California Contractor Insurance Basics: What GCs Get Wrong

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If you’re a general contractor (GC) in California, your insurance requirements aren’t just “paperwork.” They’re the difference between a routine issue staying routine—or turning into a lawsuit, a project delay, or a loss that hits your insurance program hard at renewal.

The problem is that many GCs think they’re protected because they “required a COI.” But certificates don’t guarantee coverage, and common contract language can create blind spots that only show up after a claim.

This guide covers the contractor insurance basics GCs actually need—and the mistakes we see most often when verifying subcontractor coverage.

Quick takeaway (for busy GCs)

A strong insurance and risk-transfer program is built on three things:

  • The right policies (not just the right “names” of policies)

  • Correct additional insured + primary/noncontributory wording where appropriate

  • Contract + certificate + endorsement verification that matches the work being performed

If one of those pieces is missing, your risk transfer may fail when you need it most.

The 7 most common things GCs get wrong

1) Thinking a Certificate of Insurance (COI) is proof of coverage

A COI is a snapshot. It’s not the policy, and it doesn’t override the policy terms. The real risk is assuming you’re an additional insured (AI) just because the certificate says so.

What to do instead:

  • Require the actual additional insured endorsement(s) that match your contract requirements.

  • Confirm the endorsement form and wording, not just a COI box checked.

If your projects depend on tight risk transfer, don’t treat COIs as the finish line—treat them as the starting point.

2) Requiring “General Liability” but not confirming the right details

Many GL policies look fine until you inspect the exclusions, endorsements, and limits structure.

Common gaps:

  • Limits are too low for your contract or project profile

  • Work class exclusions (roofing, heights, residential, habitational, etc.)

  • No completed operations coverage adequate for the scope

  • No additional insured coverage for ongoing and/or completed operations when needed

Related resource:

3) Not understanding additional insured: “ongoing ops” vs. “completed ops”

This is a big one.

  • “Ongoing operations” protects you while the sub is actively working.

  • “Completed operations” protects you after the sub’s work is finished (often where the most expensive claims live).

If your contract requires both, but you only verify one, your protection may evaporate after punch list.

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4) Ignoring Workers’ Comp verification (or assuming exemptions solve it)

In California construction, Workers’ Comp issues can become GC issues quickly—especially if an uninsured or misclassified subcontractor’s worker gets hurt and claims flow up.

What to do instead:

  • Verify Workers’ Comp is in force (and matches the entity performing work).

  • Watch for labor-only subs, leased labor, or “1099 crews” where the true employer relationship is fuzzy.

Related resource:

5) Overlooking Commercial Auto exposures on job sites

If subs are driving company vehicles, hauling tools/materials, or using personal vehicles for business errands, your project can still be impacted when there’s a serious accident connected to the job.

What to do instead:

  • Require Commercial Auto where operations justify it.

  • Validate limits align with your contract requirements and project risk.

Related resource:

6) Not thinking through equipment, tools, and materials in transit (Inland Marine)

General liability is not designed to cover a contractor’s tools, equipment, or job materials the way many people assume.

If a sub’s equipment is stolen from a jobsite—or materials are damaged while transported—projects get delayed and disputes start.

Related resource:

7) Treating Umbrella/Excess as “nice to have” instead of core program design

Serious construction losses can pierce primary limits fast. When excess is missing—or written in a way that doesn’t follow form correctly—everyone discovers the gap at the worst possible time.

Related resource:

What GCs should require from subcontractors (a practical checklist)

Use this as a baseline, then tailor it to your scope and contract.

  1. General Liability

  • Adequate limits for the project
  • Additional insured endorsement(s) as required (ongoing + completed ops when applicable)
  • Primary & non-contributory wording when required by contract
  • Waiver of subrogation when required

  1. Workers’ Compensation

  • In force for the actual entity performing work
  • Employer’s Liability limits appropriate to your contracts

  1. Commercial Auto

  • If vehicles are used in operations, deliveries, hauling, or jobsite travel
  • Limits appropriate to your risk profile

  1. Inland Marine (as needed)

  • Tools/equipment/materials exposure (especially higher-value trades)

  1. Umbrella/Excess (as needed)

  • Especially for higher hazard scopes, larger projects, or stricter contracts

  1. Bonds (when required)

  • License bonds and project-specific bonds as needed

Related resource:

The “real-world” reason this matters: claims don’t care what the COI said

Most GC insurance headaches happen when:

  • A loss occurs

  • The sub’s carrier denies the tender (exclusion, wrong endorsement, lapsed policy)

  • The GC’s policy responds by default

  • Renewals get harder and more expensive

A clean risk transfer file upfront is one of the most effective ways to reduce claim friction later.

When to talk to an insurance advisor (and what to ask)

If you’re reviewing subcontractor insurance in-house—or relying on a third-party certificate tracker—ask these questions:

  • Do we verify endorsements, or only certificates?

  • Do our contract requirements match the work being performed?

  • Are we consistently requiring completed operations additional insured where needed?

  • Are our subs carrying appropriate limits, or just minimums?

  • Do we have a standard escalation process when coverage doesn’t comply?

If you’re not sure, that’s normal. The point is to build a repeatable system that protects the GC, the project, and the subcontractor relationship.

We Invite You To Try Something, Different.

If you want a second set of eyes on your subcontractor insurance requirements (or your current COI/endorsement process), we’ll review your baseline requirements and help you identify the most common failure points before they become claims problems.

Start here:

Ready to get started?

Let’s protect your legacy the California way — with honor, integrity, and service.

Schedule your Contractor Risk Review today with Eastman Insurance Solutions – California.
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FAQ: California Contractor Insurance Basics (GC Edition)

Is a certificate of insurance legally binding proof of coverage?

Not in the way most people think. A certificate summarizes coverage but does not replace policy language or endorsements. Endorsements control how additional insured status is granted and when it applies.

What’s the difference between additional insured ongoing operations and completed operations?

Ongoing operations applies while work is being performed. Completed operations applies after the work is finished—often the period when defect/property damage claims arise

Do I really need to verify Workers’ Comp for every subcontractor?

In construction, yes. Uninsured or misclassified labor can create real financial exposure and disrupt projects. Verification should confirm coverage is active for the correct entity performing the work.

When should a subcontractor carry Commercial Auto instead of just personal auto?

When vehicles are used for business operations such as hauling tools/materials, deliveries, or regular jobsite travel. Personal auto may not respond as expected for business use.

When does Inland Marine matter for contractors?

When tools, equipment, or materials exposures are meaningful. Theft and transit damage are common—and general liability typically isn’t built to cover those contractor property exposures.

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