Do Contractors Need Insurance? (Yes, Here's Why)

Contractors face more liability exposure than almost any other profession. Working on client properties with tools, equipment, and materials creates countless opportunities for accidents. A single mistake—a burst pipe, electrical fire, or injured homeowner—could result in a lawsuit that costs hundreds of thousands of dollars. Contractor insurance isn't optional; it's essential for survival.

Clients Require It

Most clients won't hire uninsured contractors. Homeowners, property managers, and general contractors typically require proof of insurance before allowing anyone on their job sites. Many states require contractors to carry minimum insurance coverage to obtain or maintain their contractor's license. Without proper coverage, you're locked out of legitimate jobs and forced to compete on price alone.

Essential Coverage: General Liability

General liability insurance is the minimum coverage every contractor needs. It covers property damage you cause while working (like breaking a window or flooding a basement), bodily injury to third parties (a homeowner tripping over your equipment), and completed operations claims (issues that arise after you finish a job). Coverage limits of $1 million per occurrence are standard for most contractor work.

Additional Coverage You May Need

Depending on your specialty, you may need additional coverage:

• Commercial auto insurance covers your work vehicles
• Inland marine insurance protects tools and equipment on job sites
• Workers' compensation is required in most states if you have employees
• Umbrella coverage provides extra liability protection for larger commercial projects

Get Covered Quickly

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