A General Contractor Needs Workers' Compensation First

If you're a general contractor, you're likely already aware that your business faces two key insurance needs: workers' compensation and general liability. But if you have to choose one to buy first, workers' compensation should be your priority. The reason is simple: your business likely employs or works with subcontractors, and most states require coverage for any injuries those workers may suffer on the job. General liability is important too, but it's often requested by clients and can be addressed after securing mandatory coverage for your team.

By starting with workers' compensation, you're not just complying with the law—you're also protecting your business from the financial burden of employee injuries. Your quote will show you whether you're eligible and what the cost looks like for your state and operations. This line of coverage also ensures you're prepared for the risks unique to managing a workforce in the construction industry.

Why Workers' Compensation Comes First for General Contractors

General contractors are in a unique position: they manage projects that involve multiple workers, including in-house staff and subcontractors. In most states, if you pay someone to work on your projects, you're legally required to have workers' compensation insurance. This coverage pays for medical expenses and lost wages if an employee is injured on the job. Without it, you could be held personally liable for those costs, which could quickly deplete your business funds.

Even if your business is small or you're working with independent contractors, you need to be aware of your state’s requirements. Some states classify certain subcontractors as employees for insurance purposes. Your quote will clarify how your specific operations are treated in your state. For example, a subcontractor who works exclusively for you might be considered an employee under your state’s laws, making you responsible for workers' compensation coverage for them.

The Role of General Liability for General Contractors

General liability insurance is the second key line of coverage for general contractors, but it's not as urgent as workers' compensation. This line protects you if someone—not your employee—is injured at your job site or if property is damaged due to your operations. For example, if a client’s home is damaged during your work, general liability can help cover repair costs.

However, general liability is often requested by clients or property owners before they allow you to start work. If you don't have it, you might not get the job. But since this coverage is not always required by law, you can address it after securing workers' compensation. Just be sure to start your quote for general liability as soon as possible to avoid delays in project opportunities. General liability will cover third-party claims like a client tripping over tools or a subcontractor damaging a client's property, but it won't protect you from claims about the quality of your work—those fall under professional liability (E&O), which is a separate line.

What General Contractors Face That Other Businesses Don’t

General contractors have exposures that differ from many other small businesses. For example:

  • Multiple workers and subcontractors: You may work with independent contractors or hire employees for different projects, increasing the risk of injury claims.
  • Work at client locations: You often work on-site at a client's home or business, which increases the risk of property damage or injury to third parties.
  • Job-specific risks: The nature of construction work—like lifting heavy materials, using power tools, and working at heights—creates unique injury risks.
  • Regulatory and compliance requirements: Your business must comply with local, state, and federal regulations for safety and insurance, and failure to do so can lead to legal and financial consequences.

Because of these factors, general contractors need to be especially careful about their insurance priorities. Workers' compensation should be the first line of coverage to protect your team, followed by general liability to cover third-party claims. Other lines, such as commercial auto or umbrella, may be relevant but are not quotable here. Your quote will help you identify which lines are most important for your specific business.

How to Get the Right Coverage for Your Business

Getting the right coverage starts with understanding your business needs and your state’s requirements. A marketplace like ours can help you compare options from top-rated carriers in one application. You’ll receive quotes for workers' compensation and general liability based on your business type, the number of workers you employ, and your project locations.

Once you have your quotes, you can decide which coverage to purchase first. For general contractors, workers' compensation is usually the best first step. After that, you can move on to general liability and any other lines that apply to your business. Start your quote to see what options are available in your state.

Remember, insurance requirements vary by state and by the type of work you do. Your quote will reflect the specific needs of your business, and it may differ from what another trade would be told. For example, a landscaping company might prioritize different lines than a residential contractor, even within the construction industry. That’s why it's important to base your decisions on your own exposures and the requirements of the people you work for.

When to Consider Other Lines of Coverage

Once you've secured workers' compensation and general liability, you may want to look into other lines of coverage that could protect your business. For example, commercial auto insurance can help cover your vehicles if you use company-owned trucks or vans. However, this line cannot be quoted here and must be obtained through a separate provider. Similarly, umbrella insurance, which extends the limits of your general liability and workers' compensation policies, is not one of the lines you can buy here.

Another line that might be relevant for you is professional liability (E&O) insurance, which covers claims about the quality of your work, such as a client alleging poor craftsmanship or failure to meet contract specifications. Most general liability policies exclude professional services, so this is a separate line to consider. If your business includes design, planning, or consulting services, professional liability may be a necessary addition to your coverage. This line is not quotable here.