Three Pitfalls Between the Bid and the Build
Why your General Liability policy needs to match the contract, and not the other way around
The most expensive mistakes contractors make on a new project are almost never made on the job site. They're made at the desk, before the first nail is driven in the gap between the contract being signed and the insurance being verified.
By the time the general contractor's risk management team calls to reject your Certificate of Insurance, it usually takes somewhere between Day 3 and Day 30 from when the project starts. You have already mobilized crews, ordered materials, and started the work. Now you're scrambling because the GC is retaining payment. And the cost of fixing it after the fact is always higher than the cost of preventing it in the first place.
The three pitfalls covered in the article:
1. The Additional Insured Mismatch: Contracts increasingly specify how the additional insured status must be granted: specific endorsement forms (CG 20 10 ongoing operations, CG 20 37 completed operations), primary and non-contributory wording, waivers of subrogation. Many contractors carry "blanket" additional insured language that sounds comprehensive but doesn't satisfy the specific contractual ask. COIs get rejected or worse, accepted with status that was never properly endorsed.
2. Limits That Don't Match the Job: The $1M/$2M standard is being outgrown. Public projects, multifamily, hospitals, and schools now routinely require $2M/$4M with umbrella on top. Per-project aggregates. Separate Workers' Comp limits. Contractors' Pollution Liability or Professional Liability as standalone policies. The contractor wins the bid and discovers the umbrella requirement eats the margin.
3. Scope, Class Code, and Exclusion Gaps: Policies are written around a specific class code. Take a job that doesn't match the classification, or one that falls inside policy exclusions (height restrictions, residential exclusions, subcontractor work), and the policy may not cover the claim. The insurance exists, but you are outside the risk tolerance the particular carrier takes.
The fix is the pre-contract review: a 30-minute conversation with your Risk Manager to review the specifications of the contract and insurance requirements line-by-line against the current policy. This will make sure that you are compliant with all the requirements upfront rather than putting the contract at risk.
The piece closes on the mission line and an invitation: "If you have a contract on your desk, we should talk before the next bid goes out."
Engage Insurance Group We are an independent risk management firm built on a simple conviction: that you deserve coverage decisions driven by your needs, not our incentives. This independence changes everything. Learn more at engage-ins.com.