General Liability Insurance

Building contractors are required by law to carry general liability insurance. Coverage requirements vary according to contractor license categories, however new or renewed contractor licenses cannot be issued without proof of basic coverage. This coverage is to include products and completed operations coverage as well as bodily injury losses or property damage caused by the contractor as a result of his/her work.

There are two types of policies by which general liability can be written: occurrence and claims-made policies. Occurrence policies provide coverage for liability that occurs during the policy period. Certain insurance policies can be issued to provide coverage only when the first case of property damage or bodily injury occurs during the policy period. Current Oregon law, for example, allows a claim to be made for up to 10 years following the completion of a project. Claims-made policies allow for liability coverage for claims made while the policy is in force. Often this type of coverage will not cover claims made before the established retroactive date” if the claims are due to occurrences that were before the retroactive date. Additionally, in claims-made policies, contractors can opt to purchase what is sometimes referred to as tail coverage”. This is also known as an extended reporting” option and can cover claims reported after the policy is canceled or replaced.

The cost of liability insurance for employers has increased recently, the main causes cited by insurance companies are: increased claims and losses as a result of the introduction of new building materials and the damage incurred by them, an increases in the litigation of employers because of performance issues, and lower investment returns.

There are many insurance providers carrying the required coverage for contractors. Additionally it is important to know that risk retention and purchasing groups provide liability coverage to their members. These groups are formed under federal mandate, require membership fees, and may be exempt from certain state regulations. Currently in Oregon, there are 15 active risk retention groups providing liability coverage for contractors.

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