7 Reasons Why Contractors Need General Liability Insurance

Construction sites involve many workers, complicated licensing and regulations, dangerous equipment, and sometimes even dissatisfied customers. Liability insurance is indispensable for general contractors and construction firms. It is important to understand the many facets of general liability insurance and how it affects the construction industry.

General Contractors License

What Is General Liability Insurance?

General liability insurance covers many unexpected circumstances. Some of the most common are lawsuits, legal counsel, and medical bills resulting from injuries on a business’s property. Complaints of slander or libel may be covered as well.

When obtaining general liability insurance, the plan will have a maximum coverage amount. When determining coverage, the rates will reflect how much the insurance company will pay for legal fees and settlements and how much the contractor or construction company will have to pay.

It is recommended to research average legal and lawsuit costs in the area before settling on a maximum coverage amount. A contractor reporting and consulting service can assist in working through the details.

Should a general contractor or construction firm have liability insurance? Here are 7 reasons why they should.

  1. Worker and Bystander Injuries

All companies with more than three employees must provide workers compensation. General liability insurance can also help cover workers’ lawsuits when they are injured on the job. Sometimes people enter a construction zone with or without permission and may become injured. General liability insurance will cover medical expenses and litigation resulting from the injury.

  1. Material Issues

Even if the construction process goes smoothly, sometimes issues arise after the project is completed. Faulty or inferior materials may be the cause. Sometimes the contractor is blamed for issues. Liability insurance will cover such legal action arising after the project is completed.

  1. Property Damage

In the construction process, occasionally damage occurs to existing buildings or land either on the project site or on adjacent property. General liability insurance would take care of unintended expenses.

  1. False Advertising Claims

Many people are not aware that general liability insurance covers claims of false advertising. While such cases are a less common issue with construction jobs, contractors are sometimes sued when people do not believe they have fulfilled their promises.

If customers are not satisfied with the finished project, they may claim there has been a failure to deliver on the contract. Liability insurance makes sure the contractor will not have to pay for a lawsuit.

  1. Copyright Issues

People often do not consider that copyright laws apply to construction blueprints. However, blueprints and plans are sometimes protected intellectual property. If a business or individual thinks that a contractor has disclosed plans that should have been kept confidential, a lawsuit may be filed to resolve the issue. Liability insurance will cover such a lawsuit.

  1. Project Bids

Many contractors win major projects by offering price bids. Many business or government construction jobs require contractors to have general liability insurance and be bonded. Bonding covers the customer if there are any issues with the construction company. The insurance covers the contractor or construction company if the customer or employees sue.

Since insurance is often a requirement before a bid can be submitted, being insured qualifies contractors to submit bids on more and better jobs.

  1. Employee Benefits

General liability insurance can be a benefit offered to employees. If there are employees or individuals with whom the contractor often contracts with, they can be added to the company’s liability policy. This benefit is attractive to employees and contract laborers and will enhance worker retention.

general contractor license


Liability insurance protects the insured general contractor in cases of personal injury, property damage, and material flaws. Lawsuits concerning false advertising and copyright violations also fall under the scope of general liability insurance. General liability insurance is required before some project bids can be placed. Employees and contract laborers may be covered under liability insurance. To function at optimal efficacy, general liability is a necessity for a contractor or construction company.

For more information about obtaining a general contractor license in Florida, contact Contractors Reporting Services in Tampa, Florida at (813) 932-5244.