General liability insurance is the foundation of protection for contractors in Colorado Springs.
It covers the most common risks you face on job sites—but many contractors don't fully understand what's actually covered until they need to file a claim.
Here's exactly what general liability insurance protects.
What General Liability Insurance Covers
1. Bodily Injury to Third Parties
What It Means: Medical expenses, lost wages, and legal costs if someone gets injured because of your work or operations.
Real Examples:
- A homeowner trips over your equipment and breaks their ankle
- A client's child gets hurt on your active job site
- A passerby is injured by falling debris from your work area
What's Covered: Emergency room visits, hospital stays, rehabilitation costs, lost income, pain and suffering claims, and legal defense fees.
2. Property Damage to Others
What It Means: Repair or replacement costs if you damage someone else's property while working.
Real Examples:
- Your crew accidentally breaks a homeowner's expensive window
- You damage a client's hardwood floors while moving equipment
- Your tools scratch or dent a customer's vehicle in their driveway
- You knock a hole in the wrong wall during demolition
What's Covered: Repair costs, replacement value, and associated expenses to restore damaged property.
3. Personal and Advertising Injury
What It Means: Protection against non-physical injury claims related to your business operations.
Real Examples:
- A competitor claims you slandered their business reputation
- Copyright infringement allegations over marketing materials you used
- Claims that your advertising violated someone's rights
- Accusations of false advertising about your services
What's Covered: Legal defense costs and settlements for these specific types of claims.
4. Medical Payments
What It Means: Immediate medical expenses for minor injuries, regardless of who's at fault.
Real Examples:
- A client needs stitches after cutting themselves on materials you left out
- A property owner needs minor first aid after a small accident on your job site
What's Covered: Small medical bills (typically up to $5,000-$10,000) paid quickly without admitting fault or requiring a lawsuit.
5. Legal Defense Costs
What It Means: Attorney fees, court costs, and settlement expenses when you're sued for covered claims.
Why It Matters: Legal defense costs can exceed $50,000 even for baseless lawsuits. General liability covers these expenses in addition to your policy limits.
What's Covered: Lawyer fees, court filing fees, expert witness costs, and settlement negotiations.
What General Liability Does NOT Cover
Understanding coverage gaps is just as important as knowing what's covered.
Your Own Injuries or Employee Injuries
General liability doesn't cover you or your employees. You need workers' compensation insurance for employee injuries—which is required by Colorado law if you have employees.
Damage to Your Own Tools and Equipment
Your tools, materials, and equipment aren't covered under general liability. You need inland marine insurance or equipment coverage for this protection.
Professional Errors or Design Mistakes
If you provide design services, engineering advice, or professional consulting, general liability won't cover mistakes or omissions. You need professional liability insurance (errors and omissions).
Intentional Damage or Criminal Acts
Deliberately causing damage or engaging in criminal behavior voids your coverage.
Pollution or Environmental Damage
Standard general liability excludes pollution-related claims. You need separate pollution liability coverage for environmental damages.
Auto Accidents
Damage or injuries caused by your work vehicles require commercial auto insurance, not general liability.
Completed Work Defects (Limited Coverage)
While general liability includes some completed operations coverage, significant defects in your finished work often require contractors professional liability or warranty coverage.
Contractual Liability (Sometimes Limited)
Coverage for contractual obligations varies by policy. Review your specific policy for limitations on contracts you sign with clients.
Coverage Limits Explained
General liability policies have several limit types:
Per Occurrence Limit: Maximum paid for a single incident (typically $1 million)
Aggregate Limit: Maximum paid for all claims during the policy period (typically $2 million)
Medical Payments Limit: Maximum for small medical claims without proving fault (typically $5,000-$10,000)
Example: A $1 million/$2 million policy means up to $1 million per incident and $2 million total for all claims in one year.
How Much Does General Liability Cost for Colorado Contractors?
Small Contractors (1-3 workers, low-risk work): $500 - $1,500/year
Medium Contractors (4-10 workers, moderate risk): $1,500 - $3,500/year
Large Contractors (10+ workers, high-risk work): $3,500 - $8,000+/year
Your actual cost depends on:
- Type of contracting work (roofing costs more than painting)
- Annual revenue
- Number of employees
- Claims history
- Coverage limits selected
- Years in business
What Factors Affect Your Premium?
