Whatever the insurance section of your contract says. For most construction contracts that is $1,000,000 for any one incident and $2,000,000 for the policy year. Larger projects and public work often ask for $2,000,000 per incident, or a yearly limit that resets on each job. If the contract wants more than your policy carries, adding a second layer of coverage on top is usually the cheapest way to get there. Who this is for: contractors who want to know whether their current liability limit will pass.
The short version
- Read the contract. The most common ask is $1,000,000 per incident and $2,000,000 for the year.
- Bigger jobs and public agencies often want $2,000,000 per incident, or a yearly limit that resets for each job.
- If your policy is lower, an umbrella on top usually costs less than raising the policy itself.
- Some contracts let your umbrella count toward the general liability number. Some do not. Ask.
- The limit is only half the check. The extra wording is the other half.
What do the numbers actually mean?
- Per occurrence is the most the policy pays for one incident. One fall, one fire, one flooded floor.
- Aggregate is the most the policy pays in a whole policy year, across every incident and every job.
- Products and completed operations aggregate is a separate yearly limit for claims that show up after your work is finished, which is when most construction claims arrive.
- Per project aggregate means your yearly limit resets for each job, so a claim on one project does not eat the coverage your other customers are counting on.
A $1,000,000 per occurrence, $2,000,000 aggregate policy is usually written "$1,000,000/$2,000,000." More in general aggregate vs per occurrence and per project aggregate.
What limits do contracts usually ask for?
| Type of job | Typical general liability requirement | What else tends to come with it |
|---|---|---|
| Homeowner or small property owner | $1,000,000 per occurrence, often no aggregate stated | A certificate. Sometimes nothing more. |
| Subcontract with a general contractor, small to mid size job | $1,000,000 per occurrence, $2,000,000 aggregate, $2,000,000 for claims after the job is finished | Additional insured wording, waiver, primary wording, often a $1,000,000 umbrella |
| Larger commercial project | $2,000,000 per incident and $4,000,000 for the year. Some accept $1,000,000 and $2,000,000 if your yearly limit resets on each job. | A $2,000,000 to $5,000,000 umbrella and every endorsement above |
| Public agency | $1,000,000 to $2,000,000 per occurrence, set by the agency's own rules | The agency and its officers named, and no room to negotiate |
| Wrap-up project (the owner buys one insurance program for everyone on the job) | Often lower for work on site, since the wrap-up covers it, but your own policy still covers work elsewhere | Enrollment forms instead of endorsements. Two things to check: your own policy may have a wrap-up exclusion that turns off coverage for work inside the program, and a wrap-up usually does not cover your vehicles, so the auto and workers comp lines of the contract still have to be met by your own policies. |
What if my policy is lower than the contract wants?
You have three routes. Illustrative ranges below are for a small contractor with clean claims, and trade, payroll, state, and claims history move them.
| Route | When it fits | Illustrative cost |
|---|---|---|
| Raise the general liability limit itself | The contract insists the limit be on the general liability policy, and your insurer offers $2,000,000 per occurrence | Often roughly 10% to 30% more than your current premium, illustrative. Some insurers will not go above $1,000,000 for certain trades. |
| Buy an umbrella | The contract allows the limit to be met by your policy plus an umbrella, which most do | Roughly $600 to $2,500 a year for $1,000,000, roughly $1,200 to $4,500 for $2,000,000. It also sits above your auto and employers liability, which is why it is usually the better buy. |
| Add a per project aggregate | The contract wants your yearly limit to reset for each job | Free on some policies, roughly $250 to $1,000 on others. |
Does my umbrella count toward the general liability requirement?
Read the exact words. Many contracts say the limits "may be satisfied by a combination of primary and umbrella or excess policies." If yours does, a $1,000,000 policy plus a $1,000,000 umbrella meets a $2,000,000 requirement. Some contracts require the limit on the general liability policy itself, and then the umbrella does not count. If the contract is silent, ask whoever checks insurance for your customer and get the answer in writing. More in can an umbrella satisfy the general liability limit.
Is the limit the only thing they will check?
No, and it is usually not what fails. Most certificates are rejected over wording, not numbers. They will also check three pieces of wording. Your customer added to your policy, so they can use it if they are sued because of your work. That protection continuing after the job is finished. And your insurer agreeing not to go after your customer to recover money it paid. Check those lines with the same care as the limits. For the legal minimum, which is usually none, see the minimum general liability coverage for contractors.
What this looks like in real life
Illustrative example. It is typical of what we see and is not a promise of how any specific situation would be handled.
The setup: A masonry contractor in Massachusetts with eight employees is awarded a $400,000 subcontract on a parking structure. The contract asks for $2,000,000 per occurrence general liability. He carries $1,000,000 per occurrence and $2,000,000 aggregate.
What went wrong: His insurer would not raise the per occurrence limit mid term for masonry work at height. He assumed that meant he could not take the job.
What it cost: His broker read the contract: limits could be met by a combination of primary and umbrella policies. A $1,000,000 umbrella cost roughly $1,700 a year, illustrative, and was in place in three business days.
The fix: The contract's exact words decide whether an umbrella counts. Read them before assuming a limit is out of reach.
Frequently asked questions
Q: How much general liability insurance do I need for this contract?
Whatever the insurance section says. The most common requirement is $1,000,000 per occurrence and $2,000,000 aggregate. Larger projects and public agencies often want $2,000,000 per occurrence or a limit that resets for each job.
Q: What is the difference between the limit for one claim and the limit for the year?
Per occurrence is the most the policy pays for one incident. Aggregate is the most it pays in the whole policy year. A $1,000,000/$2,000,000 policy pays up to $1,000,000 for one claim and $2,000,000 total for the year.
Q: Is $1,000,000 enough for most jobs?
For most small and mid size subcontracts, yes, paired with a $2,000,000 yearly limit. Larger commercial and public projects increasingly ask for $2,000,000 per incident, and many want an umbrella on top.
Q: Can I use an umbrella to meet the requirement?
Often yes. Many contracts say the limits may be met by a combination of your policy and an umbrella. Some require the full limit on the general liability policy itself. Read the wording or ask your customer in writing.
Q: What is a per project aggregate and do I need one?
It means your yearly limit resets for each job. General contractors like it because a claim on someone else's project cannot use up the coverage behind their certificate. You need one only if the contract asks for it.
Q: What if my insurer will not raise my limit?
That is common for roofing, masonry, demolition, and other work at height. Buy an umbrella from another insurer instead, or have your broker shop the whole policy.
How Morrow helps
Morrow is a licensed independent commercial insurance brokerage that works with contractors and trades every day. Reading a contract's liability limit next to a policy and finding the cheapest way to close the gap is something we do for contractors every week.
- Free contract review. Send us the contract or bid documents and we mark up the insurance section in plain English, whether or not you buy anything from us.
- Free, instant certificates. Clients issue their own certificates of insurance online in about a minute, any hour, any day, at no charge.
- Markets you cannot reach online. One application, shopped across many insurance companies for general liability, workers comp, auto, umbrella, and pollution coverage.
One more thing. This article is general information and is not legal advice or a statement of coverage. Your contract and your policy wording control in every case. Requirements vary by customer, by state, and by insurance company, so have a licensed advisor review your own contract and your own policy before relying on any of it.
Last updated: Reviewed by the Morrow commercial lines team. Last updated September 2026.