The standard answer is four coverage types: commercial general liability, workers' compensation, commercial auto, and umbrella/excess. The better answer is: it depends on the project, the contract, and the specific risk profile of the work being performed.
Here's what each coverage type does, why you need it from your contractors, and how requirements typically vary by project type.
The Four Core Coverage Types
The Four Core Coverage Types
1. Commercial General Liability (CGL)
CGL covers third-party bodily injury and property damage claims arising from the contractor's operations. This is the baseline coverage you need from every contractor - it protects you when a contractor's work or employees cause harm to a third party who then sues you as the contracting entity.
Typical limits by project type:
- Light commercial/residential: $1M per occurrence / $2M aggregate
- Mid-range commercial: $2M per occurrence / $4M aggregate
- Large commercial/infrastructure: $5M per occurrence / $10M aggregate
What most contracts miss: The endorsement requirements on CGL are as important as the limits. You should require:
- Your entity as additional insured (primary and non-contributory)
- Waiver of subrogation
- Cross-liability coverage (a/k/a severability of interest)
2. Workers' Compensation
Workers' comp covers the contractor's employees for work-related injuries. This is non-negotiable - if a contractor's employee is injured on your site and the contractor has no workers' comp coverage, that employee may have a direct claim against you.
Every state has workers' compensation requirements for employers. In most states, it's mandatory for contractors with any employees. The required limit is "statutory" - meaning it meets the state's minimum. Employers Liability limits (part of the same policy) typically start at $100,000/$100,000/$500,000.
Watch out for: Contractors who claim they don't need workers' comp because they use "independent contractors" exclusively. This is a classification risk - if a worker is reclassified as an employee, the coverage gap falls back on you.
3. Commercial Auto Liability
If the contractor uses vehicles in connection with your project, commercial auto covers bodily injury and property damage arising from vehicle use. This covers both owned and, typically, non-owned/hired vehicles.
Standard minimum: $1M combined single limit. Higher limits are appropriate for contractors whose vehicle operations are central to their work.
4. Umbrella / Excess Liability
Umbrella provides additional limits above the CGL, auto, and employers liability. It's essential for projects where the primary limits aren't adequate to cover a major incident.
Critical point: The umbrella must follow form - meaning it must have the same additional insured and waiver of subrogation endorsements as the underlying policies. A gap here is one of the most commonly missed compliance issues.
Typical requirements:
- Standard commercial projects: $2M-$5M
- Large commercial/infrastructure: $10M-$25M
Additional Coverage Types by Project
Professional liability / E&O: Required for design-build contractors, architects, engineers, and IT contractors whose errors in professional judgment can cause economic harm beyond bodily injury and property damage.
Pollution liability: Required for contractors whose work involves hazardous materials, environmental remediation, or operations with pollution exposure.
Builder's risk / Installation floater: Covers materials and partially completed work against loss. Often required on construction projects - but usually obtained by the project owner or GC, not each subcontractor.
Cyber liability: Increasingly required for contractors with access to your systems, networks, or sensitive data.
Contractor Insurance Checklist by Project Type:
General commercial construction:
- CGL: $2M per occurrence / $4M aggregate
- Workers' comp: statutory limits
- Commercial auto: $1M CSL
- Umbrella: $5M+ following form
Light maintenance/service:
- CGL: $1M per occurrence / $2M aggregate
- Workers' comp: statutory limits
- Umbrella: $2M+ following form
Design or professional services:
- All of the above + professional liability: $1M-$2M
What Your Contract Should Say
Your contract should specify:
- Minimum coverage types and limits for each required policy
- Endorsement requirements - additional insured status, basis, waiver of subrogation
- Cancellation notice requirements - typically 30 days written notice
- Obligation to maintain coverage throughout the contract term
- Consequence of non-compliance - right to suspend work or terminate
Specifying limits without specifying endorsements is one of the most common gaps in contractor insurance exhibits. The limits can be right and the protection still inadequate if the endorsements aren't in place.
Related Resources
- Who Is Responsible for Verifying Contractor Insurance
- How Do I Verify a Contractor's Insurance
- How to Write Insurance Requirements into a Contract
- What Insurance Does a Food Vendor Need
Bramble reads your contracts and verifies that contractor COIs meet your specific coverage and endorsement requirements - not just generic thresholds. Book a demo at getbramble.com.