A comprehensive insurance plan called Contractor General Liability Insurance (CGL) is created to shield you from any liabilities brought on by mishaps, injuries, or property damage sustained while working on construction projects.

Contractors general liability insurance serves as a safety net for you in California, where construction activity never stops, allowing you to concentrate on your projects and expanding your business without having to worry about potential legal and financial repercussions.

What a GL Policy Can Cover

Bodily Injury and Property Damage: Contractor's general liability insurance covers medical bills and related legal fees for physical injuries suffered by third parties at the construction site. It also includes any harm to property brought on by the contractor's activities.

Completed Work: Defects or problems might occasionally arise even after a project has been finished. For claims resulting from operations that have been finished, general liability insurance for contractors provides coverage.

Items Liability: This insurance protects against claims relating to flaws or malfunctions in the items or products produced, provided or distributed by the contractor.

Personal and Advertising: The contractor's general liability insurance covers claims of libel, slander, or copyright infringement that may result from advertising or promotional operations.

Legal Defense: Contractor's general liability insurance also covers legal defense costs, such as attorney fees, court costs, and settlements, in addition to the policy limitations.

So, why do Contractors need General Liability?

Well, for one: it’s required! State laws in California require general contractors to show proof of general liability insurance. But you don’t just need it, you want it… here’s why:

Risk Reduction: There is always a chance of accidents, property damage, or injury in the construction sector. A general liability coverage acts as a safety net, assisting contractors in minimizing monetary damages brought on by unforeseen circumstances.

Contractual Obligations: Before signing a contract, many clients and project owners demand that contractors obtain general liability insurance - as they should! This is one way to quickly rule out a Contractor, no insurance, no work! Hiring an uninsured or unqualified contractor puts the homeowner in a vulnerable position as they could be held liable for any mishaps. Insurance gives clients peace of mind knowing you are adequately insured to manage any obligations that could occur throughout the project.

Legal Requirements: Contractors are required by law to have a specified amount of liability insurance in several states and municipalities. To prevent fines and legal repercussions, compliance with these regulations is crucial.

Professional Reputation: Having proper insurance improves your standing in the industry. Clients are more inclined to engage and trust a contractor that is equipped to handle any obligations that may arise from probable disasters.

Financial safety: Even if a responsibility claim is unfounded, it may nevertheless result in high legal fees. You can experience financial difficulty if you don't have insurance because of the cost of the legal process and potential settlements or verdicts.

Peace of mind: There is a sense of assurance knowing you have a safety net in place, allowing you to focus on the work at hand.

Coverage Off-Site: Contractor's general liability insurance policies frequently include coverage away from the job site. This implies that they can still be protected even if your work creates liabilities off-site.

What Is the Price of a GL Policy?

The cost of a contractor's general liability insurance might differ significantly depending on the contractor's categorization, payroll, subcontractor costs, gross revenues, and location. The policy's coverage limits may also affect the cost. It's a widespread misperception among contractors that a policy with a $2 million aggregate limit will cost significantly more than one with a $1 million aggregate limit. In actuality, the price difference is typically less than $100. Despite this, there can occasionally be a price differential of more than $500; however, this is usually the case when a significant increase in the aggregate limit is requested. The majority of external parties who need general liability insurance from contractors look for a $2 million aggregate coverage maximum for project engagement.

A general liability policy, which offers thorough protection against a variety of risks and obligations, is an essential instrument for the wellbeing of both you and your company. Beyond the requirements of the law, it is crucial for protecting one's financial stability, professional reputation, and the efficient completion of projects. You may move more confidently and securely through the challenges of the construction business by investing in a general liability coverage.

Always check your policy and refer to your General Liability Insurance provider for specifics on your policy. This blog was written as information only, and offers no legal advice. If you are a homeowner, be sure to request a copy of your General Contractor's Certificate of Insurance as proof of coverage and keep that with a copy of their contract and/or estimate for the project. Request that they send a copy of the certificate when they submit the estimate to you. A Contractor won’t typically send the certificate until they are submitting a bid, estimate, or contract, so if you ask for it upon your initial phone call don’t be surprised if they hesitate… sadly, there have been scammers who try to get copies of Contractors certificates to use as their own, but a Contractor should be upfront and tell you whether they have insurance or not and should provide that to you when they estimate the project. Never sign a contract until you have verified their insurance. 

Of course, Advanced Builders & Contractors always has your back. We are a fully licensed and insured General Contractor and would be honored to be considered for your home build, remodel, addition or residential project. We’ve been building the best homes in Los Angeles for over 17 years and counting, so when you’re ready be sure to contact us. We look forward to working with you!