What is Contractor Liability Insurance?

Running a contracting business means wearing a lot of hats—and insurance shouldn’t be the one that slows you down. Yet, overlooking or misunderstanding your insurance coverage can lead to serious gaps in protection that impact your operations, your reputation, and your bottom line.

From general liability to professional liability and everything in between, let’s break down the key considerations every contractor should understand when it comes to protecting their business.

Why Liability Insurance Matters for Contractors

Many contractors know they need insurance for their tools, vehicles, and trailers—but when it comes to liability, things can get a little more complicated. Is general liability insurance enough? Or should you also consider professional liability coverage?

The answer depends on the nature of your operations.

• General liability insurance is designed to cover third-party bodily injury or property damage—think slip-and-fall incidents or damage caused on a jobsite.
• Professional liability insurance (also called errors and omissions) covers claims related to design flaws, project management mistakes, or other professional services. If you design, consult, or advise as part of your contracting work, this coverage could be critical.

Without the right combination of coverages, you could be left exposed in the event of a claim.

Certificates of Insurance: What You’re Really Being Asked For

If you’ve been in business long enough, you’ve likely heard this request: “Please provide a certificate of liability insurance.”

While this might seem like a straightforward document, the details matter—especially when the requesting party wants to be listed as an additional insured. This means they’re asking to be covered under your liability policy, which often requires a specific endorsement. In some cases, your policy may include this automatically for written contracts—but not always.

That’s why it’s important to review every certificate request carefully and talk with your independent insurance agent before fulfilling it.

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Managing Subcontractor Risk

If you work with subcontractors, you’ll want to apply the same due diligence. Ask to be named as an additional insured on their policies, and request certificates of insurance to confirm their coverage.

This helps protect your business in the event a subcontractor causes damage or injury while working on your behalf. It’s called risk transfer—and it’s one of the most effective tools available to safeguard your business from claims you didn’t cause.

Watch Out for Certificate Language

Not all certificate requests are cut and dry. Some entities may ask for specific language to be added in the “description of operations” section of the certificate. While this can sometimes be harmless, it may also include language that’s inaccurate, incompatible with your current insurance program—or in extreme cases, illegal.

The best course of action? Share the request with your insurance agent before making any changes. They can guide you on what is and isn’t appropriate to include.

Additional Coverage to Consider

While general and professional liability policies are essential, there are other important coverages to discuss with your agent:

• Workers’ Compensation – Required in most states, this coverage protects employees who get injured on the job.
• Commercial Auto Insurance – Covers vehicles used for business purposes, including trucks and trailers.
• Inland Marine (Tools & Equipment Insurance) – Protects your gear while in transit or on the jobsite.
• Builders Risk Insurance – Covers structures under construction against theft, weather, or vandalism.
• Umbrella Liability – Provides an extra layer of protection when claims exceed the limits of your primary policies.
• Employment Practices Liability – Helps protect against claims of discrimination, wrongful termination, and more.

Learn More: Contractor Insurance: 7 Policies You Need to Protect Your Business

Work With the Right Insurance Partner

As a contractor, your job is complex—and so is the insurance that protects it. At Central, we work closely with contractors and independent agents to help you get the coverage you need, from day one through every project milestone.

Whether you’re reviewing a certificate request, managing subs, or simply want to be sure you have the right protection in place, your independent Central agent is here to help.