When is a contractor required to have general liability insurance?

A contractor is required to have general liability insurance before starting any work as a necessary precaution to protect against potential claims of bodily injury or property damage that could arise during the course of construction activities. This insurance serves as a financial safety net, covering legal costs and compensation payouts, which is essential in mitigating risks associated with construction.

It is critical for contractors to secure this coverage prior to commencing any project because, without it, they expose themselves and their businesses to significant financial liabilities. This not only safeguards their operations but also builds trust with clients, as having insurance is often viewed as a sign of professionalism and credibility.

While obtaining a license or being requested by a client can sometimes inform the insurance requirement scenario, they do not serve as primary catalysts for needing insurance. The urgency to have insurance in place emphasizes the contractor's readiness to handle accidents or mishaps that could occur once work begins. Thus, having general liability insurance in effect before starting any work establishes a solid foundation for operating responsibly and legally within the industry.