Does my General Contractors Insurance policy cover subcontractors?

Some policies offer coverage for uninsured subcontractors; this is usually not a good idea for several reasons, such as you will be responsible for any claims they may cause. You should always require any subcontractor you hire to provide a certificate of insurance naming you as an additional insured. If you do not get these certificates of insurance, the amounts you paid to these subcontractors will be included in your sales. This can cause your premiums to go through the roof. You should always get these before they start any work.

What does a 1099 “Employee “ Mean?

This might be the most misused and misunderstood phrase in the General contracting business. It is as wrong as describing a circle as a square. 1099 is an IRS form that you are required to issue to people or companies that are NOT employees you pay money to during the tax year. These are parties that technically operate their own business.nnThey are not W-2 employees of the business and require their own insurance. The legal definition of an actual 1099 party can be found HERE. The truth be told, most people classified as 1099 by contractors should not be. They do this to try and get around Worker’s Compensation laws and avoid paying taxes that would be required if they were treated as employees.nnLearn more about insurance for independent contractors.

Do 1099 contractors need insurance?

If you use people or contractors that you pay as independent contractors, commonly referred to incorrectly as 1099 employees, you need to collect certificates of insurance from them. If you do not, the insurance company, for audits and claims purposes, treat them as uninsured subcontractors. As a result, any claims and the amounts paid to them will cause your premiums to increase.

Cheap General Contractor General Liability Insurance near me

At Farmerbrown.com, we are as close as your phone or computer. We are licensed in all 50 States and can get your General Contracting business insured and ready to go the same day. We can get you the certificates of insurance you need in a matter of minutes.

I always see licensed, Bonded, and Insured on my competitions vehicles, website, advertising, etc. what does that mean?

That is a good advertising tool. It tells your prospective client that you have insurance, the necessary license, and a bond. Since there is generally no bond requirement in most States, you can purchase an employee dishonesty bond for less than $200 to cover this.

General Contractor Insurance

Fast Quotes. Trusted Coverage. Call: (888) 973-0016

Complete guide to liability protection

General Contractor Insurance

Construction is one of the most litigated industries in the country. A subcontractor gets hurt on your job site. A passerby gets struck by debris. Without the right insurance, that bill is yours.

Farmer Brown Insurance has been placing general contractors’ insurance across all 50 states since 1996. We work with A-rated carriers, issue certificates the same day in most cases, and never charge for COIs.

What is general contractor insurance?

General contractors insurance is not a single policy. It is a combination of policies that together cover the range of risks a construction business faces. The core is general liability insurance. Around it, most GCs also carry workers compensation, commercial auto, inland marine for tools and equipment, and surety bonds for contracts that require them.

For new businesses, getting general liability in place before the first job is not optional. Most property owners and project managers require proof of coverage before signing any contract, and some states require it to issue a contractor’s license.

Some GCs also carry a Business Owner’s Policy, or BOP, which combines general liability and commercial property coverage into a single policy at a lower total cost than buying each separately. Whether a BOP makes sense depends on whether you have a physical location with assets worth insuring.

Each policy covers a different category of loss. None of them overlaps. A claim that falls between two policies is where contractors get hurt. Getting the combination right matters as much as getting the individual policies.

General contractor liability insurance coverage

General liability insurance is the foundation of any contractor insurance package. This policy protects contractors when their work causes bodily injury to third parties or property damage to someone else’s property. Contractors liability insurance protects your business from claims that could otherwise drain your bank account.

What does General Liability Insurance cover?

A general liability insurance policy provides coverage for several types of claims that construction businesses commonly face:

What General Liability Insurance does not cover

Understanding what your general liability coverage excludes helps you identify gaps in your insurance coverage. A standard general liability policy does not provide coverage for:

Business insurance every general contractor needs

While general liability insurance forms the core of your protection, most construction businesses need additional coverage to address their specific business needs. Here are the essential policies that offer coverage for the unique risks contractors face:

Workers Compensation Insurance

Workers compensation insurance is required by law in almost every state if you have employees. This policy covers medical bills, lost wages, and rehabilitation costs for workplace injuries sustained during construction activities.

Workers comp also provides financial protection against lawsuits from injured employees. Without this coverage, you face significant legal fees, medical expenses, and potential fines for violating state law.

Commercial Auto Insurance for construction businesses

Personal auto insurance does not cover vehicles used for business. If a driver in your company truck causes an accident while hauling materials, your personal policy will deny the claim. Commercial auto covers vehicles owned by the business, employees who drive those vehicles, and in many cases employees who use their personal vehicles for work deliveries or site visits.

For GCs running multiple crews and multiple vehicles, fleet coverage is typically more cost-effective than individual commercial auto policies.

Professional liability insurance

Professional liability coverage, also known as errors and omissions insurance, protects contractors who provide professional services such as design, project management, or consulting. This policy covers claims arising from mistakes, negligence, or failure to meet contractual obligations.

If a client sues because your professional advice caused them financial losses, professional liability insurance pays for your legal defense and any settlements.

