Do General Contractors Need Liability Insurance to Get Jobs?

Nate Jones, CPCU, ARM, CLCS, AU
11 hours ago
2 min read

For general contractors, liability insurance is not just a safety net—it’s often a requirement to win jobs. Clients, project owners, and subcontractors want assurance that your business is protected against accidents, property damage, and legal claims.

Without liability insurance, you may lose bids, fail to meet contract requirements, or expose your business to financial risk. Understanding why this coverage is critical—and how to secure it—can help contractors operate confidently and competitively.

Why Liability Insurance Matters for Contractors

General contracting involves high-risk work, including:

Construction site operations
Heavy machinery and equipment use
Working on client property
Hiring subcontractors and employees

Liability insurance protects contractors from claims of bodily injury, property damage, or negligence, covering legal defense costs and settlement expenses that could otherwise bankrupt a business.

How Liability Insurance Helps Contractors Win Jobs

1. Meeting Client Requirements

Many project owners and general contractors require proof of liability insurance before awarding contracts. This demonstrates financial responsibility and risk management.

2. Compliance With Regulations

Some states or municipalities mandate liability coverage for licensed contractors. Having insurance ensures you meet these legal requirements.

3. Protection Against Lawsuits

Even small accidents can lead to expensive legal claims. Liability insurance helps you:

Cover legal defense fees
Pay settlement costs
Avoid personal financial liability

Key Types of Liability Coverage for General Contractors

General Liability Insurance – Covers bodily injury, property damage, and legal defense.
Professional Liability / Errors & Omissions – Protects against claims of poor workmanship or project errors.
Umbrella Liability – Provides additional coverage above standard limits for large claims.