Introduction – Shared Responsibility
Meeting insurance requirements on a construction project is not a one-sided duty. Contractors and property owners must collaborate to ensure coverage is in place, compliant, and current throughout the lifecycle of a build. Construction contracts often include specific language detailing insurance obligations—miss one, and you risk delays, denied claims, or legal disputes. Understanding and executing these requirements is essential for every stakeholder.
Typical Insurance Requirements in Construction Contracts
Construction contracts outline who must carry which types of insurance—and how much. These provisions are legal safeguards and should never be glossed over.
Common insurance requirements include:
- General Liability Insurance: Often $1–5 million in coverage depending on project size.
- Workers’ Compensation Insurance: As required by state law for all employees and subcontractors.
- Builder’s Risk Insurance: Typically purchased by the owner or GC to cover physical loss or damage to the structure.
- Umbrella or Excess Liability Coverage: For projects with higher risk profiles.
- Professional Liability Insurance: Required for design-build or engineering services.
Key Terms to Understand:
- Additional Insured: A person or entity added to a policy to receive coverage benefits (e.g., owners listed on contractor’s general liability).
- Waiver of Subrogation: Prevents the insurer from seeking damages from other parties after paying a claim.
- Primary and Non-Contributory Language: Specifies that the contractor’s insurance pays first in the event of a claim.
For Contractors: Obtaining and Proving Coverage
Contractors bear the brunt of insurance responsibility. Here’s how to stay compliant:
- Secure Proper Policies: Carry general liability, workers’ comp, and umbrella policies that meet or exceed contractual limits.
- Request Endorsements: Include additional insured endorsements and waivers of subrogation as specified.
- Provide Proof of Coverage: Share Certificates of Insurance (COIs) that clearly list the property owner or general contractor as additional insureds. COIs should also include policy numbers, effective dates, and limits.
🔍 Tip: Use digital tools or services like getbcs.com to keep COIs organized and accessible.
For Owners/Developers: Ensuring Contractor Compliance
Owners and developers are not off the hook. Their role is to verify that contractors are covered—and remain covered:
- Review COIs Before Work Begins: Confirm that policies are active, limits are sufficient, and your entity is named correctly.
- Implement Owner-Controlled Insurance Programs (OCIPs): For large builds, OCIPs consolidate coverage under one policy to simplify compliance and reduce costs.
- Maintain Liability Coverage: Owners should carry their own general liability or property insurance to protect against contractor insolvency or uninsured claims.
Documenting and Monitoring Compliance
Insurance is only as good as its paper trail. For long-duration projects, policies will expire mid-construction. Set up a system to track expiration dates, renewal COIs, and endorsement verifications.
Recommended practices:
- Digital Tracking Software: Automate alerts for renewal deadlines and missing documents.
- Quarterly Audits: Conduct periodic reviews of all insurance documents to ensure ongoing compliance.
Handling Scope Changes and Claims
If the project scope changes—say, new subcontractors are brought in or the contract value increases—insurance requirements may shift too. Failing to update coverage puts everyone at risk.
- Contractors: Notify insurers and request updated COIs.
- Owners: Re-check compliance and ensure you’re still protected.
- Both Parties: Document changes in writing and file all updates.
In the event of an accident, clear documentation helps streamline the claim process and prevent disputes.
Conclusion – Collaboration for Coverage
Construction insurance isn’t just a contract clause—it’s an active process that requires ongoing collaboration between contractors and owners. When both parties fulfill their obligations, track documentation, and communicate changes, the project is well-protected from costly, unexpected risks.
✅ Protect the build. Cover the risk. Keep the records.