Most general contractors need at minimum five types of insurance: general liability, workers' compensation, commercial auto, a contractor's tools & equipment policy, and an umbrella/excess liability policy. Project owners and lenders often add builder's risk and professional liability to that list. Requirements vary by state, contract, and project size.
Who this is for: Licensed general contractors, construction company owners, and project managers evaluating their commercial insurance program or bidding on a contract that specifies coverage requirements.
TL;DR — Key Takeaways
- General liability is the non-negotiable baseline — most contracts, GC licenses, and construction permits require a minimum of $1M per occurrence / $2M aggregate.
- Workers' compensation is legally required in nearly every state the moment you hire your first employee (some states extend that to sole proprietors on certain project types).
- Commercial auto covers vehicles titled to the business — personal auto policies do not cover business use for GCs.
- Builder's risk protects the project itself while it's under construction; your GL policy does not cover the structure being built.
- An umbrella policy is often the most cost-effective way to reach the $5M–$10M limits required on larger commercial jobs.
What Are the Core Coverages a General Contractor Needs?
1. Commercial General Liability (CGL)
A CGL policy is the foundation of every GC's insurance program. It covers third-party bodily injury and property damage claims arising from your operations, products, and completed work. It also covers personal and advertising injury (libel, slander, copyright infringement in ads).
What CGL does NOT cover: damage to your own work product (the "your work" exclusion), employee injuries (covered by workers' comp), professional errors, and auto liability.
Standard limits for a general contractor:
| Project Type | Typical Per-Occurrence Limit | Typical Aggregate Limit | Notes |
|---|---|---|---|
| Residential remodeling | $1,000,000 | $2,000,000 | Minimum for most homeowner contracts |
| Light commercial | $1,000,000 | $2,000,000 | Required by most GC license applications |
| Mid-rise / institutional | $2,000,000 | $4,000,000 | Many owners require $2M per occurrence |
| Large commercial / public | $2,000,000–$5,000,000 | $4,000,000–$10,000,000 | Umbrella/excess layers typically required |
CGL premiums for general contractors are rated primarily on payroll and subcontractor costs, and sometimes gross receipts, depending on the carrier. Annual premiums for a small GC (under $2M in revenue) typically run $3,000–$8,000 for a $1M/$2M policy, though trade mix, claims history, and state heavily influence the number.
2. Workers' Compensation
Workers' comp pays your employees' medical bills and a portion of lost wages when they are injured on the job, regardless of fault. It also provides employers' liability protection (Coverage B) against lawsuits alleging employer negligence.
State mandate: Nearly all states require workers' comp once you have one or more employees [verify state — a handful of states allow very small employers to elect out, and sole-proprietor rules vary by state]. Failure to carry it is a Class A misdemeanor or felony in many states and will result in license suspension.
Your Experience Modification Rate (EMR), calculated by the NCCI (or an independent state rating bureau in non-NCCI states such as California or New York), adjusts your premium up or down based on your actual loss history compared to contractors of similar size and trade. An EMR above 1.0 raises your premium and can disqualify you from federal, state, and many private commercial bids.
Approximate cost range: Workers' comp rates for general contractors average $7–$18 per $100 of payroll for field supervisors and laborers; office employees run much lower. A GC with $500,000 in field payroll might pay $35,000–$90,000 annually, with wide variation by state and EMR.
3. Commercial Auto Insurance
Any vehicle titled in the business name — company trucks, vans, or trailers — needs a commercial auto policy. Business-owned vehicles driven for personal errands are not the problem; the issue is that a personal auto policy excludes business use when the vehicle is registered to a business entity.
GCs also need hired and non-owned auto liability (HNOA) if employees drive personal vehicles on company business or if you rent vehicles. HNOA can sometimes be added to the CGL or commercial auto policy as an endorsement.
4. Builder's Risk (Course of Construction)
Builder's risk is property insurance for the project under construction — the structure, materials on-site, and materials in transit. It is typically purchased per project (or as a blanket policy for volume builders) and runs for the duration of construction.
Who buys it: The policy is usually purchased by whoever bears the risk of loss during construction — often the property owner, though many GCs are required by contract to carry it or are named as an additional insured.
What it covers: Fire, wind, theft, vandalism, and certain water damage to the structure-in-progress. What it excludes: Earthquake and flood (available as endorsements or separate policies), faulty workmanship, and contractor's tools and equipment.
Builder's risk premiums typically run 1%–4% of the total completed value of the project, depending on construction type, location, and coverage breadth.
5. Contractor's Tools, Equipment & Inland Marine
Your CGL and builder's risk policies do NOT cover your own tools and equipment. A contractor's equipment floater (also called inland marine or tools & equipment policy) covers saws, nail guns, scaffolding, and small equipment against theft, damage, and loss — on-site, in transit, and sometimes off-site.
For larger equipment (excavators, lifts, cranes), a separate contractor's equipment policy or a scheduled equipment endorsement is needed.
