Insurance and bonding for contractors are the financial instruments that protect construction projects from loss events and contractor default. GCs need both to meet owner requirements, satisfy state regulations, and manage risk across their subcontractor base. This checklist gives you a structured approach to verifying that your contractors carry adequate insurance and bonding.

Use this alongside our Performance Bond Complete Guide for deeper context on bonding requirements.

Insurance Verification Checklist

Run through these items for every contractor before they start work on your project.

General Liability Insurance

Certificate of insurance (COI) on file and current
Minimum limits meet contract requirements (typically $1M per occurrence, $2M aggregate)
GC named as additional insured on endorsement page (not just certificate description)
Waiver of subrogation endorsement included
Primary and non-contributory language confirmed
Policy effective dates cover the full project duration
Carrier A.M. Best rating is A- VII or better

Workers' Compensation Insurance

Workers' comp COI on file and current
Coverage active in the state where work is performed
Employer's liability limits meet minimum requirements ($500K/$500K/$500K typical)
Waiver of subrogation endorsement included
Classification codes match the contracted work scope
Experience modification rate (EMR) on file and below threshold (typically 1.2 or lower)

Commercial Auto Insurance

Auto COI on file and current
Hired and non-owned auto coverage included
Combined single limit meets requirements (typically $1M)
GC named as additional insured if required

Umbrella/Excess Liability

Umbrella policy COI on file if required by contract
Umbrella limits adequate for project size (typically $2M-$10M)
Umbrella follows form over underlying general liability and auto policies

Professional Liability (If Applicable)

Professional liability COI on file for design-build subs
Per-claim and aggregate limits meet contract requirements
Policy covers the specific professional services being provided

Insurance Limits Reference Table

Use these minimums as starting points. Adjust based on project value and risk management requirements.

Coverage Type	Small Projects (<$1M)	Mid Projects ($1M-$10M)	Large Projects ($10M+)
General liability (per occurrence)	$1,000,000	$1,000,000	$2,000,000
General liability (aggregate)	$2,000,000	$2,000,000	$4,000,000
Workers' comp	Statutory	Statutory	Statutory
Employer's liability	$500,000	$1,000,000	$1,000,000
Auto (combined single limit)	$1,000,000	$1,000,000	$2,000,000
Umbrella	Not required	$2,000,000	$5,000,000-$10,000,000

Bonding Verification Checklist

Run through these items for contractors where bonding is required.

Performance Bond

Bond on file and covering the full subcontract value
Surety company A.M. Best rating is A- VII or better
Bond form is AIA A312 or equivalent industry standard
Bond obligee is correctly identified (your company)
Principal (subcontractor) information is accurate
Bond effective date aligns with subcontract execution
No restrictive conditions that limit your claim rights

Payment Bond

Payment bond on file and covering the full subcontract value
Surety rating matches performance bond surety (A- VII+)
Bond form protects your lower-tier subcontractors and suppliers
Claim filing deadlines are clearly stated
Bond amount equals 100% of subcontract value

Bid Bond (If Applicable)

Bid bond submitted with bid package
Bond amount equals required percentage (typically 5-10%)
Surety is authorized to issue bonds in the project state
Bond references the correct project and bid amount

Documentation and Filing Checklist

Proper documentation protects you during audits and claims.

All certificates and bonds are filed in a centralized system (not scattered across email inboxes)
Expiration dates are tracked with automated alerts at 30, 14, and 7 days
Renewal certificates are required before policy expiration
Additional insured endorsement pages are on file (not just the certificate face page)
Bond originals are stored securely with copies in project files
Non-compliant contractors are flagged and blocked from starting work
AP department is notified of any lapsed coverage to hold payments

Common Verification Mistakes to Avoid

Accepting certificates without endorsement pages. The certificate says "additional insured" in the description box, but the actual endorsement page is missing. Without the endorsement, you may not be covered. Always collect the endorsement page.

Ignoring classification codes on workers' comp. A roofer classified as a general laborer pays lower premiums but leaves you exposed if the classification is wrong. Verify that codes match the actual work being performed.

Not checking surety ratings. A bond from an unrated surety provides unreliable protection. Always verify the A.M. Best rating independently.

Assuming annual policies cover multi-year projects. A 24-month project started mid-policy will see the insurance policy expire before the project ends. Track renewal dates relative to project completion dates.

Use Our Free EMR Calculator

Your EMR affects both your insurance costs and your prequalification success. Our EMR Calculator Tool helps you model how safety improvements translate to premium savings and competitive advantage.

FAQs

What insurance do contractors need for construction projects? At minimum, contractors need general liability, workers' compensation, and commercial auto insurance. Larger projects may require umbrella/excess liability and professional liability (for design-build contractors). Specific limits vary by project size and contract requirements.

When should a GC require bonding from a subcontractor? Require bonds on subcontracts over $500,000, critical-path trades, first-time subcontractors, and any sub with financial uncertainty. Consider bonds on subcontracts between $200,000-$500,000 based on risk assessment.

What is the difference between a certificate of insurance and a bond? A certificate of insurance proves that a contractor carries insurance coverage for loss events (injuries, property damage). A bond is a guarantee that the contractor will perform according to contract terms and pay their subcontractors and suppliers. Both are required on most commercial construction projects.

How do I verify that a contractor's insurance is still active? Request current certificates of insurance with expiration dates. Set up automated expiration tracking. For high-risk situations, contact the carrier directly to confirm active coverage. Some platforms offer real-time carrier verification.

What happens if a contractor's insurance lapses during the project? Stop work and hold payment until valid coverage is restored. Notify the contractor in writing of the compliance failure. If coverage is not restored within a reasonable period (typically 5-10 business days), consider termination for cause under the subcontract.

Can a contractor work without a bond if the contract requires one? No. If the contract requires a bond and the contractor cannot provide one, they have not met a condition precedent to starting work. Allowing unbonded work when the contract requires a bond exposes you to unprotected default risk.

Track Insurance and Bonds in One Platform

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