General liability for contractors is the foundation of a strong insurance defense. One of the biggest risks in the construction industry is third-party injuries, and some of the most costly claims you could face as a construction professional come from construction defect claims and lawsuits for property damage, medical bills, or accidents.
Contractor General Liability: Protection for Your Construction Business
General liability is designed to protect construction professionals against third-party claims and lawsuits, including:
- Bodily Injury Claims
- Medical Expenses
- Completed Product Claims
- Property Damage Claims
- Personal and Advertising Injury Claims
General liability insurance gives you the peace-of-mind that your business assets are protected. If a third-party alleges property damage, injury, or bodily harm, you won’t have to worry about your construction business assets being depleted by medical bills, court costs, settlements, or judgements.
In the high-risk construction industry, safety and protection are part of the job. General liability insurance is one way you can protect your business and keep your assets where you want them. You work hard to build your business. General liability insurance works hard to protect it.
The basic intention of a general liability insurance policy is to cover you for damages that you, your employees, or your subcontractors have caused, whether to someone's property or person. And, the rule of thumb is this, if you don't have a policy in place at the time of the damage, there is no coverage. In other words, the policy that will cover you is the policy you have in place when the damage appears, not the policy you had when you did the work. This is the nature of "occurrence form" policies.
Policies also come with a lot of exclusions. Generally, the cheaper the policy the more things are excluded from coverage.
Here is a list of important coverages that are usually excluded on "cheap" policies:
- Prior Work Coverage - Some policies exclude coverage for damages from past work.
- Unlicensed Subcontractors Coverage - Some policies exclude coverage when damage is caused by an unlicensed subcontractor.
- Deductibles - Most policies have a "per claim" deductible instead of a "per occurrence" deductible, meaning you would be responsible for a deductible for each person who joined in the lawsuit.
- Action-over - Most policies exclude this coverage, but you could be liable for your subcontractor's employee's injuries in your "unsafe" work environment. They can go after their employer's workers comp policy, but they can also go after your general liability insurance too.
- “Limited to Business Description” - If you have this on your policy, then your coverage has been limited to a very specific definition of your operations. Anything outside of that may not be covered.
- Open Roof Damage - Most policies will exclude this even when the roof is tarped.
- Height Limitation - Most policies exclude coverage for work over 3 stories.
- Water Damage - Some policies exclude coverage for water damage.
- Paint Overspray Damage - Some policies exclude coverage for paint overspray damage.
Note: general liability insurance policies do not cover your tools and equipment, unless added/packaged together. And, equipment policies are called "Inland Marine" policies.