General liability insurance for construction businesses

A certificate of insurance (COI) is the official proof of coverage that you receive from your insurance provider when you purchase a policy. Also known as an ACORD 25 form, COIs are often required to work with certain clients, sign a lease, or take out a loan. They can also help you win project bids over uninsured competitors.

A COI includes important information about your policy, such as:

• Type of coverage
• Policy number
• Per-occurrence and aggregate coverage limits
• Exclusions
• Effective policy term dates

To obtain a certificate of liability insurance, you must have an active insurance policy. If you already have an active policy, contact your Insureon agent or log in to your account with our Customer Portal to download or request a certificate.

While general liability insurance is important for most construction businesses, it doesn’t cover all the risks your business can face. You might need to purchase other business insurance policies to fill coverage gaps and make up for general liability insurance exclusions.

Here are the most common exclusions from a commercial general liability policy:

• Criminal acts: General liability doesn’t cover illegal actions or criminal acts. For example, if your equipment or tools are stolen from a jobsite, the policy wouldn’t pay to replace the items.
• Preventable risks: Third-party bodily injury and property damage claims caused by preventable risks are generally excluded. So, if a customer slips on the icy walkway outside your office because you didn’t put salt down, the claim wouldn’t be covered.
• Subcontractors: General liability insurance doesn’t cover damage caused by a subcontractor who is working for you. Additionally, an action over exclusion clause can deny coverage for bodily injuries suffered by a subcontractor if the claim is passed on to the insured party through a lawsuit.
• Intentional acts: If you or an employee cause deliberate damage or harm, such as if a disgruntled contractor destroys a homeowner’s property, a general liability policy wouldn’t cover the damages.

If a subcontractor you hire causes damage, such as breaking a homeowner’s window, and they’re uninsured and not included in your policy, you could be responsible for repair costs and legal expenses.

To avoid these financial risks, you can extend your general liability insurance coverage to your subcontractors by adding them to your policy as an additional insured endorsement.

Another option is a controlled insurance program (CIP). Also called wrap insurance, CIPs bundle general liability, workers’ comp, and other types of coverage into one project-specific policy for all contractors and subcontractors involved.

There are two types of coverage options for CIPs:

• Contractor-controlled insurance program (CCIP): With CCIPs, the general contractor purchases and manages the policy. This option streamlines claims and is typically cheaper when the risk is assumed by an experienced general contractor.
• Owner-controlled insurance program (OCIP): OCIPs are purchased by the project or property owner. This option is often used for larger projects as they tend to be more expensive and offer broader coverage.

While commercial general liability insurance covers basic construction industry risks, it does not offer absolute protection. Other policies to consider include:

• Workers’ compensation insurance: Workers’ comp covers medical costs for work-related injuries and illnesses. Most states require this coverage for businesses with employees, and more states are starting to mandate it for contractors, even if they don’t have employees.
• Commercial auto insurance: This policy covers the cost of an accident involving your business vehicle. Almost every state requires this coverage for business-owned vehicles.
• Contractor’s tools and equipment insurance: This form of inland marine insurance helps pay for the repair or replacement of a contractor’s tools and equipment if they are lost, stolen, or damaged in transit or at a jobsite.
• Owners and contractors protective (OCP) liability insurance: This special kind of liability coverage is often purchased by independent contractors on behalf of a general contractor or project owner to protect that party from costs related to incidents caused by the contractor.
• Professional liability insurance: Also called errors and omissions insurance (E&O), this policy covers professional mistakes and oversights, such as a contractor missing a deadline for a project.
• Surety bonds: These bonds reimburse your clients for financial losses if your company is unable to fulfill the terms of its contract.
• Builder’s risk insurance: Builder’s risk insurance can pay for damage done to a structure still under construction, such as a fire or vandalism at a construction site.
• Contractors pollution liability (CPL) insurance: This type of environmental insurance covers pollution liability risks for contractors and their subcontractors.
• Railroad protective liability insurance: If you’re doing construction work near railroad tracks or crossings, then more than likely you’ll need this special type of liability insurance to protect the railroad company in the event of a lawsuit.
• Cyber insurance: Any construction company that handles customers' credit cards or other sensitive information should have a cyber policy. Also called data breach insurance, this coverage handles the significant recovery expenses after a cyberattack.

If you run a small construction company or are an independent contractor, there are ways you can save on your business insurance. You may be able to bundle general liability coverage with commercial property insurance in a business owner’s policy (BOP). A BOP offers more complete coverage at a lower cost than purchasing each policy separately.

Businesses that are eligible for a BOP typically:

• Have fewer than 100 employees
• Have a small office or workplace
• Make less than $1 million in annual revenue
• Operate in a low-risk industry
• Need less than 12 months of business interruption insurance

A business owner's policy covers damage to your building and its contents, such as fires and storm damage. If you don’t have a building, you can add business personal property (BPP) coverage to your general liability policy, or buy tools and equipment insurance to protect items brought to jobsites.

Talk to a licensed Insureon agent to find out if your construction business is eligible for a BOP.