In construction, every project brings its own set of challenges—and so do the insurance requirements. Whether you operate as a general contractor overseeing full builds or as a subcontractor focusing on specialized tasks, the protection you need can look very different. Unfortunately, many professionals only discover these differences after a problem occurs.

This revised guide explains how contractors’ insurance needs compare to those of subcontractors so you can better protect your business and avoid costly coverage gaps.

Why Insurance Requirements Differ

Although contractors and subcontractors often collaborate on the same job site, their roles and responsibilities vary significantly. Those differences create unique exposures that impact which insurance policies they need.

Contractors typically supervise entire projects. They manage multiple teams, work directly with project owners, and ensure that all phases of construction run smoothly. Because of this broad oversight, their insurance policies must cover wide-ranging liability and operational risk.

Subcontractors, by contrast, concentrate on specific areas such as electrical work, drywall installation, framing, plumbing, or finishing. While their scope is narrower, they still encounter hazards related to their work, equipment, transportation, and contract obligations.

Both groups rely on foundational protections like general liability and commercial auto insurance, but the details—such as what’s required, how coverage applies, and which add-ons are necessary—can differ dramatically.

Essential Insurance for Contractors

Contractors need a comprehensive set of policies to address the broad risks that come with managing full construction projects. Key coverages often include:

General liability insurance protects contractors if third parties suffer bodily injury, property damage, or personal and advertising injury due to their operations. Because they supervise entire job sites, project owners typically require this coverage before work begins.

Builder’s risk insurance offers protection for the project itself while it is under construction. This coverage can apply to fire, storms, theft, vandalism, and damage to materials. Some policies also extend to temporary structures, paint, or certain legal expenses.

Workers’ compensation provides wage replacement and medical care for employees injured on the job. While each state sets its own rules, most contractors with employees must carry this coverage without exception.

Commercial auto insurance applies to work-related vehicles and attached equipment, such as ladder racks or mounted toolboxes. It includes liability protection for accidents and may also cover damage to the vehicle itself.

Inland marine and tools and equipment insurance protect mobile tools, machinery, and materials in transit or on job sites. This is especially important for contractors who frequently move equipment between projects.

Professional liability insurance (sometimes called errors and omissions coverage) helps contractors who provide design guidance, planning services, consulting, budgeting, or scheduling. It can respond to allegations of professional negligence, missed specifications, or flawed recommendations.

Surety bonds provide financial assurance to project owners. If a contractor cannot complete a project, the bond helps cover the cost of finishing the work or hiring another professional.

Coverage Subcontractors Should Carry

Subcontractors may not manage an entire build, but they still face notable risks tied to the work they perform. Their insurance packages should be tailored to the exposures of their trade.

General liability insurance is a must for subcontractors as well. It protects against claims from injuries or property damage caused by their work. However, because subcontractors’ roles are often specified in detail, this coverage frequently needs backup from additional policies.

Professional liability insurance is valuable for subcontractors who provide any technical, design-related, or advisory services. This includes shop drawings, commissioning, field changes, or consulting. The policy can respond to claims of errors, omissions, or contract-related issues.

Workers’ compensation may be required even when subcontractors do not employ large teams. General contractors often ask subcontractors to carry this coverage to reduce their own liability and maintain safe job site standards.

Tools and equipment insurance, sometimes paired with inland marine coverage, protects critical tools from theft, damage, or loss. Some policies may even reimburse additional expenses needed to keep a project moving if equipment is stolen or broken.

Commercial auto insurance is essential when subcontractors use personal or business vehicles for work-related driving. Without it, an accident during a job could leave them unprotected.

Surety bonds may also be required, particularly on larger projects or government contracts. These bonds help reassure general contractors that the subcontractor will fulfill the terms of their agreement.

How to Prevent Costly Coverage Gaps

Insurance requirements are often spelled out in contracts, so reviewing those documents before work begins is crucial. Misunderstandings about what coverage is required can delay projects, result in denied claims, or create expensive liabilities.

Working with a knowledgeable insurance professional can help ensure your policies match your responsibilities. Whether you are supervising crews across several job sites or bidding on a specialized contract, an advisor familiar with construction risks can guide you toward the right mix of protection.

Need Assistance Choosing Coverage?

The right insurance varies based on your role, type of work, and contract requirements. With proper planning, you can safeguard your business from unexpected delays, legal challenges, and financial setbacks.

If you're a contractor managing multiple teams or a subcontractor navigating job requirements, we can help design a coverage plan that supports your goals and protects your livelihood.

Reach out to our team anytime to review your current policies or request a quote. We’re here to help you stay protected from the moment the project begins.