General liability: the coverage everyone asks about
General liability (GL) covers third-party bodily injury and property damage arising from your operations and, importantly for the trades, from your completed work. A ladder through a client's window, a nicked water line that floods a kitchen, a visitor tripping over materials on site: these are GL claims.
It's also the coverage behind the certificate of insurance (COI). General contractors and project owners routinely require a COI, often with themselves listed as additional insured, before you set foot on a job. If you bid work, expect to produce one quickly and repeatedly.
What GL does not cover matters too. It doesn't pay for your employees' injuries, your own tools, or your vehicles. Those exposures have their own coverages, which is why contractors carry a package rather than a single policy.
Workers' compensation: required, and audited
Workers' compensation covers medical costs and lost wages when an employee is injured on the job, and it's required by law in most states once you have employees. Rules for sole proprietors, partners, and corporate officers vary by state, including who can claim an exemption.
Subcontractors are where contractors get surprised. In many states, uninsured subcontractors can be treated as your employees for workers' comp purposes, and premium audits look at exactly this. Collecting current certificates from every sub is standard practice, and general contractors typically require subs to carry their own comp for the same reason.
Tools and equipment: inland marine coverage
Commercial property insurance is tied to a location, but a contractor's most valuable gear rides from job to job. Inland marine coverage (often called tools and equipment coverage) is built for property in motion: hand tools, power tools, and larger equipment on job sites, in transit, and in trailers.
Smaller tools are often covered on a blanket basis, while big-ticket items like generators, compressors, or survey equipment are scheduled individually. Policies differ on theft from vehicles and unattended job sites, so how your crew actually stores gear overnight is worth raising with an agent.
Commercial auto: the truck is part of the business
Personal auto policies commonly exclude or restrict business use, so a truck or van used for work generally belongs on a commercial auto policy. That covers liability and physical damage for vehicles the business owns.
If employees ever run to the supply house in their own cars, ask about hired and non-owned auto coverage, which addresses the business's liability when work is done in vehicles the business doesn't own. It's an easy gap to miss until a claim finds it.
Bonds: not insurance, but usually bought together
Bonds guarantee your obligations to someone else. License bonds are required by many state and local licensing boards just to operate. Surety bonds (bid, performance, and payment bonds) show up on larger projects and most public work, guaranteeing that the job gets finished and subs and suppliers get paid.
A bond protects the party requiring it, not you. If the surety pays out on a bond, it looks to your business for reimbursement. That's the key difference from insurance, and it's why "licensed, bonded, and insured" describes three separate things. Independent agencies commonly arrange bonds alongside the insurance program, so one conversation can cover both.
Putting a contractor's insurance program together
The pieces interact. Contracts may dictate GL limits, additional insured wording, and umbrella or excess liability above both GL and auto. Carrier appetite also varies a lot by trade: a roofer, an electrician, and a handyman look very different to underwriters, and not every carrier writes every trade in every state.
That's the case for working with an independent agent. They can compare carriers that actually write your trade where you operate, match the program to your contract requirements and your budget, and keep certificates flowing when a GC asks for one on a Friday afternoon.