Contractor Insurance Certificate — What Owners Need to Verify Before Day One

“”Our contractor insurance certificate? — Don’t worry, we’re fully insured.”

Every contractor says it. Most mean it. Some are telling you what they think is true but haven’t actually checked in two years. A few are hoping you won’t ask follow-up questions.

Here’s the problem: “fully insured” doesn’t mean anything specific. It doesn’t tell you what type of insurance they carry, how much coverage they have, whether the policy is current, or — most importantly — whether you have protection if something goes wrong on your property.

Verifying contractor insurance before work starts isn’t distrust. It’s a fifteen-minute task that can prevent a financial catastrophe. Here’s exactly what to look for.

Contractor Insurance Certificate — The Three Policies That Matter

Commercial General Liability Insurance

This is the foundational policy. Commercial General Liability (CGL) covers property damage and bodily injury that the contractor’s work causes — a worker accidentally breaks a water line and floods your finished basement, a falling piece of scaffolding damages your neighbor’s fence, a subcontractor backs a truck into your garage door. CGL pays for those things.

For residential projects, a minimum of $1 million per occurrence is standard. On larger commercial projects, $2 million or more is appropriate. The coverage limit matters — a policy with a $300,000 limit on a $400,000 project gives you inadequate protection.

Workers’ Compensation Insurance

This one is personal. Workers’ comp covers medical expenses and lost wages for workers injured on the job. If a worker gets hurt on your property and the contractor carries no workers’ comp, you may bear liability for those costs. In some states, your homeowner’s insurance steps in — and then your premiums go up. In others, you face direct exposure.

Workers’ comp requirements vary by state and by the number of employees. Some sole proprietors qualify for an exemption. That exemption doesn’t protect you — it simply means there’s no coverage in place. If a contractor tells you they’re exempt from workers’ comp, ask what happens if someone gets hurt on your property. The answer matters.

Commercial Auto Insurance

If contractor vehicles come onto your property — and they will — commercial auto covers accidents those vehicles cause. Personal auto policies typically exclude vehicles that see business use. A contractor’s pickup truck hauling materials to your jobsite is a business vehicle. If it backs over your sprinkler system or clips another car on your street, a personal auto policy won’t cover the damage.

A Real-World Example: The Worker Who Got Hurt in the Backyard

A homeowner hired a two-person landscaping crew to build a retaining wall. The contractor said he was insured. The homeowner took him at his word.

Midway through the job, one of the workers fell from a small retaining wall section and broke his wrist. The contractor carried general liability — but had let his workers’ compensation policy lapse three months earlier to cut costs.

The injured worker filed a claim against the homeowner’s property insurance. The homeowner’s carrier paid — and then declined to renew the policy at the end of the term. Finding comparable coverage in the same market took months and cost significantly more.

A current certificate of insurance, checked before work started, would have caught the lapsed workers’ comp policy before anyone set foot on the property.

The Contractor Insurance Certificate — What to Ask For and How to Read It

The document you want is a Certificate of Insurance (COI). It’s a one-page summary that the contractor’s insurance company issues, listing their active policies, coverage types, limits, and expiration dates. Any legitimate contractor can get one from their broker within a day — usually faster.

When you receive it, check each of the following:

• Policy dates: Do the policies currently show active status? An expired policy is no policy. Check the dates against today — not against when you first requested the certificate.
• Coverage limits: Do the limits match your project size? A $100,000 GL policy on a $300,000 remodel leaves a dangerous gap.
• The named insured: Does the name on the policy match the name on your contract? If the contractor signs as an LLC but the policy names them personally — or vice versa — ask why.
• Workers’ compensation: Does the certificate list it? Does it show an active status? If the contractor claims an exemption, get that in writing.
• Your name as additional insured: More on this below.

Additional Insured Status — The Protection Most Homeowners Don’t Know to Ask For

When you appear as an additional insured on the contractor’s general liability policy, their insurance covers you — not just the contractor — if a claim arises from work on your property.

Without additional insured status, the contractor’s GL policy protects only the contractor. With it, you gain direct access to that coverage if a lawsuit or claim names you in connection with their work.

On commercial projects, additional insured requirements are standard practice. On residential projects, they’re less common — but absolutely worth requesting, especially on larger jobs. Your contract should specify that the contractor must name you as an additional insured and provide a certificate showing that status before work begins.

Some contractors push back, citing premium increases. A modest project may not warrant the requirement. A significant remodel, addition, or new construction almost always does.

What Good Looks Like

Insurance Requirements Written Into the Contract

The contract should specify the types of coverage it requires, the minimum limits, and the obligation to maintain that coverage through project completion — not just at signing. A policy that lapses mid-project offers no protection for work done after the lapse.

A Contractor Insurance Certificate Before Work Starts

Not at signing — before day one on the job. Policies can change between contract signing and mobilization. Get a current COI when the crew is scheduled to arrive, not three weeks before.

Direct Verification for Large Projects

For significant projects, don’t just read the certificate — call the contractor’s insurance broker and confirm the policy status directly. Someone can forge a contractor insurance certificate, or a carrier can cancel a policy after the broker issues it. A two-minute phone call closes that gap.

Subcontractor Insurance Requirements

Your contract with the general contractor should push the same insurance requirements down to every subcontractor on the job. The tile setter, the electrician, the plumber — each trade working on your property needs proper coverage. Ask whether the GC verifies subcontractor insurance before allowing anyone on site.

Red Flags to Watch For

• The contractor resists providing a certificate of insurance or keeps delaying it
• The COI shows expired policies — even by one day
• Workers’ compensation is absent with no written exemption documentation
• Coverage limits fall well below the project value
• The name on the policy doesn’t match the name on the contract
• The contract requires insurance only at signing — not through project completion
• The contract says nothing about subcontractor insurance — every trade on your property needs coverage

The Takeaway

Insurance isn’t a formality. It’s the financial backstop for everything that can go wrong on a construction project — and things do go wrong on construction projects. Workers get hurt. Property gets damaged. Neighbors file claims. None of that is unusual. What’s unusual is facing a coverage dispute without adequate protection in place.

Before any work starts on your property, ask for the certificate of insurance. Read it. Check the dates. Confirm the limits fit the project. For larger projects, call the broker.

Fifteen minutes of due diligence before day one is worth infinitely more than a coverage dispute after something goes wrong.

Previous in the series: How to Avoid Contractor Change Order Surprises — Before They Happen. 

Up next in the series: Indemnification, Termination and Dispute Resolution — The Exit Clauses That Save Your Project. 

This post is part of the Before You Sign series — a nine-part guide to construction contracts for homeowners, startups, and small businesses. See the full series.