General liability insurance

If your crew drops a ladder on a client’s car, a visitor trips over your materials, or a leak from your plumbing work damages a neighbor’s unit, general liability is the policy that typically responds. It usually also pays legal defense costs for covered claims.

It has important limits. It doesn’t cover injuries to your own employees (that’s workers’ compensation), your vehicles (commercial auto), your tools and equipment (an inland marine or tools policy) or the project under construction (builder’s risk). Policies also usually exclude the cost of redoing your own faulty work, though they may cover damage that faulty work causes to other property.

Licensing boards, clients and general contractors often require minimum limits. Check your contracts before you buy so the limits, additional insured endorsements and any waiver of subrogation match what’s required.

Premiums depend on your trade, payroll or revenue, claims history and location. Many policies are adjusted after an audit of actual payroll or sales, so report accurately and set money aside for audit adjustments.