What Is Contractor Insurance?

by Luke Arthur; Updated September 26, 2017

Working as a contractor can provide you with an opportunity to have more control over your schedule and set your own rules. When you consider working as a contractor, you also need to think about the insurance requirements for this profession. Most contractors need to have a contractor's insurance policy to protect them against liability.

Contractor's Liability Coverage

The primary purpose of purchasing contractor's insurance is to protect oneself against liability. When working as a contractor, ample opportunities for injury or damage present themselves. By purchasing this type of insurance, you can protect yourself against a lawsuit or from other damage. Many different types of contractors can buy these types of policies and they can be customized to protect against the risks that are inherent with each individual type of profession. If something happens, the contractor can pay a deductible and the insurance company will help pay for damages.

Structural Damage

One of the areas that is typically covered by this type of insurance policy is structural damage. Contractors regularly go into people's homes or into places of business to work on construction projects. During this process, the chances of causing some kind of damage are high. For example, a contractor could swing a hammer and accidentally break something valuable inside the house. When this happens, the insurance policy will typically pay to repair or replace the piece of property that was damaged.


When working at a job site, a contractor can also inadvertently contribute to an injury. For example, when a contractor is working up on scaffolding inside a house, he could accidentally drop a tool and hit someone walking by. When this occurs, the liability insurance will help pay for the medical bills of the person who was injured in the accident. If the individual who was injured files a lawsuit against the contractor, the insurance can help pay for legal costs and damages.

Other Coverages

A contractor's liability policy can also help pay for damages that are incurred as a result of an accident on the property. For example, a contractor might remove baseboards from along a wall and pull a nail out of a water pipe that has been in place for years. This could cause a significant flooding problem and the water might damage furniture and flooring. While the contractor did not specifically cause the damage, he is responsible in this situation. The policy can help pay to repair the damage to the house.

About the Author

Luke Arthur has been writing professionally since 2004 on a number of different subjects. In addition to writing informative articles, he published a book, "Modern Day Parables," in 2008. Arthur holds a Bachelor of Science in business from Missouri State University.

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