General liability

This is the foundation. General liability covers third party bodily injury and property damage that happens because of your work. If your ladder falls and breaks a client’s window, or a visitor trips over your equipment on a job site, this is the policy that responds.

Most contracts require at least $1 million per occurrence and $2 million aggregate. Larger commercial projects often ask for more. Pay attention to the details in the contract, because a policy that meets the dollar limits can still fall short if it is missing a required endorsement.

Workers compensation

Massachusetts requires workers compensation insurance for nearly every employer with employees, and contractors are no exception. It covers medical costs and lost wages when an employee is hurt on the job.

A few things contractors get wrong here. First, your classification codes drive your premium, and using the wrong code means you are either overpaying or risking an audit adjustment. Second, if you use subcontractors, you need proof that they carry their own workers comp. If a sub shows up uninsured and someone gets hurt, that claim can land on your policy. Third, sole proprietors and partners are generally excluded from the requirement but can choose to be covered, which some contracts demand anyway.

Commercial auto

Your personal auto policy almost certainly excludes business use. If you or your crew drive company trucks, vans, or trailers to job sites, you need commercial auto. It covers liability and physical damage for vehicles the business owns, and hired and non owned coverage fills the gap when employees drive their own vehicles or rentals for work.

Builders risk

Builders risk, also called course of construction insurance, covers a building while it is being built or renovated. It protects against fire, theft of materials, vandalism, and weather damage during the project. Either the contractor or the property owner can buy it, and the contract usually says who. If your contract makes it your responsibility, do not assume your general liability covers it. It does not.

Contractors equipment and inland marine

Your tools and equipment are the lifeblood of the business, and they are constantly moving. Inland marine coverage, often called contractors equipment coverage, protects tools, machinery, and materials while they are in transit, stored off site, or sitting on a job site. A standard property policy only covers what is at your listed address, so equipment that lives in your trucks and trailers needs this.

Commercial umbrella

When a serious claim exceeds the limits of your general liability, auto, or employers liability policies, a commercial umbrella picks up where they leave off. For contractors working on larger projects, contracts increasingly require umbrella limits of $2 million, $5 million, or more. It is one of the cheapest ways to buy a large amount of protection.

Professional and pollution liability

If your work involves design, consulting, or project management, consider professional liability. It covers claims that your professional advice or services caused a financial loss. Pollution liability matters for contractors who handle fuel, chemicals, or waste, and for trades like painting, paving, and site work where a spill can become an environmental claim. Some project owners now require it as a matter of course.

Wrap ups: OCIP and CCIP

On large projects you may run into an owner controlled insurance program (OCIP) or contractor controlled insurance program (CCIP), sometimes called a wrap up. The project sponsor buys one insurance program that covers everyone on site. It sounds simple, but you need to understand exactly what the wrap covers and what it does not, because you still need your own policies for the gaps. Ask questions before you sign on.

This is where contractors lose jobs over paperwork. A certificate of insurance, or COI, is the document that proves you have coverage. A certificate holder is simply the party that receives the certificate. Neither of those gives them any rights under your policy.

Additional insured status is different. When a general contractor or project owner is added as an additional insured on your policy, they get actual coverage under it for claims arising from your work.

Most contracts require this, and it has to be done with a proper endorsement. A certificate alone does not make someone an additional insured, no matter what the certificate says.

Get your certificates turned around fast and make sure the endorsements match what the contract requires. Slow or sloppy COI handling is one of the most common reasons contractors get held off a job.

1. Letting coverage lapse between jobs. Some contractors cancel policies during slow periods to save money. A gap in coverage can violate contract terms, trigger higher rates when you restart, and leave you exposed if a claim from old work surfaces.
2. Hiring uninsured subcontractors. Always collect certificates from your subs and verify them. If your sub has no workers comp and their employee gets hurt on your project, your policy can end up paying.
3. Using the wrong classification codes. Workers comp class codes are specific. Misclassified payroll leads to audit bills that can reach five figures, or to overpaying year after year.
4. Relying on a personal auto policy for work vehicles. Personal policies exclude business use. If your truck is in an accident on the way to a job site, the claim can be denied.
5. Treating insurance as a commodity. The cheapest quote is not the best program if it leaves out the endorsements your contracts require. A policy that cannot get you on the job is not a bargain.