General Liability Insurance for Contractors in New Jersey

Did you know that 40% of small business owners don’t have any insurance coverage at all, while 75% are underinsured?

If you are working as a general contractor, you don’t want to fall into either of these groups. You should consider what type of insurance coverage will protect you, your client and your business. One type of insurance that you should definitely invest in is general liability for contractors in New Jersey.

What Is General Liability Insurance?

As a contractor, you are responsible for materials, equipment, and labor for a particular construction project. This includes everything, even the operating vehicles used as trucks or potentially cranes. A contractor may also hire subcontractors, so significant responsibility and liability is attached to this role. That’s why it’s essential to ensure you have a general liability insurance plan.

General liability provides financial coverage for a range of issues that you could experience. This includes customer injury or damage to the property. For instance, if during a project, a wall collapses, falls on a building next door, or a piece of equipment falls off scaffolding, hitting someone below, general liability covers the cost.

It also ensures that you are covered if there is a legal claim. This is one of the first coverages you will set up because it ensures that you are prepared for a client contract or a commercial lease, which is often a requirement before a project can begin.

Will An Independent Contractor Be Held Liable For Damages?

A general contractor can be held liable and sued for damages. It’s not that different from running your own business. If you don’t have an insurance plan, you will have to cover the cost out of your own pocket. This can be quite expensive, but you won’t have to worry if you have general liability.

This doesn’t change based on the business that you are working in. People often assume that if you are pursuing insurance coverage, you work in an industrial sector, which isn’t always true. Doing so could expose any contractor. For instance, you could provide content for a business owner.

If that content was plagiarised, it could damage the business’s reputation. The business can then sue you for a loss of profits. Alternatively, you could complete a home renovation, which may have led to water damage after accidentally hitting a pipe. Here, the property owner could sue you for compensation for the damage caused.

While these are two different scenarios, both will cost businesses money and are covered by general liability insurance.

Why Do You Need General Liability Insurance?

There are various reasons you need general liability insurance as a contractor. Similar to a small business owner, you are liable for incidents and accidents that may happen and potential damages. This could lead to legal action, and you probably want to avoid this as much as possible.

With general liability insurance, you can ensure your business is protected. You have the same duties and responsibilities as an independent contractor as a more prominent firm. They can sue you for anything from an injury to harming someone. With general liability, you ensure you can pay both the damages and the legal bills. Without it, this can leave thousands in unpaid expenses.

You should also consider whether you need general liability insurance. Specific industries, including construction, require contractors to have general liability insurance. Ideally, the client and the contractor should ensure they have general liability coverage rather than simply relying on one or the other.

Your client will also likely expect you to have it, even if they have their own. Without this insurance, you will leave them vulnerable, and most clients will not take the risk.

How Can Contractors Gain Coverage

You might wonder how you can gain general liability coverage as an independent contractor in New Jersey. There are two routes you can consider taking.

Option 1

The first option is to gain general liability through the client. Here, they will add you to the policy as an additional insured. With this option, you receive coverage for the entire project duration and potentially longer. While a business can add you or even multiple contractors to their policy, it makes it more expensive. It won’t always happen, but a client sometimes does this. Usually, they can be certain that your work is fully insured.

Option 2

The other option is to purchase your own general liability insurance. You can do this by exploring multiple insurance providers. Clients will typically request proof that you have this coverage. You can request that your provider offer a certificate, which you can freely show to clients. This makes you more attractive to clients because it’s cheaper than having them put you on their plan.


It’s important to note that both options do not provide the same coverage. If you opt for insurance as an additional insured, you will not gain the same level of protection as the client or the policyholder. Instead, you will gain defense coverage so you can cover legal fees and potentially coverage for injury, property damage, or even advertising injury.

Key Takeaways

General Liability Insurance is a vital protective measure for contractors operating in New Jersey. It protects them against potential financial losses arising from third-party claims of bodily injury, property damage, or advertising injury.

By investing in comprehensive coverage tailored to their business needs, contractors can mitigate risks, protect their assets, and uphold their professional reputation in the competitive construction industry. With the diverse challenges and liabilities inherent in construction projects, having reliable General Liability Insurance is a legal requirement and a strategic investment in long-term business success.

As contractors navigate the complexities of New Jersey’s regulatory landscape and project demands, prioritizing robust insurance coverage offers peace of mind and ensures readiness to overcome unforeseen obstacles, allowing them to focus on delivering high-quality services and achieving their business goals.


What is General Liability Insurance, and why do contractors need it?

General Liability Insurance protects contractors from financial losses resulting from third-party claims of bodily injury, property damage, or advertising injury. It’s essential for safeguarding their business against potential liabilities.

What does General Liability Insurance cover for contractors?

This insurance typically covers legal expenses, medical bills, property damage costs, and settlements or judgments resulting from covered claims.

Are contractors legally required to have General Liability Insurance in New Jersey?

While New Jersey may not mandate General Liability Insurance for contractors, many clients and contracts may require it as a prerequisite for working on projects.

How does General Liability Insurance benefit contractors?

General Liability Insurance helps contractors mitigate risks, protect their assets, and uphold their professional reputation. It provides peace of mind and ensures readiness to overcome unforeseen obstacles in the construction industry.

Can contractors customize their General Liability Insurance coverage?

Yes, contractors can tailor their coverage to suit their business needs by adding endorsements or increasing policy limits to provide additional protection.

How can contractors choose the right General Liability Insurance policy?

When selecting a policy, contractors should consider factors such as the size and scope of their projects, risk tolerance, and budget. Consulting with an insurance agent or broker can help them make an informed decision.

What steps should contractors take to file a General Liability Insurance claim?

In the event of an incident or claim, contractors should promptly notify their insurance provider and provide all relevant documentation and information to facilitate the claims process.

Are there any exclusions or limitations to General Liability Insurance coverage for contractors?

Contractors should review their policies carefully to understand any exclusions or limitations, such as coverage for certain work or activities.