The right insurance protects your business, your employees, and your clients. Here's what every contractor needs to know about construction insurance.

General Liability Insurance

This is your foundation coverage, protecting against:

  • Property damage to client's home or belongings
  • Bodily injury to third parties
  • Advertising injury claims
  • Legal defense costs

Recommended coverage: $1-2 million per occurrence

Workers' Compensation Insurance

Required in California if you have employees. It covers:

  • Medical expenses for work injuries
  • Lost wages during recovery
  • Disability benefits
  • Death benefits to survivors

Learn more in our California Workers' Comp Guide.

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Commercial Auto Insurance

If you use vehicles for business:

  • Covers company-owned vehicles
  • Consider hired and non-owned auto coverage
  • Include tools and equipment coverage

Contractor's Tools and Equipment

Protect your investment in tools:

  • Coverage for theft and damage
  • Replacement cost vs. actual cash value
  • Coverage while in transit

Professional Liability (Errors & Omissions)

Important for design-build contractors:

  • Covers design errors
  • Negligent supervision claims
  • Cost overrun disputes

Builder's Risk Insurance

Protects projects under construction:

  • Materials on site
  • Work in progress
  • Temporary structures

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Contractor's Bond

Required by CSLB for licensing:

  • License bond: $25,000 (required)
  • Bid bonds: For public projects
  • Performance bonds: Guarantees project completion
  • Payment bonds: Ensures subcontractors get paid

How Much Does It Cost?

Coverage Type Annual Cost Range
General Liability ($1M) $500 - $3,000
Workers' Comp $2,000 - $10,000+
Commercial Auto $1,200 - $2,400
Contractor Bond ($25K) $100 - $500

Choosing an Insurance Provider

Look for insurers who specialize in construction. Get quotes from:

  • Nationwide specialty construction insurers
  • Local agents with construction expertise
  • Industry association group programs

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