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What does General Liability Insurance cover for contractors and construction businesses?

A: For contractors and construction businesses, General Liability Insurance covers the cost of lawsuits brought by third parties over property injury or bodily damage allegedly caused by the business or one of its employees.

If your construction business is sued, you have to pay legal fees, settlement costs, and damages — regardless of whether you're found liable for any wrongdoing. Fortunately, General Liability Insurance (aka contractor's liability insurance) can cover the cost of a lawsuit against a contractor or construction professional.

General Liability Insurance doesn't cover every lawsuit, but it covers many of the most common and expensive. GL Insurance includes coverage for third-party lawsuits over…

  • Property damage.
  • Client and third-party injuries (e.g., a customer trips over a power cord or slips on a wet floor).
  • Reputational injuries (e.g., a competitor claims you damaged its reputation in an ad).
  • Problems with your construction / installation (aka Completed Products coverage).

Completed Products Coverage: A Key Part of General Liability for Contractors

Let's take a closer look at the last item on that list: Completed Products coverage. Say you've just finished installing a new air conditioning unit for a client. But there's a problem. The coolant pipe is constricted, which causes a buildup of frost and condensation. The moisture begins to rot the floors of your customer's utility closet.

In this situation, the customer can sue your business for failure to deliver the goods it promised. You could face a lawsuit for damages over rotted floors, repair costs, and other financial losses. However, if you have contractor's insurance, your Completed Products Coverage will pay for the cost of the lawsuit and the damages the court rules you owe the customer.

No matter what type of construction or installation business you run, Completed Products coverage can protect you from lawsuits over the work you complete. Roofing insurance can cover lawsuits over leaks, ice damming, and water damage. Grading professionals can be insured for basement leaks and drainage issues.

General Liability Insurance isn't the only policy you'll need, but it does cover many of your company's biggest risks, effectively shielding you from lawsuits that could bankrupt your business.

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