Top Five Misconceptions About Contractor’s Liability



Contractor’s Liability Insurance is a type of insurance that general contractors are often required to have on bigger jobs. As such, it’s generally a requirement if a business wants to grow. Even still, there are misconceptions and fabrications that exist about this vital insurance.

Myth: My Business Isn’t Big Enough

Fact: If you have a job, chances are you have enough business to have this type of insurance. In addition, insurance companies offer special prices for contracting businesses that are smaller. That means you won’t have to pay the big dollars that another business pays if you have a third of the people.

Myth: Contractor’s Liability Does Nothing

Fact: Contractors liability insurance, also known as professional liability insurance or CPL insurance, ensures that the contractor is able to protect the business owner or client from mistakes that were made. Think not just about the mistakes that you could make, but the mistakes that an engineer, architect, or subcontractor could make while working in your name.

The last thing you want from your job site is bankruptcy because your concrete sub made a mistake.

Myth: Contractor’s Liability Protects Everything

Fact: Thinking that this type of business insurance does nothing is bad. However, thinking that this type of insurance helps cover everything could be worse. Contractor’s liability does not cover things that builder’s risk, worker’s compensation, or even general liability would cover.

However, that limitation is what makes it better. Specialized insurance keeps you protected to a higher level than general insurance does. Especially at things that are high risk – like a mistake being made by you or anyone on site.

Myth: Contractor’s Liability Won’t Cover the Cost to Me

Fact: While this type of insurance is usually obtained so that a client feels secure in working with you, that doesn’t mean it doesn’t help you at all. For example, if you make a mistake in the drawing – you could pay millions without this insurance. If you have this insurance, then you only have to pay what the insurance agent tells you to pay – which usually ends in millions in savings!

Myth: I Don’t Need to Check Around

Fact: The biggest mistake we see general contractors make is not getting multiple insurance quotes. If you were looking for personal auto (or even commercial auto) insurance, you wouldn’t take the first option you were given. Why then, would you settle for the first quote that you get in contractor’s liability. You should want what’s best for your specific business.

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