When Should a Contractor Consider Higher Liability Limits?
Larger Projects Can Bring Larger Liability Requirements
Contractors may first encounter the need for higher limits when a property owner, developer, municipality, or general contractor requires more liability insurance than the underlying policy provides.
Contract Requirements
A project contract may require liability limits above the contractor’s standard General Liability policy, creating a need to explore excess or umbrella coverage.
Larger Project Values
Working on larger buildings, higher-value property, or more complex construction can increase the financial severity of a potential liability claim.
Multiple Requirements
Contracts may also require specific underlying limits, additional insured status, completed operations protection, or other insurance provisions that affect excess placement.
Liability Exposure Goes Beyond the Current Job
Contractors should consider the combination of jobsite operations, vehicles, employees, subcontractors, completed projects, and business assets when reviewing whether higher limits make sense.
Vehicle Exposure
Multiple work trucks, heavier vehicles, trailers, frequent driving, and employee drivers can increase commercial auto liability exposure.
Completed Operations
Liability exposure may continue after projects are completed when later bodily injury or property damage is alleged to arise from finished work.
Subcontractor Use
A contractor that regularly hires subcontractors may face additional contractual and liability considerations depending on the work and agreements involved.
Business Assets
As a business builds property, equipment, cash flow, and other assets, protecting against a severe liability claim may become a larger financial concern.
When Is It Time to Revisit Your Liability Limits?
Liability limits should not necessarily remain unchanged while the contracting business expands. Major changes in operations are good reasons to review both underlying and excess coverage.
You Win Larger Contracts
Larger projects may create higher contract requirements and greater potential claim severity.
You Add Vehicles
Expanding the commercial fleet or adding employee drivers may increase auto liability exposure.
You Hire More Workers
A larger workforce can mean more jobsites, more activity, and greater overall operational exposure.
You Expand Your Services
Adding trades, entering new markets, or taking on more complex work may change both underwriting and liability considerations.
Have Your Liability Exposures Grown?
Best Formula Insurance can help contractors review excess liability and commercial umbrella options, underlying limits, contract requirements, auto exposure, completed operations, and other factors that may affect liability planning.