Three years into the business, a sub trips on a job site and tears his rotator cuff. Workers' comp pays his medical and lost wages. He sues you anyway for negligent site conditions. General liability covers the legal defense. Two years later, an auto-collision case from one of your trucks pulls in $180K. Auto liability covers it. None of those events would have ended your business if you carried the right insurance. They would all have ended it if you did not. This is the working contractor's guide to the six policies every small GC should understand.
BuildCrux is contractor management software with project tracking, mileage capture, photo documentation, and customer portal. We do not sell insurance. The framework below is what every small GC should run through with a commercial-construction-specialty insurance broker before signing the first major contract. Always validate specifics with your broker.
What goes wrong without the right coverage
You assumed your homeowner policy covered the truck
Personal auto insurance excludes vehicles used for business. Your F-250 with the company logo and tools in the bed is a commercial vehicle. A claim on personal auto policy gets denied. You pay the $80K judgment yourself. Commercial auto liability is non-negotiable for any contractor whose vehicle leaves the driveway for business reasons.
You did not carry workers' comp because you have no employees
You hire a 1099 sub. The sub does not have their own workers' comp. The sub gets hurt on your jobsite. Most states classify them as your employee for the injury and impose statutory liability on you anyway. The premium for the year would have been $2,400. The injury claim is $140K. Always require sub COIs with workers' comp coverage, and consider a small policy of your own as a safety net.
Your general liability did not include products and completed operations
Two years after you finished the deck, a board fails and the homeowner falls and injures themselves. Standard GL covers ongoing operations. Products and completed operations coverage extends to issues that arise after substantial completion. Most policies include it; some discount versions exclude it. Check your declarations page.
You did not get builder's risk on the new construction
Lightning strike sets fire to a half-built house. Owner's homeowner policy covers it only if there is a structure to insure (usually pre-substantial-completion this is unclear). GL does not cover damage to your own work. Builder's risk fills the gap, covers the property under construction, and is typically required by lenders.
The BuildCrux Method for Risk Management
Accurate Estimating
Insurance cost belongs in your bid, not your overhead account. Per-project bonding (when required), Builder's Risk premiums, and any project-specific endorsements should appear as line items so the owner sees the true cost.
- Project-specific insurance line items in estimates
- Bonding cost as a percentage line item where required
- Builder's Risk premium per-project
Structured Planning
COI on file before any sub starts work. Additional insured endorsements verified on every project. Annual policy review with broker before peak season. Subcontractor insurance requirements documented in every sub agreement.
- COI on file before sub starts
- Additional insured endorsement check
- Annual policy review with broker
Controlled Execution
Photo documentation of pre-existing site conditions. Daily logs that record weather, crew counts, and incidents. Mileage tracking with route polylines. These create the audit trail an insurance defense needs when a claim hits.
- Photo documentation of pre-existing conditions
- Daily logs with weather + incidents
- Mileage tracking with route polylines
Change Order Management
Scope changes affect insurance exposure. Adding a structural element, working at height beyond original scope, or moving outside the policy class all require broker notification. Build the notification into the CO process.
- Broker notification on scope-class changes
- Endorsement review on major COs
- Coverage gap check before work starts
Financial Visibility
Insurance premiums tracked as overhead and as project-specific cost. Loss-runs reviewed annually with broker to identify trends. High-claim project types analyzed for risk-adjusted margin to inform future bidding.
- Premium allocation: overhead vs project-specific
- Annual loss-run review
- Risk-adjusted margin analysis
The six policies every small GC needs
| Policy | What it covers | Typical cost (small GC) | Required by |
|---|---|---|---|
| General Liability (GL) | Bodily injury, property damage from your operations | $1,200 to $4,800/year per $1M coverage | Owners, lenders, almost all contracts |
| Workers' Compensation | Employee injury medical + lost wages | 0.5% to 8% of payroll (trade-dependent) | State law (most states) |
| Commercial Auto Liability | Vehicle accidents in business use | $1,500 to $4,000/year per truck | State law + lender |
| Builder's Risk (per-project) | Damage to property under construction | 0.1% to 0.4% of construction value | Lenders, large project owners |
| Tools and Equipment (Inland Marine) | Tools stolen or damaged | $300 to $1,200/year | Self-decision (highly recommended) |
| Professional Liability (E&O) | Design errors, project management negligence | $1,500 to $5,000/year per $1M | Owners on design-build contracts |
Track project documentation that supports insurance defense
BuildCrux ships photo documentation, daily logs, and mileage tracking that protect you when claims hit. 30-day money-back guarantee.
