If you are hiring a contractor, they should have general liability insurance, workers’ compensation insurance, and commercial auto insurance at a minimum. Depending on the job, they may also need professional liability insurance, builder’s risk insurance, and an umbrella policy. These cover damage to your property, injuries on the job, and costly mistakes. Before work starts, you should ask for proof of insurance and confirm the policies are active.
Hiring a contractor is a big step. You trust them with your home, your money, and your safety. A simple repair can turn into a major problem if something goes wrong and the contractor has no coverage. Insurance protects you from paying for injuries, property damage, or poor workmanship. It also shows that the contractor runs a serious business. Let’s break down the key types of insurance you should expect.
General Liability Insurance
General liability insurance is the most basic coverage every contractor should carry. It protects against property damage and bodily injury caused by the contractor’s work.
For example, if a contractor drops a heavy tool and cracks your tile floor, general liability insurance should cover the repair. If a visitor trips over building materials and gets hurt, this policy may cover medical costs and legal fees.
Without this coverage, you could be pulled into a claim or even a lawsuit. Always ask for a certificate of insurance. Make sure the policy is active and has limits high enough to cover the size of your project.
Workers’ Compensation Insurance
Workers’ compensation insurance covers injuries to workers while they are on the job. If a worker falls off a ladder or cuts their hand using equipment, this insurance pays for medical care and lost wages.
If your contractor does not carry workers’ compensation, you could face serious risk. In some states, a worker may try to claim that you are responsible for their injury since the accident happened on your property. That can mean legal trouble and large medical bills.
Even if the contractor says they use subcontractors, you should still confirm that everyone on the site is covered. Ask for proof of workers’ compensation and verify it with the insurer if you can.
Commercial Auto Insurance
Many contractors drive trucks or vans to transport tools and materials. Commercial auto insurance covers accidents that happen while they are using these vehicles for work.
If a contractor backs into your garage door or damages your driveway with a heavy truck, this policy should cover the repair. Personal auto insurance often does not cover work-related driving. That is why commercial auto coverage matters.
If vehicles are part of the job, ask your contractor if they have this insurance. It is a simple question that can save you from stress later.
Builder’s Risk Insurance
Builder’s risk insurance covers property damage during construction. This is common for larger projects like home additions, full remodels, or new builds.
This policy can cover damage from fire, theft, vandalism, or certain weather events while the work is in progress. For example, if materials are stolen from your site or a storm damages a half-built structure, builder’s risk insurance may pay for the loss.
Sometimes the contractor carries this policy. In other cases, the homeowner buys it. Talk clearly about who is responsible. Get it in writing before work begins.
Professional Liability Insurance
Professional liability insurance, also called errors and omissions insurance, covers mistakes in design, planning, or advice. This is more common for contractors who offer design-build services or give technical guidance.
If a contractor designs a deck that does not meet code and it must be rebuilt, this policy may cover the cost. General liability insurance usually does not cover design errors. That is why this separate policy matters for certain jobs.
If your project includes design work or detailed planning, ask whether the contractor carries professional liability insurance.
Umbrella Insurance
Umbrella insurance provides extra coverage on top of other policies. If a claim exceeds the limits of general liability or auto insurance, an umbrella policy can cover the remaining amount.
For small jobs, this may not be as critical. But for large projects with higher risk, extra coverage can offer peace of mind. Major claims can cost far more than basic policy limits.
Ask about coverage limits and whether the contractor has an umbrella policy if your project is large or complex.
How Much Coverage Is Enough?
The right amount of coverage depends on the size and type of the project. A small bathroom remodel may require lower limits than a full home renovation.
As a general guide, many contractors carry at least $1 million in general liability coverage per occurrence. Larger companies may carry $2 million or more. Do not be shy about asking. A serious contractor should be open about their coverage.
You can also ask to be listed as an “additional insured” on the policy. This gives you added protection if a claim arises from the contractor’s work on your property.
How to Verify Insurance
Do not rely on a verbal promise. Always request a certificate of insurance. This document shows the types of coverage, policy numbers, limits, and expiration dates.
Check that the business name on the certificate matches the name on your contract. Look at the policy dates to confirm the coverage will remain active for the full length of your project.
If you want extra caution, you can call the insurance company listed on the certificate to confirm the policy is valid. It only takes a few minutes and can prevent serious trouble.
Why This Matters
Home projects can be messy. Tools break. Accidents happen. Weather changes plans. Most contractors do their best work, but no one can control every outcome.
Insurance acts as a safety net. It protects your home, your savings, and your legal standing. It also protects the contractor and their workers. A contractor who carries proper insurance shows that they plan ahead and take their business seriously.
Before signing any contract, review insurance details as carefully as you review the price. The cheapest bid is not always the safest choice. Solid insurance coverage can mean the difference between a small setback and a financial crisis.
In short, your contractor should have general liability, workers’ compensation, and commercial auto insurance at a minimum. For larger or more complex jobs, builder’s risk, professional liability, and umbrella coverage may also be needed. Ask questions. Get proof. Confirm the details. A few simple checks now can save you from major problems later.