6. Umbrella / Excess Liability
An umbrella policy sits above your CGL, commercial auto, and employers' liability limits, providing a single additional layer (typically $1M–$10M per occurrence and aggregate) for large or catastrophic claims. On most commercial bids, owners will require limits of $5M or $10M total — the umbrella is the most cost-effective path to get there.
Cost: A $5M umbrella for a small-to-mid GC typically adds $2,000–$6,000/year on top of the underlying policies.
7. Professional Liability / Errors & Omissions (Optional but Growing)
Design-build GCs and those performing project management functions face professional liability exposure — claims that your plans, specifications, or design decisions caused financial loss. A standard CGL policy excludes professional services. If your contract includes design, scope management, or cost-estimation responsibilities, a separate professional liability (E&O) or contractors professional liability (CPL) policy is worth evaluating.
What Is the Typical Total Insurance Cost for a General Contractor?
The following table shows approximate annual premium ranges for a single-trade general contractor with $1.5M in gross receipts and $400K in field payroll, assuming standard EMR (1.0) and no major prior claims:
| Coverage | Typical Annual Premium Range | Basis |
|---|---|---|
| Commercial General Liability ($1M/$2M) | $4,000 – $9,000 | Payroll + subcontractor cost |
| Workers' Compensation | $28,000 – $72,000 | Field payroll × class rate |
| Commercial Auto (2 vehicles) | $3,500 – $7,000 | Vehicle type, MVR, radius |
| Contractor's Tools & Equipment | $800 – $2,500 | Scheduled equipment value |
| Umbrella ($5M) | $2,500 – $5,500 | Underlying limits |
| Builder's Risk (single project, $500K value) | $2,000 – $10,000 | Project value, type, location |
| Total (ex. builder's risk) | ~$39,000 – $96,000 | Varies widely by state & trade |
These are illustrative ranges based on industry benchmarks. Your actual premiums will vary based on state, trade mix, claims history, payroll, revenue, and carrier.
How to Get Your GC Insurance Program in Place — 7 Steps
- List your exposures. Identify all trades you self-perform, the states you work in, vehicle count, payroll by class code, and subcontractors you use (and whether you require certificates from them).
- Pull your license requirements. Check your state contractor's licensing board for minimum GL limits and whether they require a bond in addition to insurance.
- Review your contracts. Your client and lender contracts will define minimum limits, required endorsements (additional insured, waiver of subrogation, primary-and-non-contributory), and sometimes carrier rating requirements (e.g., A.M. Best A- VII or better).
- Gather loss runs. Request 3–5 years of loss runs from your current carriers. Underwriters will not quote without them, and clean loss history is your strongest bargaining chip.
- Work with an independent broker. A broker who specializes in construction can access multiple contractors' markets (admitted and E&S) and help you structure the program around your actual contracts — not a one-size-fits-all package.
- Complete the application. Expect detailed applications covering payroll by class code, subcontractor usage, project types, and safety programs. Incomplete applications delay binding.
- Bind and issue certificates. Once coverage is bound, your broker can issue Certificates of Insurance (COIs) with the required additional insured endorsements — often needed before work can begin.
Real-World Scenario: Mid-Size GC Wins a $3M Commercial Tenant Improvement
Background: A licensed general contractor in Texas with $2.8M annual revenue, 12 field employees, and 3 owned trucks wins a $3M tenant improvement project for a retail chain. The owner's contract requires:
- CGL: $2M per occurrence / $4M aggregate, primary and non-contributory, with owner as additional insured
- Workers' comp: Statutory limits with employer's liability at $1M each
- Commercial auto: $1M CSL
- Umbrella: $5M per occurrence / $5M aggregate
- Builder's risk: Provided by the owner
How the program shook out (illustrative example, not a guarantee):
| Coverage | Annual Premium |
|---|---|
| CGL (increased to $2M/$4M) | ~$9,500 |
| Workers' comp ($850K payroll) | ~$65,000 |
| Commercial auto (3 vehicles) | ~$7,200 |
| Umbrella ($5M) | ~$4,100 |
| Total | ~$85,800 |
The GC's broker added the owner as an additional insured using ISO CG 20 10 and CG 20 37 endorsements (ongoing and completed operations), added a waiver of subrogation, and confirmed primary-and-non-contributory language — all in time to get COIs issued within 24 hours of binding. Without those endorsements on the certificate, the owner's project manager would have rejected them and delayed the job start.
This scenario is illustrative. Actual premiums depend on carrier, loss history, state, payroll, and other underwriting factors.
Frequently Asked Questions
Is general liability insurance required for a general contractor's license?
In most states, yes. The majority of state contractor licensing boards require proof of general liability insurance — typically at $300,000 to $1,000,000 per occurrence — as a condition of licensure. Some states also require a contractor's license bond (a surety bond, not the same as insurance). Check your state licensing board for the exact minimums; the required limit in your contract will often exceed the state minimum.
What's the difference between an additional insured and a certificate holder?