Get StartedSelf-insure vs purchase: where the line is
| Risk type | Self-insure | Purchase coverage |
|---|---|---|
| Bodily injury claims (your operations) | Never (could exceed all assets) | GL $1M-$2M minimum |
| Employee injury | Never (state law usually requires WC) | Workers' Comp at statutory minimum |
| Vehicle accident | Never | Commercial Auto $1M minimum |
| Property damage during construction | Maybe on small repair work | Builder's Risk on new construction |
| Stolen tools | Possible if tool inventory < $5K | Inland Marine if > $5K or you have employees |
| Design errors / project management | Maybe on traditional GC scope | E&O on design-build, hazardous projects |
| Cyber breach (customer data) | Maybe at small scale | Cyber liability if storing card / SSN data |
Case study: a $250K liability claim
A 6-employee remodeler in Houston was completing a kitchen demolition when a 35-pound section of the upper cabinets fell during removal and struck a homeowner who had unexpectedly entered the work area. Homeowner sustained shoulder and neck injuries; surgery, lost income, and pain-and-suffering damages totaled $410K in the eventual settlement.
The contractor carried $1M GL with $2M aggregate. Defense costs ($72K) and the $410K settlement were covered, with $338K applied against the per-occurrence limit. The contractor remained in business. A similar contractor with $300K GL would have been forced to declare bankruptcy. Annual premium difference between $300K and $1M coverage at the time: roughly $800. The math is not subtle.
Why insurance docs sit in BuildCrux
BuildCrux stores COIs, additional insured endorsements, sub COIs, daily logs, photo documentation, and mileage logs in one project record. When a claim hits, your defense team gets a chronological audit trail in minutes instead of asking for receipts and incident reports buried in three different inboxes. Project documentation does not prevent claims; it prevents bad outcomes when claims happen.
BuildCrux Feature
Project Photo Documentation
Document every jobsite with project photos
Learn moreFrequently asked questions
How much general liability insurance does a small contractor need?+
Most commercial owners and lenders require $1M per occurrence with $2M aggregate as a minimum. Higher-value commercial work may require $2M to $5M. Residential remodel customers rarely require contractually but $1M is the minimum for any contractor whose work could plausibly injure someone.
How much does general liability insurance cost for contractors?+
For a small GC with $0 to $5M annual revenue and minimal claims history, GL typically runs $1,200 to $4,800 per year per $1M of coverage. Specialty work (roofing, HVAC, electrical at heights) carries higher rates. Past claims significantly increase premiums.
Do contractors need workers' comp if they have no employees?+
Most states require workers' comp for any business with at least one employee. Sole proprietors with no employees are exempt in most states. However, if you hire 1099 subs, many states classify them as employees for injury purposes. Carrying a small policy is often cheaper than risking the gap.
What is builder's risk insurance?+
Builder's risk covers the property under construction against fire, theft, vandalism, weather, and other perils during the build. Premiums are typically 0.1% to 0.4% of construction value. Lenders almost always require it on new-construction loans.
Should contractors carry an umbrella policy?+
Often yes. An umbrella policy adds $1M to $5M of coverage above your underlying GL, auto, and employer's liability limits at relatively low premium ($800 to $2,500 per year per $1M). Contractors with significant assets or working on high-value projects should consider it.
Do I need professional liability (E&O) as a GC?+
Traditional GCs who only build do not always need E&O. Design-build GCs, GCs taking on owner's rep responsibilities, or GCs with significant project management exposure should carry it. Premiums run $1,500 to $5,000 per year per $1M.
How do I prove insurance to owners and GCs?+
Your insurance broker issues a Certificate of Insurance (COI) listing your active policies, limits, effective dates, and named insureds. Most owners and GCs require COIs naming them as additional insured before allowing work to start.
The bottom line
Construction insurance is the cheapest insurance against going out of business in the entire trade. Six policies, a specialty broker, and an annual review keep most contractors covered for the kinds of claims that actually happen. The contractors who go under are not unlucky; they are uninsured. The contractors who survive bad years are not lucky either; they paid for the right coverage and kept records that supported the defense.
