Every construction project runs on a plan. There’s a schedule, a budget, a set of drawings, and a sequence everyone follows to get from dirt to done. Your insurance should work the same way.
Too often, coverage gets treated as a box to check at bid time and forgotten until something goes wrong.
- A storm hits a half-framed structure.
- A sub’s employee gets hurt on-site.
- A client claims faulty work six months after closeout.
That’s when contractors find out whether their insurance was built to fit the job or just pulled off the shelf.
Whether you’re a general contractor, subcontractor, or developer in Alabama, this checklist walks through the coverage that matters at each phase of a project, so nothing falls through the cracks.
Phase 1: Before You Bid
The best time to sort out your insurance is before you sign anything. Contracts often spell out exactly what coverage you need, how much, and who needs to be named on your policies.
- Review the contract’s insurance requirements. Look for minimum limits, additional insured requirements, waiver of subrogation language, and primary/non-contributory wording.
- Confirm your general liability coverage fits the job. Commercial general liability (CGL) covers third-party bodily injury and property damage. Make sure your limits meet or exceed the contract’s requirements.
- Check your workers’ compensation status. In Alabama, most employers with 5 or more employees are required to carry workers’ comp insurance. Even if you’re under that threshold, many project owners and GCs require it anyway.
- Line up your certificates of insurance (COIs). Know how quickly your agent can turn around a COI. Delays here can delay your start date.
- Ask about bonding needs. Many public and larger private projects require bid, performance, and payment bonds. Bonding isn’t insurance, but it’s part of the same conversation.
Phase 2: Groundbreaking and Construction
Once work starts, your exposure grows every day. Materials arrive, crews multiply, equipment moves on and off site, and the structure itself becomes something worth protecting.
- Secure builder’s risk insurance. Builder’s risk insurance covers the structure under construction, along with materials and supplies on site, in transit, or in storage, against covered losses like fire, wind, theft, and vandalism. Clarify early whether the owner or contractor is responsible for carrying it.
- Cover your tools and equipment. Inland marine coverage (sometimes called contractor’s equipment or tools coverage) protects the gear that moves from job to job. Standard property policies often don’t follow your equipment off your premises.
- Review your commercial auto policy. Trucks hauling crews, materials, and trailers need business auto coverage. Personal auto policies typically won’t respond to business use.
- Verify your subcontractors’ coverage. Collect current COIs from every sub before they set foot on site. An uninsured sub can leave you holding the bag for their injuries or damages.
- Add umbrella or excess liability. Large claims can quickly blow past your primary limits. An umbrella policy adds a layer of protection on top of your general liability, auto, and employer’s liability coverage.
- Keep safety programs documented. Good safety practices reduce claims, and documented programs can help your insurability over time.
Phase 3: Project Completion and Closeout
Finishing the job doesn’t end your risk. Some of the most expensive claims show up after the final walkthrough.
- Confirm completed operations coverage. This part of your general liability policy responds to claims tied to your finished work, like a structural issue that causes damage after you’ve left the job.
- Consider professional liability. If your firm handles design-build work, project management, or any design input, a professional liability policy can address errors and omissions that a CGL policy may exclude.
- Close out the builder’s risk properly. Know when coverage ends (often at occupancy or acceptance) and make sure there’s no gap before the owner’s permanent property coverage takes over.
- File your paperwork. Keep copies of contracts, COIs, change orders, and inspection records. If a claim surfaces down the road, documentation is your best friend.
Phase 4: Between Projects
The off-season, or any gap between jobs, is the perfect time to step back and look at the big picture.
- Schedule an annual coverage review. Your business changes. New services, more employees, bigger projects, and new equipment can all mean your coverage needs to change, too.
- Audit your workers’ comp classifications and payroll. Misclassified employees or outdated payroll estimates can lead to surprises at audit time.
- Look at cyber liability. Contractors store bid documents, client data, and banking information. Payment fraud and phishing scams are real risks for construction businesses of every size.
- Talk to your agent about growth. If you’re planning to take on larger projects, enter new markets, or bid on public work, your insurance program should be ready before the opportunity shows up.
Why the Right Agent Matters
Construction insurance isn’t one-size-fits-all. A residential remodeler, a commercial GC, and a specialty electrical sub face very different risks, and their coverage should reflect that.
At Palomar Insurance, we’ve been insuring contractors, builders, and tradespeople for decades. As a local, family-owned agency founded in 1954, we know the construction landscape across Alabama and the Southeast, from permitting to project timelines. With broad carrier relationships, our team can shop the market to build a program around how your business actually works, not the other way around.
And when you need a certificate by tomorrow morning or have a question mid-project, you won’t get lost in a call center. You’ll get a real person who knows your account.
Ready to make sure your next project is covered from start to finish? Learn more about our construction insurance solutions or contact our team at (800) 489-0105.
Frequently Asked Questions
What insurance does a contractor need in Alabama?
Most contractors carry commercial general liability, workers’ compensation (required for most Alabama employers with five or more employees), commercial auto, and inland marine coverage for tools and equipment. Depending on the project, builder’s risk, umbrella liability, professional liability, and bonds may also be needed.
What does builder’s risk insurance cover?
Builder’s risk insurance covers a building while it’s under construction, including materials and supplies on site, in transit, or in storage, against covered losses such as fire, wind, theft, and vandalism. Coverage details vary by policy.
Who pays for builder’s risk insurance, the owner or the contractor?
It depends on the contract. Either party can carry it, so it’s important to confirm responsibility before work begins to avoid gaps or duplicate coverage.
How often should contractors review their insurance?
At least once a year, and any time your business changes significantly, such as adding employees, buying equipment, or taking on larger or different types of projects.
