General Contractor Insurance in North Carolina

There is no state-wide mandate for contractors to carry general liability insurance, though you may need it for a specific project or permit, or to fulfill other requirements.

Commercial general liability insurance is the most common type of contractor liability insurance. It protects your construction business from expenses associated with third-party property damage and customer injuries.

Counties and cities sometimes have their own requirements for this type of insurance, as do most commercial leases. For example, contractors who operate in Iredell County must carry a general liability policy with $2 million combined single limits, $1 million annual aggregate, and $1 million products and completed operations aggregate, at minimum.

Adding commercial umbrella insurance can boost your coverage on general liability insurance and other policies.

Contractor general liability insurance can also help protect against advertising injuries, such as libel, slander, and copyright infringement. So, for example, if an employee at your business posts false negative comments about a competitor on social media, your policy would help pay for legal costs if the other business sues.

To comply with North Carolina state laws, general contractors that have three or more employees must have workers’ compensation insurance. That includes full-time, part-time, and seasonal workers. Clients might also require you to carry this coverage.

Workers' comp covers medical bills for work-related injuries and provides disability benefits while an employee is recovering and unable to work. It's especially important for those in high-risk professions, such as roofers, tree service technicians, and carpenters.

Sole proprietors and others who are not required to carry coverage can still buy workers' comp for themselves. If you're injured on the job, your health insurance provider can deny the claim. That could leave you paying for an expensive medical treatment, or out of work with no recourse for your lost wages.

When you buy a workers' comp policy in North Carolina, it comes with employer's liability insurance. This policy helps pay for legal fees if an employee files a lawsuit blaming your construction business for their injury.

Commercial auto insurance is required in North Carolina for all vehicles owned by your general contracting company. This policy covers financial losses from an accident that injures someone or damages their property. It can also cover vehicle theft, weather damage, and vandalism.

Auto insurance requirements for all North Carolina vehicles include a minimum of:

• Bodily injury liability per person: $30,000
• Bodily injury liability per accident: $60,000
• Property damage liability per accident: $25,000

Additionally, drivers must carry uninsured motorists coverage equal to the above minimum amounts.

If you drive your own vehicle for work purposes, or rent or lease a vehicle for business use, you'll need a separate policy called hired and non-owned auto insurance (HNOA). Your personal auto insurance policy won't cover incidents that happen while you're driving for work, with the exception of a commute.

As with other types of insurance, your county or city may require a specific amount of auto liability insurance. For example, Iredell County requires contractors to carry auto liability insurance with $1 million combined single limits and $1 million annual aggregate limits. You may need additional coverage depending on the kind of work you do and the business vehicles you own.

Contractors are not required to carry a bond in order to get licensed in North Carolina, unless they are using one to meet the financial requirements for licensure. However, many counties and cities require contractors to purchase a surety bond before they begin work. Your clients might also require a bond.

A surety bond guarantees reimbursement if a general contractor fails to fulfill the terms of a contract. Unlike an insurance claim, this amount must be paid back to the company that issued the bond.

Different types of bonds act as financial guarantees for a contracting business. For example, you might need a bid bond to bid on a construction project, or a performance bond to sign a contract with a client.

Even when it's not required, contractors often choose to be bonded and insured to protect themselves and their clients and to show they are reliable.