While General Liability insurance is not a requirement to obtain a contractors license, it is vital to protect your business against liability associated with third-party property damage and bodily injury losses. Arizona has state minimum General Liability coverage thresholds you must meet. Most of the time, you must carry limits of $1,000,000/$2,000,000.
General Liability Insurance Application
Why do contractors require General Liability insurance?
Contractor General Liability insurance is often required by a contractor's customer (commercial, residential, or General Contractor if working as a subcontractor) to guarantee the financial ability to pay in the event of a claim.
More contractors' clients are asking proof of their General Liability insurance coverage. CCIS provides a Certificate of Insurance to all contractors who purchase the policy with us as evidence of coverage. Some contractors' clients prefer to be named as an "Additional Insured" on the policy. CCIS can provide an "Additional Insured" endorsement upon request.
How much does a contractor General Liability policy cost in Arizona?
The policy cost is based on several factors, including contractor’s classification, payroll, subcontractor costs, gross receipts and location.
| Payroll Tier | Average Policy Cost* |
|---|---|
| $0 Payroll | $790 - $1,050 |
| $1 - $30k Payroll | $925 - $1,460 |
| $30k - $60k Payroll | $1,062 - $2,118 |
| $60k - $100k Payroll | $1,338 - $2,934 |
| $100k+ Payroll | $1,965 + |
*Prices shown are for a one year term and based on several factors including, but not limited to, classification, payroll, subcontractor costs, gross receipts and location. Rates do not constitute an offer of coverage and are subject to change at any time. Rates may fall outside average ranges shown here due to exceptional risk factors.
Not all insurance companies use the same underwriting criteria to determine the premium of a policy. Additional underwriting criteria that may or may not be utilized includes credit score, policy age, experience, and number of years the insured has not made any claims. There are many additional coverages, deductibles, fees, taxes and exclusions that can be added to a policy which can affect the premium rate.
What does a contractor's General Liability policy cover?
A Contractor General Liability policy provides coverage for third-party claims due to damages from the insured contractor's business operations. The policy covers claims for bodily injury, property damage, product and completed operations, medical costs, and personal and advertising injury. Following is a brief description of each coverage:
- Bodily Injury: An injury suffered by a person, including death.
- Property Damage: Refers to physical injury to tangible third-party property, as well as any subsequent loss of use.
- Product and Completed Operations: Coverage is offered for bodily injury and property damage after a project has been finished, but only for work done during the policy period
- Medical Payments: Covers medical costs for bodily injury caused by an accident that occurs within the policy period.
- Personal and Advertising Injury: Injuries caused by false arrest, malicious prosecution, unlawful eviction, the use of another's concept in an advertisement, copyright infringement, or the publication of anything that slanders, libels, or violates a person's right to privacy. Not prevalent in contractor general liability cases.
How do claims work for contractor General Liability insurance?
General Liability policies can be occurrence or claims-made based. Occurrence policies cover claims that occur during the policy period no matter when the claim is filed. Claims-made policies cover claims only when both the occurrence and the resulting claim happen during the period the policy is in force. Claims-made policies are typically not accepted by third parties as a valid form of General Liability coverage. As such, we recommend contractors carry occurrence coverage and will focus on the claims process with these policies.
The insurance company has a duty to defend the insured contractor but has discretion to settle any suit. If a claim is made, the contractor is responsible for paying the deductible, and the insurance company will cover the balance of damages and/or medical payments up to the policy limits.
What is a premium audit and what occurs during it?
Typically, when contractors apply for General Liability insurance, they must provide estimates for business expenses, payroll, and income, which are then used by the insurer to calculate the premium for the next period. An insurance premium audit examines the construction business’s company's financial records to identify its actual risk exposure and adjusts the premium accordingly. If the size and conditions of the business changed, so will the insurance premium and the contractor may owe an additional premium or be owed premium based on the changes.
Insurers may perform premium audits at any time from one week after the policy is bound, up to the end of the policy term. If a claim is made against the policy, the insurance company is highly likely to conduct an audit.
CCIS can provide you with General Liability insurance.