Inland Marine Insurance (tools and equipment coverage)

Construction businesses invest heavily in tools and equipment. A standard property policy covers equipment at a fixed location. Inland marine covers it wherever it goes: in transit, stored at a job site, or left in a truck overnight. Theft from job sites is one of the most frequent claims in the construction industry. Coverage is typically written at replacement cost rather than cash value, which, on equipment that depreciates quickly, is a meaningful difference when a claim gets filed.

Commercial property insurance

If your contractor’s business operates from a physical location like an office or warehouse, commercial property insurance protects that building and everything inside it. This coverage pays for damage from fire, storms, theft, and other covered events.

Contractor insurance and bodily injury protection

Construction sites present constant risks for bodily injury. Heavy equipment, power tools, scaffolding, and hazardous materials create dangerous conditions that can injure workers and bystanders alike.

When someone gets hurt because of your construction activities, the financial consequences can be severe. Medical costs for serious injuries easily reach tens of thousands of dollars. Add legal fees and potential settlements, and a single accident could bankrupt an uninsured contractor.

Your general liability coverage steps in to cover medical costs and legal fees when third parties suffer bodily injury at your job site. Workers compensation handles workplace injuries to your employees. Together, these policies provide comprehensive financial protection against injury claims.

Construction insurance for advertising injury claims

Personal and advertising injury coverage protects your business from non-physical harm claims. While less common than property damage or bodily injury claims, advertising injury lawsuits can still create significant financial losses for contractors.

Your general liability policy covers advertising injury claims including copyright infringement, defamation, and invasion of privacy. For example, if you use a photo of a completed project on your website without the homeowner’s permission and they sue for privacy violation, your insurance provides coverage.

Surety bonds for general contractors

Many project owners and government agencies require contractors to obtain surety bonds before starting work. These bonds guarantee that you will complete the project according to your contractual obligations and pay your subcontractors and suppliers.

FarmerBrown.com handles all your bond needs quickly and efficiently. Common bond types include:

How much does general contractors insurance cost in 2026

General liability runs approximately 0.75% of annual revenue. The table below shows 2026 estimates by revenue tier.

Annual Revenue	Estimated Annual Premium
Under $150,000	$1,600 minimum
$150,000 to $500,000	$1,600 to $3,750
$500,000 to $1,000,000	$3,750 to $7,500
$1,000,000 to $5,000,000	$7,500 to $37,500

These figures are for general liability only. Workers compensation, commercial auto, inland marine, and bonds are priced separately and add to the total.

Insurance requirements for subcontractors and independent contractors

Get a certificate of insurance from every subcontractor before they start. Verify it shows active coverage, not an expired policy. Request to be named as an additional insured on their general liability policy. Keep those certificates on file.

When your carrier audits the policy, payments to subs who can’t produce certificates get added to your payroll. On a large project with multiple subs, that can generate a significant additional premium bill. Getting the paperwork upfront costs nothing. The audit bill does not.

What "licensed, bonded, and insured" means

Licensed means the contractor holds a valid state or local license for the type of work they perform. Bonded means they carry a surety bond, usually a license and permit bond that protects the public if the contractor fails to deliver. Insured means active general liability and typically workers compensation. All three together mean there is financial recourse if something goes wrong. Many property owners and project managers will not hire a contractor who cannot confirm all three.

Why choose farmerbrown.com for contractor insurance?

Frequently Asked Questions:

Does my general contractor insurance policy cover subcontractors?

Some policies offer coverage for uninsured subcontractors, but this is generally not a good idea. You become responsible for any general liability claims they cause. Always require subcontractors to carry their own insurance and provide a certificate naming you as additional insured. This protects your business and keeps claims off your policy.

What does "licensed, bonded, and insured" mean?

This phrase tells potential clients that you have the proper contractor license, a surety bond, and liability insurance. It builds client trust and gives you a competitive advantage. Even if your state does not require a bond, you can purchase an employee dishonesty bond for less than $200 to legitimately use this marketing phrase.

Do I need professional liability coverage as a general contractor?

If you provide professional services like design work, consulting, or project management, professional liability insurance protects you from claims of negligence or errors. General liability insurance does not cover professional mistakes that cause financial losses to clients.

How much general liability coverage do I need?

Most contractors should carry at least $1 Million per occurrence and $2 Million aggregate limits. Avoid policies with lower limits like $300,000/$600,000. You might save $100 in premium, but in today’s lawsuit environment, it does not take much of a claim to exceed $300,000. Project owners often require $1 Million minimum coverage before allowing you on the job site.

Do you charge for certificates of insurance?

FarmerBrown.com never charges for certificates of insurance. Our dedicated team delivers your certificate in under an hour in almost all cases. Fast COI turnaround helps you start projects without delays.

What states require general liability insurance for contractors?

Requirements vary by state and locality. Even when not required by state law, most cities require proof of general liability insurance before issuing building permits. Many project owners also require contractors to show insurance coverage before starting work. Regardless of legal requirements, protecting your business from financial losses makes insurance a smart investment.