A certificate holder appears on a Certificate of Insurance (COI) as the party being notified — they receive a copy of the certificate but have no coverage rights under your policy. An additional insured is added by endorsement to your actual policy, giving them coverage for their own liability arising out of your work. Project owners almost always require additional insured status, not just certificate holder status.
Do subcontractors need their own insurance, or does mine cover them?
Subcontractors need their own insurance. Your CGL policy covers your direct operations and employees, but generally excludes work performed by independent contractors. You should require every subcontractor to name you as an additional insured on their GL policy, carry their own workers' comp, and provide you a COI before they begin work. If an uninsured sub causes a loss, the claim lands on your policy — and potentially your limits.
What does "waiver of subrogation" mean, and why do clients require it?
Subrogation is your insurer's right to sue a third party after paying your claim. A waiver of subrogation is an endorsement that gives up that right — usually in favor of the project owner or lender. Clients require it because it prevents your carrier from suing them after paying a claim related to the project. It is typically added at no additional cost or for a small flat fee.
Does my general liability cover the building I'm constructing?
No. Your CGL policy covers third-party bodily injury and property damage — for example, a passerby injured by falling debris, or water damage to an adjacent tenant's property. The building being constructed is covered by a builder's risk policy, which is a separate property insurance product. The "your work" exclusion in a standard CGL policy specifically excludes property damage to the work itself.
What is builder's risk insurance and who buys it?
Builder's risk (also called course-of-construction insurance) is property insurance that covers the structure and materials during construction against fire, wind, theft, vandalism, and other perils. It is purchased per project or on a blanket basis. Responsibility for purchasing it is determined by the contract — it may fall on the owner, the GC, or be split. Always clarify in writing before signing.
How does my EMR affect my ability to bid on jobs?
Your Experience Modification Rate (EMR) is a factor calculated by the NCCI (or your state's rating bureau) based on your actual claims history compared to similarly sized contractors. An EMR of 1.0 is average. Many public agencies and large private owners require an EMR below 1.0 or 0.85 as a prequalification threshold. A high EMR also raises your workers' comp premium — by the same percentage as the modifier. A GC with an EMR of 1.30 pays 30% more premium than the average contractor in their class.
Do I need professional liability if I'm just a builder?
Traditional GCs building to an owner's plans generally don't need professional liability — errors in the design fall on the architect or engineer. However, if you are doing design-build work, providing project management services, or making design recommendations, you have professional liability exposure that a standard CGL policy excludes. Contractors' professional liability (CPL) policies cover this gap and are increasingly common for design-build GCs.
Why General Contractors Choose Morrow
-
Independent broker access across multiple carriers. Morrow is an independent agency, meaning we are not captive to one company. We shop your construction risk across admitted and specialty E&S markets to find the best combination of coverage and price for your trade mix and loss history.
-
Fast COI and endorsement turnaround. On commercial jobs, delays in certificate issuance can halt a job start. Morrow's service team issues COIs and additional insured endorsements quickly — not days later — so your paperwork never holds up a contract.
-
Construction specialization. We understand the difference between CG 20 10 and CG 20 37, what primary-and-non-contributory language means in a contract, and how to structure a program for a GC who manages subs across multiple trades. We don't treat your construction account like a BOP.
-
Claims advocacy. If you have a claim, Morrow works with your carrier on your behalf — not the other way around. We help you document, report, and navigate the claims process so small incidents don't become policy problems.
-
Whole-program review. Many GCs have policies that were assembled piece by piece over years and have gaps or overlapping exclusions. Morrow reviews your full program against your actual contracts and exposures, not just the renewal policy.
Get a Quote or Review Your Current Coverage
Ready to get coverage or want a second opinion on your current program?
Get a General Contractor Insurance Quote →
Morrow places commercial insurance for general contractors across multiple states [Morrow to confirm licensed states]. We work with A-rated carriers [Morrow to confirm current carrier panel] and can typically bind coverage within 24–48 hours of a completed application.
Licensed independent insurance agency · A-rated carriers · [Reviews: Morrow to confirm rating platform and score]
Related Resources
- Commercial General Liability Insurance for Contractors
- Is General Liability Insurance Required by Law?
- Workers' Compensation Insurance for Construction
- Builder's Risk Insurance: What It Covers and Who Needs It
- How Much Does General Contractor Insurance Cost?
- Contractors Insurance Industry Overview
Author: [Content reviewed by a licensed P&C insurance professional — Morrow to confirm named author and credentials] Published: June 2026 Last Updated: June 2026
Sources: - Insurance Information Institute (III) — Construction Industry Insurance Basics - National Council on Compensation Insurance (NCCI) — Experience Rating Plan Manual - ISO (Insurance Services Office) — CGL Policy Form CG 00 01; Additional Insured Endorsements CG 20 10, CG 20 37 - Occupational Safety and Health Administration (OSHA) — Construction Industry Standards (29 CFR Part 1926) - National Association of Insurance Commissioners (NAIC) — Insurance Regulatory Information - State contractor licensing boards (requirements vary; verify with your state)