How Do You Know if Your Contractor Has the Right Insurance for Your Project?

Hiring a contractor involves more than evaluating bids, timelines, and experience. One of the most important questions to ask is whether the contractor carries the right insurance coverage for the work being performed.

Many property owners assume that a contractor's certificate of insurance automatically means they are fully protected. In reality, not all insurance policies provide the same level of coverage, and gaps can create significant financial risk if an accident, injury, or property damage claim occurs during the project.

Here are a few key areas to review before work begins:

1. Verify General Liability Coverage

A contractor should carry commercial general liability insurance that covers bodily injury, property damage, and legal defense costs arising from their operations. Review the policy limits and make sure they are appropriate for the size and complexity of your project.

2. Confirm Workers' Compensation Coverage

If the contractor has employees, workers' compensation insurance is essential. This coverage helps protect both the contractor and the project owner if a worker is injured on the job. Without it, injured workers may seek compensation from the property owner.

3. Ask About Subcontractors

Many projects involve subcontractors. Confirm whether subcontractors are required to carry their own insurance and whether the general contractor verifies coverage before allowing them on-site.

4. Request a Certificate of Insurance

A certificate of insurance (COI) provides evidence that coverage is in force. However, don't stop there. Review the certificate carefully to verify policy limits, effective dates, and the types of coverage being carried.

5. Consider Additional Insured Status

For larger projects, you may want to be listed as an additional insured on the contractor's liability policy. This can provide an extra layer of protection if a claim arises from the contractor's work.

6. Evaluate Project-Specific Risks

Certain projects may require specialized coverage, such as professional liability, pollution liability, builders risk, or commercial auto insurance. The right insurance program depends on the nature of the work being performed.

Understanding insurance requirements can be challenging, especially when you're trying to balance budgets, timelines, and project goals. That's where professional guidance can make a difference. Our experienced agents at Insurance Connection can help you review certificates of insurance, identify potential coverage gaps, and ensure your contractor's insurance aligns with the unique risks of your project.

The Bottom Line

The lowest bid isn't always the best value if insurance coverage is inadequate. Taking a few minutes to verify a contractor's insurance can help prevent costly disputes and unexpected liabilities later. Before signing a contract, work with your insurance advisor—or the team at Insurance Connection—to make sure the contractor's coverage provides the protection your project deserves.