Essential Insurance Policies Every Contractor Needs in 2026

Do you have the insurance you need to protect you from losses? Contractors take on big risks, and without adequate coverage, common disruptions can derail business. Take a moment to review your contractor insurance coverage to ensure you have the right policies to protect your business in 2026.

General Liability Insurance

General liability insurance covers third-party claims involving bodily injury or property damage occurring on your business premises or resulting from your operations. Standard policies also provide coverage for personal and advertising injury claims.

Why do contractors need general liability insurance? Construction sites can be dangerous places, and not all incidents involve workers. For example, someone walking by your operations could be injured by debris. Commercial general liability insurance is a staple of insurance coverage for contractors, and it’s often required by state licensing boards and project managers.

Contractors Professional Liability Insurance

Contractors professional liability insurance (CPL), also known as errors and omissions insurance, is distinct from general liability insurance. It covers claims alleging financial loss stemming from negligent or substandard professional services.

Why do contractors need professional liability insurance? Problems with construction design can lead to major financial losses, making CPL insurance critical for contractors that provide design services. For example, a flaw in design could delay the business opening of a commercial client, leading to lost revenue.

Commercial Auto Insurance

Commercial auto insurance can provide coverage for your vehicles as well as third-party claims involving bodily injury or property damage. A hired and non-owned endorsement adds business liability coverage for when workers use personal or rented vehicles for work.

Why do contractors need commercial auto insurance? A collision can disrupt operation in two ways – first by damaging the vehicle you depend on for work, and second by exposing your company to liability. Whether you’re using vehicles owned by your company, personally owned by workers, or rented, you need adequate commercial auto insurance.

Inland Marine Insurance

Inland marine insurance provides coverage for property while in transit or in off-site storage. It typically provides coverage for many common losses, including fire, storm, theft and vandalism, and can protect your equipment and supplies.

Why do contractors need inland marine insurance? Contractors frequently haul expensive supplies and equipment to different sites. Your commercial auto insurance covers your vehicle, but it doesn’t cover the items you’re transporting.

Workers’ Compensation Insurance

Workers’ compensation provides coverage for work-related injuries and illnesses, including compensation for missed work and medical care. It works on a no-fault basis, meaning workers do not need to sue their employers or prove fault in order to file a claim. As such, it protects the worker by ensuring that compensation is available, and it protects the employer by preventing costly legal battles.

Why do contractors need workers’ compensation insurance? Workers’ compensation is vital in any industry, but it’s especially important in construction, which is a high-risk sector known for a significant injury rate. States typically require workers’ comp for most employers, and there may be special requirements for contractors. For example, California requires contractors to carry workers’ comp coverage whether or not they have employees.

What Else Do You Need?

In addition to the core insurance policies every contractor needs, you may require additional policies. It depends on your business – what you do, who you work with, and where you operate.

Common policies for contractors include:

• Pollution Liability Insurance: Standard general liability insurance excludes pollution or environmental claims, so pollution liability coverage is critical for contractors. It can be added as an endorsement, but you may prefer to secure standalone coverage.
• Builders Risk Insurance: Written on inland marine insurance forms, builders risk insurance is designed to cover property during construction and renovations. It’s essential for projects, but it’s often purchased by the property owner.
• Umbrella Insurance: A series of claims or a single severe claim can wipe out your coverage limits and leave you responsible for the difference. Umbrella insurance bolsters the coverage offered by your underlying policies to provide you with superior protection.
• Cyber Insurance: As contractors become more reliant on computer systems, cyber insurance is becoming increasingly important. If a cyberattack could shut down your operations, or if you hold sensitive data, consider adding cyber insurance to your contractors insurance package.

Contractor Insurance 2026 Review

Contractors insurance is one of the more complicated types of commercial coverage. A broker who specializes in the needs of contractors can help you review your coverage for 2026.

• Do you have the right policy types? In addition to the core policies listed here, you may need other policy types or endorsements.
• Is your coverage structured optimally? It’s important to make sure your insurance is structured optimally to provide robust coverage at the best price possible.
• Is everyone covered? When working with vendors and subcontractors, careful attention must be paid to the contracts and insurance terms.

Heffernan Insurance Brokers offers construction insurance and risk management program for contractors. Learn more.