General liability insurance for home service businesses

What general liability is for

Commercial general liability (often shortened to GL or CGL) is the policy that responds when your business hurts someone who is not your employee or damages property that is not yours. SBA describes it as protection against financial loss from bodily injury, property damage and medical expenses^[1]. For a contractor, the most valuable part is often the duty to defend: the insurer hires and pays lawyers when a homeowner or another contractor sues, even if the claim turns out to be weak.

A standard policy is built from a few coverage parts. Premises and operations covers accidents while you are working. Products and completed operations covers damage that shows up after you leave, such as a fitting that fails weeks later. Personal and advertising injury covers claims such as defamation in an advertisement. Medical payments covers small injury bills without a lawsuit. Each part can carry its own limit.

What it usually does not cover

Most disputes with insurers come from exclusions the owner never read. These are the ones that catch home service businesses most often.

• Your own work: the cost to repair or replace the work you did is usually excluded, even when the damage it caused to other property is covered.
• Care, custody or control: property you are working on or holding, such as a customer's appliance on your bench or a furnace you have taken apart, may be excluded unless you add an endorsement or inland marine coverage.
• Employee injuries: these belong to workers' compensation and employer's liability, not GL.
• Vehicles: accidents involving autos you own, rent or use belong to a commercial auto policy.
• Pollution and mold: many contractor policies exclude them, which matters for water damage, HVAC drain lines, chemicals and pesticide work.
• Subcontractor exclusions or conditions: some policies exclude claims from uninsured subs or require you to collect their certificates.
• Residential or classification limits: some carriers restrict roofing above a certain height, new residential construction or work outside the classes on your declarations page.

Why the exposure is bigger than it looks

Home service work happens inside occupied homes, around gas, water and electricity. The US Fire Administration estimates there were 344,600 residential building fires in 2023, with 2,890 deaths, 10,400 injuries and about $11.27 billion in losses^[4]. Water is just as common: from 2018 to 2022, water damage and freezing caused claims on 1.6% of insured homes each year, second only to wind and hail^[5].

When a homeowner's insurer pays for a flooded kitchen and finds that a contractor's fitting failed, it can pursue that contractor to recover what it paid. This is subrogation, and it is the way many small contractors first meet their GL insurer. The claim arrives months later, from a company rather than the customer, and it is defended or paid under completed operations coverage.

Most home service firms are small

Across the trades this site covers, more than half of employer establishments have fewer than five employees^[3]. A small firm has no cushion for a five-figure claim, which is why commercial clients and property managers insist on proof of coverage before they hand out work.

Limits, and what clients and states require

A declarations page lists several numbers. The each-occurrence limit caps what the insurer pays for one incident. The general aggregate caps everything in the policy year, and the products and completed operations aggregate is a separate cap for claims from finished work. Defense costs usually sit outside the limits on a standard form, but check, because some policies erode the limit with legal fees.

Minimums come from two places. Some states require them for contractor registration: Washington requires either $200,000 public liability and $50,000 property damage, or a $250,000 combined single limit, alongside a registration bond^[2]. Contracts set the rest, and commercial clients and property managers often require higher limits than the state minimum, an umbrella, or specific endorsements.

How to read a GL quote in six steps

1. 01

   Match the classifications to your work

   Compare the class codes on the quote with what you actually do. Adding duct cleaning, generator installs or roof work without telling the insurer can leave those jobs uncovered.

2. 02

   Read the exclusion endorsements

   List every endorsement form number and read each one. Ask the agent to explain any that mention subcontractors, residential work, height, mold or pollution.

3. 03

   Check completed operations

   Make sure completed operations are included and not limited to a short period after the job ends.

4. 04

   Look at the deductible or self-insured retention

   A retention means you pay the first part of every claim, including defense, before the insurer steps in.

5. 05

   Confirm contract endorsements

   Check that additional insured, primary and non-contributory, and waiver of subrogation endorsements are available, preferably on a blanket basis.

6. 06

   Know how to report a claim

   Write down the claims phone number and the reporting deadline, and tell staff that every damage incident gets reported to the office the same day.

Occurrence, claims-made and other fine print

Most contractor GL policies are written on an occurrence basis: the policy in force when the injury or damage happened responds, even if the claim arrives years later. Claims-made policies respond only if the claim is made while the policy is active, so switching carriers or closing the business can leave a gap unless you buy prior acts or tail coverage. Ask which form you are buying and keep old policies on file.

• Keep every old declarations page. Completed operations claims can reach back to work done under a policy you cancelled long ago.
• Check the definition of insured. Make sure it includes your employees, your LLC members and any second entity you trade under.
• Look for a contractual liability limitation endorsement. It can remove coverage for liability you accept in a contract, which property managers' contracts often require.
• Ask how the policy treats work done by subcontractors and whether you must hold their certificates to stay covered.
• Confirm the territory and any limits on work in other states if you send crews across a border.

Example: a condensate leak, six weeks later

Example (fictional): an HVAC company replaces an attic air handler in October. In late November the homeowner finds a stained ceiling and a damp bedroom carpet; the new condensate line had slipped off its fitting. The homeowner's insurer pays for drywall, paint and flooring, then sends the HVAC company a subrogation letter asking for repayment.

The owner reports the letter to his GL insurer the same day. Completed operations coverage responds to the ceiling and carpet damage, minus his deductible. The cost of sending a technician back to refit the drain line and add a float switch is his own, because the policy excludes the cost of fixing his own work. His takeaway is to put a drain safety switch on every attic install and to photograph the finished drain connection on every job.

Talking about coverage with customers

Customers rarely ask about exclusions; they ask whether you are insured. Answer plainly and offer proof: 'Yes, we carry general liability and workers' compensation. I can send a certificate today.' Do not promise that your insurance will pay for any problem, and do not describe coverage you have not confirmed. If a customer reports damage, take photos, write down what they say, and let the insurer decide coverage. Our guides to insurance types for service contractors and certificates of insurance cover the rest of the paperwork.