Contractor Insurance – What it is and Types

What is contractor insurance? Construction is a perilous business. All the people who work on a project or have a stake in the property have a financial investment to get the work done. To reduce the risk of damage, there are a lot of types of insurance existing to guard and protect property owners, construction companies, and other investors from losses incurred throughout a building project or in the regular course of business.

Contractor Insurance - What it is and Types

Contractor insurance keeps your construction business in case of damage to your equipment, claims, on-the-job injuries, and a lot more. You may be needed, either by law or the company that employed you, to have this coverage. In this article, you will learn all that you need to know about constructor insurance.

What is Constructor Insurance?

Contractor insurance is usually a package of insurance policies or small business insurance policies that protects your business from financial losses in case someone files a claim against you. A good contractor’s insurance policy contains numerous types of coverage that defend your business from problems including lawsuits, accidents, lost income, stolen, lost, or damaged tools. It is very important to protect your source of revenue with satisfactory coverages and limits that match your experience in case your business is threatened.

Who Needs Contractors’ Insurance?

Contractors, independent tradespeople, and subcontractors should carry commercial insurance. It protects your business and is often needed by a lot of employers before you are eligible to start working for them. Some of the trades that need contractors’ insurance are as follows:

  • Carpentry.
  • Fire Alarm Installation.
  • Glaziers.
  • Carpet
  • Swimming Pool Servicing.
  • Upholstering.
  • Welding.
  • Gutter Cleaning.
  • Handypersons.
  • HVAC Installation and Repair.
  • Debris Removal.
  • Drywall contractors.
  • Electrical.
  • Alarm Systems Installation and Repair.
  • Appliance installation.
  • Artisan contractors.
  • Builders and Tradesmen.
  • Interior Painting.
  • Locksmiths.
  • Painting and Siding.
  • Surveyors.
  • Glass Installation.

It is always advisable to have insurance in case of accidents, even if you don’t need coverage.

Types of Constructor Insurance

While there are a lot of insurance policies that exist under this category, the lists below are just some of the insurances that are most commonly used in the construction industry. They are as follows:

General Liability Insurance

General liability insurance assists in protecting against “general” claims that come from third parties. These claims naturally contain property damage and bodily injuries that result from a contractor’s products, operations, or services, but they can include advertising claims relating to defamation.

Inland marine Insurance

Inland marine insurance is a type of insurance that covers tools, materials, and equipment while they are in transport to and from a job site over land. This coverage is meant to assist in protecting business property that is movable or used for transportation purposes.

Builders risk Insurance

Builder’s risk insurance is a type of property insurance that guards buildings while they are under construction, either through a remodel or new construction. It assists in mitigating the risk of certain damages throughout the construction process. It can be bought by the project owner or general contractor and covers all parties on the project.

Workers’ Compensation Insurance

This insurance protects contractors against losses caused by work-related accidents or illnesses. It also offers the employee assistance to compensate for lost work and wages.

Subcontractor Default Insurance

Subcontractor default insurance is a type of insurance that protects a contractor in the event one of their subcontractors fails to complete according to their agreement. Contractors may be buying it as an alternative to a performance bond, or offer additional protection beyond what a surety bond covers.

Errors and Omissions or Professional Liability insurance

Errors and omissions Insurance In a chosen profession, one must follow certain standards and best practices in a given industry. If a client is certain that a mistake was made, they can claim that an individual did not live up to or meet the standards set by the industry.

Pollution Liability Insurance

Pollution liability insurance policies are the type of insurance that covers claims for property damage and bodily injury caused by dangerous waste or materials released during a company’s business operations. Contractors who regularly work with or dispose of dangerous waste often need this type of coverage.


In conclusion, most contractors need some business insurance policies to protect against these different risks, but you can typically purchase them together from the same insurance company. While some types of insurance are common in other industries, a lot of policies are formed to mitigate risks that are specific to the construction industry.