The first time a contract exhibit asks for $5 million per occurrence, most contractors carry $1 million on the general liability policy and a $1 million or $2 million umbrella bought years ago. The gap between what the owner wants and what you carry is where jobs stall. This guide walks through the requirements you will see on larger projects and how each one is satisfied.
Reading the insurance exhibit
Owner and GC requirements on larger projects usually stack several items, and each has to be checked against the actual policy, not the certificate:
- Higher limits: $5 million or $10 million per occurrence and aggregate, sometimes with a per-project aggregate so one bad job does not exhaust the limit for the others
- Additional insured for ongoing and completed operations, on a primary and non-contributory basis
- Waiver of subrogation on liability and workers’ comp
- Completed-operations coverage maintained for years after substantial completion, commonly matched to California’s ten-year statute of repose for latent construction defects
- Sometimes contractors pollution liability, professional liability for design-build scope, or railroad protective near tracks
The umbrella or excess policy has to follow the underlying policies on every one of those endorsements, or the higher limit does not actually reach the owner.
Umbrella versus excess
Both sit above your primary general liability, auto and employers liability and add limits. The difference is in what they cover:
- An umbrella can be broader than the underlying policies. It may drop down to cover some claims the primary excludes, subject to its own retention.
- A follow-form excess covers exactly what the underlying policy covers, no more, and only adds limits.
For contract compliance the practical question is the same either way: does the policy above the primary carry the additional insured, primary and non-contributory, and waiver wording the contract requires, and does it schedule every underlying policy the owner expects it to sit over? A $5 million excess that does not list your auto policy leaves auto at $1 million.
Wrap-ups: OCIP and CCIP
On large projects the owner (OCIP) or the general contractor (CCIP) may buy one liability and workers’ comp program that covers every enrolled contractor on that site. Your own policies then step aside for that project.
Three things change for you:
- Your bid should exclude the insurance cost the wrap-up replaces. Wrap-up administrators will ask for your rates and payroll so they can deduct it, and they will audit it.
- Your practice policies need a wrap-up exclusion handled correctly, so you are not paying premium on payroll the wrap-up already covers, and so coverage still applies to your off-site work, your yard and your other jobs.
- Completed operations after the wrap-up ends is the classic gap. Some programs carry a completed-operations tail; some do not. If the wrap-up does not, your own policy must, and it must be the policy in force when the claim is made years later.
Where builder’s risk fits
Builder’s risk is property insurance for the structure while it is being built: the work in place, materials on site, and often materials in transit and in temporary storage. Liability policies do not cover this. The contract will say whether the owner or the contractor buys it. If it is yours, watch for soft-cost coverage such as extended interest and re-permitting, testing and startup for mechanical and electrical work, and the policy’s end date, which should run to final completion or occupancy rather than a calendar date that can arrive early.
Contractors pollution liability
General liability policies exclude most pollution claims. Excavation, demolition, roofing, mechanical and any work that disturbs soil, fuel, refrigerant or existing building materials carries exposure a standard policy will not respond to. Owners on larger projects increasingly require a dedicated pollution policy, and it is inexpensive relative to the liability it fills.
Getting it in place before the bid
Higher limits and endorsements take time to underwrite, and pricing improves when a carrier sees the whole program rather than a rush request the week a contract is signed. For growing contractors we review the insurance exhibits from upcoming bids as part of the program review, build the umbrella or excess layer to match, and issue the certificates instantly from the portal once the job is awarded. Send us the exhibit and we will tell you exactly what your current policies do and do not satisfy.
Common questions
What is the difference between umbrella and excess liability insurance for contractors?
Both add limits above your primary general liability, auto and employers liability. An umbrella can be broader than the underlying policies and may cover some claims they exclude, subject to a retention; a follow-form excess covers exactly what the underlying policies cover and only adds limits. For contract compliance the key is that the layer above carries the same additional insured, primary and non-contributory and waiver wording and schedules every underlying policy.
What changes for my insurance when a project has an OCIP or CCIP wrap-up?
The owner’s or GC’s program covers your liability and workers’ comp for that project, so your bid should exclude the insurance cost it replaces, your own policies need the wrap-up exclusion handled so you are not paying premium twice while still covering your other work, and you must confirm who carries completed-operations coverage after the wrap-up ends.
Who buys builder’s risk insurance, the owner or the contractor?
The contract decides. Builder’s risk covers the structure, materials on site and often materials in transit while the project is under construction, which liability policies do not cover. Whoever buys it should confirm soft-cost coverage, testing and startup coverage and that the policy runs to final completion rather than a fixed calendar date.