Type of Work: High-risk trades like roofing or demolition cost more than low-risk work like painting or landscaping.
Annual Revenue: Higher revenue means more jobs and greater exposure, increasing premiums.
Experience: New contractors pay more than established businesses with proven track records.
Location: Where you work affects rates based on local lawsuit trends and regulations.
Coverage Limits: Higher limits mean higher premiums, but better protection.
Claims History: Previous claims increase rates for 3-5 years.
Safety Programs: Documented safety training can reduce premiums by 5-15%.
Colorado-Specific Considerations
Licensing Requirements: Many Colorado municipalities require proof of general liability before issuing contractor licenses.
Contract Requirements: Most general contractors and property managers require subcontractors to carry minimum $1 million coverage.
Additional Insured Requirements: Clients often require being named as additional insureds on your policy. This extends your coverage to protect them from claims arising from your work.
Certificate of Insurance: You'll frequently need to provide certificates proving coverage before starting jobs.
Real-World Claim Examples
Scenario 1: Property Damage A plumbing contractor accidentally floods a client's basement while installing new pipes, causing $25,000 in water damage to finished space and personal property. General liability covers the full repair cost plus legal fees when the homeowner's attorney gets involved.
Scenario 2: Bodily Injury An electrician's ladder falls and injures a homeowner, breaking her arm and requiring surgery. Medical bills total $35,000, and she sues for lost wages and pain and suffering. General liability covers all medical expenses, legal defense, and the settlement.
Scenario 3: Third-Party Property Damage A roofing contractor's debris falls from a roof and damages a neighbor's new car parked on the street. The $8,000 repair is fully covered under property damage liability.
How to Maximize Your Coverage
Purchase Adequate Limits: Don't settle for minimum coverage. Most contracts require $1 million, but consider $2 million for better protection.
Add Umbrella Coverage: For high-risk work, an umbrella policy adds $1-5 million in additional coverage inexpensively.
Include Products-Completed Operations: Ensures coverage extends after you finish jobs, protecting against claims from completed work.
Request Additional Insured Endorsements: Many clients require this, so having it standard saves time and money.
Review Exclusions Carefully: Understand what's not covered so you can purchase additional policies as needed.
Document Everything: Photos, contracts, and communication records help support claims and defense.
Frequently Asked Questions
Is general liability required for contractors in Colorado?
Not legally required by the state, but most municipalities require it for licensing, and virtually all clients demand proof of coverage before hiring you. Operating without it exposes you to catastrophic financial risk.
What's the difference between general liability and workers' compensation?
General liability covers injuries to clients and the public. Workers' compensation covers your employees. Both are essential, and workers' comp is legally required if you have employees.
Does general liability cover subcontractors?
Only if they're covered under your workers' compensation. Independent subcontractors need their own general liability insurance. You should always verify subcontractors carry their own coverage.
Can I be sued even with general liability insurance?
Yes, but your insurance provides legal defense and pays settlements or judgments up to your policy limits. Without insurance, you pay everything out of pocket.
What if my claim exceeds my coverage limits?
You're personally responsible for amounts beyond your limits. This is why adequate coverage limits are crucial—don't underinsure to save a few hundred dollars annually.
How quickly can I get coverage?
With complete business information ready, you can typically get quotes within 24 hours and have coverage active within 1-3 business days.
Protect Your Contracting Business Today
General liability insurance is non-negotiable for contractors in Colorado Springs. It protects your business from the most common risks you face daily and is required by most clients before they'll hire you.
The cost of coverage is minimal compared to the financial devastation of a single uninsured claim.
Get your free general liability insurance quote from EJC Insurance & Financial:
📞 Colorado Springs: (719) 685-8585
✉️ hello@ejcteam.com
Our independent agents specialize in contractor insurance and compare multiple carriers to find you comprehensive protection at competitive rates. We understand the unique risks Colorado contractors face and customize coverage for your specific trade.
Protect Your Colorado Springs Contracting Business Today - Get a Free Quote!
