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General Liability insurance is a form of Casualty Insurance that protects a business from most liability exposures they will encounter in the course of their operations.

• General Liability Insurance is separate and distinct from other liability coverages such as: Automobile Liability, Professional Liability, Employment Practices Liability, and Employers’ Liability (Worker’s Compensation).

General Liability – or “GL” as it is most often referred to – provides coverage for litigation expenses (attorney’s fees, courts costs, investigation expenses, etc.) and the cost to settle a claim arising out of a third-party claimant’s suit for damages due to “Bodily Injury” or “Property Damage”.

• Ex. of a “Property Damage” claim against a contractor could be an improperly installed pressurized water line that leaks and causes damage to the home. The General Liability policy would pay to replace damaged items that the leaking water came into contact with (Sheetrock, trim, discolored grout, etc.)
• An example of a “Bodily Injury” claim against a contractor could be a situation where a remodeling contractor improperly wires new appliances by not grounding them. The homeowner or another third-party then uses the appliance and completes the circuit, electrocuting themselves.

As a contractor it is important to verify you are adequately insured against damages that you may cause to a third-party claimants’ person or property in the scope of your operations. Uninsured claims against a contractor can result in monetary settlements that may have drastic financial implications on your small business and personal assets.

Please consult a qualified Insurance Professional when making your insurance buying decision to ensure you are purchasing a General Liability Policy that does not contains exclusions that remove much needed coverage for you organization.

The only way to verify if an organization has an active General Liability Policy is to request a Certificate of Liability Insurance from the organization’s Insurance agent.

A certificate of Liability Insurance, or Acord 25, is an industry standard form that displays to the Certificate Holder (requestor) the insured’s active Liability Policy Numbers, Policy Term, and Limits of Insurance.

More importantly, this form also requires the Insurer to notify the Certificate Holder if the insured’s insurance lapses for any reason within 10 days of cancellation.

As a homeowner, it is important to request this information prior to work commencing. If an uninsured contractor causes significant damage to your home, you may find yourself paying out-of-pocket to replace damaged material and hiring a new contractor to redo the work.

As a homebuilder it is crucial that you obtain Certificates of Insurance from all of your subcontractors that also includes some additional wording, when appropriate. This ensures that subcontractors working on your behalf have their own active General Liability insurance and the homeowner or any other third-party should not be able to file a claim against your insurance policy for work you did not complete.