Understanding contractor insurance
What the coverages mean, how claims actually work, why policies get declined, and the terms that decide the outcome. Written for contractors rather than for brokers.
Claims are rarely denied because the insurer is looking for a way out. They are denied because the loss does not match the definition in the policy. Your own work is not third party property. An employee is not a member of the public. A vehicle is not a tool. Each of those distinctions is written into the policy and each one decides a category of claim.
Understanding four definitions prevents most surprises. What counts as bodily injury, what counts as property damage, who counts as an insured, and what counts as your work. Almost every contractor claim dispute comes down to one of those four.
General liability is written on an occurrence basis, which means it covers injury or damage that happens during the policy period even if the claim arrives years later. That is why completed operations coverage matters so much to a builder: a defect discovered three years after handover is still an occurrence during the original policy year.
Professional liability is usually written on a claims made basis, which means what matters is when the claim is made, not when the work was done. That is a meaningful difference, and it is why letting professional liability lapse is more dangerous than letting an occurrence policy lapse. With claims made, a gap in coverage is permanent for anything that happened during the gap.
Eight coverages cover almost everything a construction business faces. They do different jobs, and buying one does not cover the others.
Third party injury and property damage caused by your operations.
Medical care and lost wages for your own injured employees.
Vehicles used in the business, including owned, hired and non owned.
Your tools and equipment against theft, damage and loss.
The project under construction, plus materials on site.
A guarantee of performance or payment, not a transfer of risk.
Extra limits above your underlying policies once those are used up.
Claims from design work and advice, which general liability excludes.
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Tell us your trade, payroll and the states you work in. A licensed specialist will come back with real numbers.
