What Does a General Liability Policy Really Cover for Contractors?
If you are a general contractor or subcontractor, you likely carry Commercial General Liability (CGL) insurance. It’s often required in construction contracts — but do you fully understand what it covers, and just as importantly, what it does not cover? Let’s break it down.
The Basics: What Does General Liability Insurance Cover?
A CGL policy is designed to protect your construction business from third-party claims, which typically fall into three main categories:
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Bodily Injury
If someone who is not your employee is injured on your job site or as a result of your work, your general liability policy can cover medical costs, legal fees, and damages. -
Property Damage
Imagine you’re remodeling a home and accidentally cause a water leak that damages the homeowner’s floors. A CGL policy helps cover the repair costs and any resulting lawsuits. -
Personal & Advertising Injury
This coverage protects against claims like libel, slander, or using someone else’s advertising ideas. While less common, this type of claim can be a real exposure for design-build contractors or construction firms doing their own marketing.
What’s Not Covered (This Is Important!)
Many contractors believe, “I’ve got insurance — I’m covered.” However, policy exclusions can leave you exposed. Here are some common gaps:
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Your Work (Faulty Workmanship)
If poor workmanship requires redoing the job, your CGL policy won’t pay for that. It covers damage caused by your work, but not damage to your work. For this exposure, you’d need Contractors Errors & Omissions (E&O) insurance or a special endorsement. -
Employee Injuries
Employee injuries are not covered under general liability. That’s what Workers’ Compensation insurance is designed for. -
Professional Advice or Design
If you provide designs, specifications, or advice, and a client sues you for errors in that professional service, a CGL policy will not respond. Many contractors overlook this gap in coverage. -
Subcontractor Mistakes
Depending on how your policy is written, mistakes made by your subcontractors may not be fully covered — especially if your subs do not carry their own insurance.
Key Takeaways for Contractors
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Know your exclusions — they matter just as much as your coverage.
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Obtain proper endorsements — such as Additional Insured or Waiver of Subrogation if required by contracts.
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Review your subcontractor agreements — and confirm you are protected from subcontractor mistakes.
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Remember, General Liability isn’t a catch-all — it’s one part of your broader risk management plan.
If you are unsure what is included in your general liability policy or how well you are protected, it’s worth taking a closer look. In the construction industry, the right insurance coverage is essential to protect your business and keep it building for the long term.
