorsement Chart (checked October 12, 2026)
- Florida Statutes ch. 489, Contracting (§ 489.115(5), permit enforcement provisions) (checked October 12, 2026)
- CSLB, Contracting for Success (home improvement contract insurance notices) (checked October 12, 2026)
- Insureon, Construction contractor insurance cost (industry data, updated July 21, 2026) (checked October 12, 2026)