Working as a contractor comes with more than just tight deadlines and tough job sites; you carry the weight of serious financial risk.
One accident, a damaged client property, or even a small mistake could cost thousands of dollars and threaten your business. On top of that, every state, client, and project may come with different insurance requirements, leaving many contractors confused about what coverage they actually need.
This blog breaks down the key coverage options in contractor insurance policies so you can meet legal and client requirements and protect your business.
What is Contractor Insurance & Who Needs It?
Contractor insurance is a bundle of policies that protects construction and trade professionals from the financial risks of the job, like accidents, property damage, or lawsuits.
If you’re paid to work on someone else’s property, you need this coverage. That includes anyone in building construction, heavy construction, or home improvement, including general contractors, developers, renovators, plumbers, electricians, carpenters, handymen, welders, masons, security installers, and more.
Why Do You Need Contractor Insurance?
Construction work is unpredictable, and even small mistakes can lead to big costs. Contractor insurance helps protect you, your employees, and your business from losses that could be too costly to manage on your own.
Many states also require coverage before work begins.
For example, Maryland’s Home Improvement Commission requires licensed contractors to carry at least $50,000 in general liability insurance. If you hire employees, workers’ compensation coverage is also mandatory. Virginia and D.C. contractors face similar rules, with liability coverage often needed for permits or to qualify for public projects.
Additionally, homeowners often want proof of insurance before letting you onto their property, and commercial property managers or general contractors typically won’t sign a contract unless you can show certificates of insurance.
Having the right policies keeps you compliant with local laws and licensing boards while protecting your business if something goes wrong. It also reassures clients that you’re professional, responsible, and prepared to handle their project safely.
What Does Contractors’ Insurance Cover?
Contractor insurance isn’t a one-size-fits-all policy; a solo tradesperson doesn’t face the same risks as a large commercial builder.
Coverage should match the size of your jobs, the number of employees you have, and the kind of work you do. That’s why it helps to have a partner who can walk you through the options.
With that in mind, here are some of the core policies most contractors rely on, along with other optional coverages that may fit depending on your business.
1. General Liability Insurance
This is the backbone of most contractor liability insurance policies. It protects your business if a third party claims bodily injury, property damage, or personal injury because of your work.
For example, if a client trips over your tools on the job site or you accidentally damage a customer’s property, general liability helps cover medical bills, repairs, and legal defense costs.
2. Workers’ Compensation & Employer’s Liability
If you have employees, workers’ comp is usually required by state law. It covers medical expenses, lost wages, and rehabilitation for employees injured on the job.
Employer’s liability, often paired with workers’ comp, helps protect you if an injured worker sues beyond what workers’ comp provides.
3. Commercial Auto Insurance
Contractors usually rely on trucks and vans to haul tools, equipment, and employees to job sites. Commercial auto insurance covers accidents involving your business vehicles, from repairing damages to paying medical bills and handling liability claims.
Many policies also protect the tools and materials stored in your vehicles.
4. Equipment and Materials / Inland Marine Coverage
Your tools and equipment are essential to your work, and also highly vulnerable to theft, loss, or damage while on the job site or in transit.
Equipment and materials coverage (sometimes called inland marine insurance) reimburses you when your gear is stolen, lost, or damaged so you can get back to work quickly.
5. Builder’s Risk / Contractor All Risk Insurance
When you’re working on a building or structure that’s still under construction, builder’s risk insurance (also called contractor all risk insurance) protects the project itself.
This coverage includes materials, equipment, and the structure against risks like fire, theft, or vandalism until the project is completed.
6. Professional Liability / Errors & Omissions
Not all risks are physical. Professional liability insurance, also known as errors & omissions (E&O), protects you if a mistake in your work or advice causes financial loss for a client.
Missed deadlines, design errors, or faulty project management can all trigger costly claims, and this coverage helps safeguard your business.
Other Optional but Valuable Coverages
These add-ons can provide extra protection depending on your work:
- Pollution / Environmental Liability – Covers cleanup costs and claims from pollution or hazardous material exposure.
- Cyber Liability – Protects against data breaches, hacked systems, or stolen client information.
- Bonding / Surety Bonds – Guarantees project completion and payment obligations (often required for public or larger jobs).
- Contractual Requirements & Additional Insured Endorsements – Ensures you meet client or project owner insurance requirements by naming them on your policy.
- Tools Off-Site / Storage Coverage – Extends protection to tools and equipment stored at job sites or in temporary locations.
- Umbrella Insurance – Adds extra liability protection on top of your general liability, auto, and workers’ comp policies.
How to Choose the Right Policy & Coverage Limits
You need to make sure your coverage is tailored to fit your business. At Gerety, we help contractors balance complete protection with cost, so you’re not overpaying for policies you don’t need or leaving dangerous gaps in coverage.
Here are some of the key considerations we walk through with our clients:
Assess Project Contracts & Client Requirements
Start by reviewing the contracts you take on. Many clients and project owners require specific types of coverage, minimum liability limits, or endorsements before work begins. Meeting these requirements keeps you compliant and ensures you don’t lose out on jobs.
Decide on Per Occurrence vs. Aggregate Limits
Insurance policies often set two types of limits:
- Per occurrence – the most the policy will pay for a single claim.
- Aggregate – the most the policy will pay over the entire policy period.
Choosing limits that match your project size and risk level helps make sure you’re covered if multiple claims happen in the same year.
Review Deductibles vs. Premium Balance
Higher deductibles usually mean lower premiums, but you’ll pay more out of pocket when a claim occurs. Lower deductibles reduce your upfront cost in a loss but increase your monthly premium.
What can your business comfortably afford? The answer to that question will help you find the right balance.
Work with a Local Insurance Broker
Contractor insurance and requirements can vary depending on state laws, licensing boards, and even client contracts. A local insurance broker will understand the regulations, know what coverage project owners typically expect, and can help tailor a policy to your specific trade and job size.
They can also compare multiple quotes, explain the fine print, and help tailor coverage to your trade, job size, and budget.
Ready to Protect Your Business?
At Gerety Insurance, we’ve been helping contractors across Maryland for more than 30 years. We understand the local requirements and the risks contractors face, enabling us to develop policies that fit your work without unnecessary costs.
While we call Maryland home, we also serve clients in DE, VA, DC, NJ, NC, PA, WV, FL, GA, and beyond. Our multi-state licensing enables us to provide seamless coverage for contractors with businesses or properties across state lines.
If you need a partner in protecting your business and giving your clients peace of mind, request a quote today. We’re here to help.
