Frequently Asked Questions
Yes. PSA assists our contractor clients with Certificates of Insurance and related endorsement requirements. When a contract requires Additional Insured status, Waivers of Subrogation, Primary and Non-Contributory wording, or other coverage provisions, those requirements must be supported by the applicable insurance policies and endorsements before they can be properly evidenced.
Yes. PSA Insurance Services assists contractors in reviewing the insurance requirements outlined in construction contracts, including General Liability limits, Additional Insured endorsements, Waivers of Subrogation, Primary and Non-Contributory wording, and Umbrella or Excess Liability requirements.
Our experienced commercial insurance team can help identify insurance requirements, review available policy coverage and endorsements, and coordinate with insurance carriers to obtain required documentation when available.
While PSA can assist with reviewing insurance provisions, we do not provide legal advice, interpret contractual obligations, or guarantee compliance with construction contracts. Contractors should consult qualified legal counsel regarding contractual language and obligations. All insurance coverage is subject to the terms, conditions, limitations, and exclusions of the applicable policies.
Learn more about our Contractors Insurance Services.
Our experienced commercial insurance team can help identify insurance requirements, review available policy coverage and endorsements, and coordinate with insurance carriers to obtain required documentation when available.
While PSA can assist with reviewing insurance provisions, we do not provide legal advice, interpret contractual obligations, or guarantee compliance with construction contracts. Contractors should consult qualified legal counsel regarding contractual language and obligations. All insurance coverage is subject to the terms, conditions, limitations, and exclusions of the applicable policies.
Learn more about our Contractors Insurance Services.
Contractors typically need several types of insurance depending on their trade, business operations, employees, equipment, and contractual requirements. Common coverages include Commercial General Liability, Workers' Compensation, Commercial Auto, Inland Marine (Tools and Equipment), Builders Risk, and Umbrella or Excess Liability insurance.
In California, the Contractors State License Board (CSLB) requires licensed contractors to maintain a $25,000 contractor license bond. Workers' Compensation insurance is generally required for contractors with employees and for certain license classifications even when no employees are present. California-licensed LLC contractors must also maintain specified liability insurance and additional bonding.
Although General Liability insurance is not universally required for all California contractors, it is frequently required by project owners, general contractors, and construction contracts.
PSA Insurance Services specializes in contractor insurance, helping construction businesses obtain coverage tailored to their operations and contractual requirements.
Learn more about our Contractors Insurance Services.
In California, the Contractors State License Board (CSLB) requires licensed contractors to maintain a $25,000 contractor license bond. Workers' Compensation insurance is generally required for contractors with employees and for certain license classifications even when no employees are present. California-licensed LLC contractors must also maintain specified liability insurance and additional bonding.
Although General Liability insurance is not universally required for all California contractors, it is frequently required by project owners, general contractors, and construction contracts.
PSA Insurance Services specializes in contractor insurance, helping construction businesses obtain coverage tailored to their operations and contractual requirements.
Learn more about our Contractors Insurance Services.
The “Your Work” exclusion in a Commercial General Liability (CGL) policy generally excludes coverage for property damage to the insured contractor’s own completed work when the damage arises out of that work. CGL insurance is designed to cover certain third-party bodily injury and property damage claims, not to serve as a warranty or guarantee of a contractor’s workmanship.
For example, if a plumbing contractor improperly installs a pipe that later leaks, the cost to repair or replace the defective plumbing work itself may be excluded. However, resulting water damage to other parts of the building may be covered, subject to the policy’s terms, conditions, and exclusions.
Under many standard CGL policies, the “Your Work” exclusion includes an exception for work performed by subcontractors on the insured’s behalf. However, this exception may be modified or eliminated by policy endorsements.
Contractors should carefully review their General Liability policies to understand how the “Your Work” exclusion and any applicable endorsements may affect coverage for construction defect and completed operations claims.
For example, if a plumbing contractor improperly installs a pipe that later leaks, the cost to repair or replace the defective plumbing work itself may be excluded. However, resulting water damage to other parts of the building may be covered, subject to the policy’s terms, conditions, and exclusions.
Under many standard CGL policies, the “Your Work” exclusion includes an exception for work performed by subcontractors on the insured’s behalf. However, this exception may be modified or eliminated by policy endorsements.
Contractors should carefully review their General Liability policies to understand how the “Your Work” exclusion and any applicable endorsements may affect coverage for construction defect and completed operations claims.
Contractors face significant liability exposures that can result in costly lawsuits, serious bodily injury claims, or substantial property damage. A single major accident could exceed the limits of a standard general liability or commercial auto insurance policy.
Umbrella or excess liability insurance provides an additional layer of financial protection by increasing the available liability limits above qualifying underlying policies, subject to policy terms, conditions, and exclusions.
Many project owners, general contractors, and developers also require higher liability limits as part of their contractual insurance requirements.
At PSA Insurance Services, we help contractors evaluate their liability exposures, understand contractual insurance requirements, and secure appropriate excess or umbrella liability coverage to better protect their businesses and financial assets.
Umbrella or excess liability insurance provides an additional layer of financial protection by increasing the available liability limits above qualifying underlying policies, subject to policy terms, conditions, and exclusions.
Many project owners, general contractors, and developers also require higher liability limits as part of their contractual insurance requirements.
At PSA Insurance Services, we help contractors evaluate their liability exposures, understand contractual insurance requirements, and secure appropriate excess or umbrella liability coverage to better protect their businesses and financial assets.
A business listed as “Not Rated” or having “No EMR” means it has not been assigned an Experience Modification Rate by the applicable Workers’ Compensation rating organization. This typically occurs when a business is new, has insufficient Workers’ Compensation premium or exposure history, or does not meet the eligibility requirements for experience rating.
An Experience Modification Rate (EMR) compares a business's historical Workers’ Compensation losses to expected losses for similar businesses. An EMR of 1.00 represents the rating benchmark, while a lower or higher EMR generally results in a premium credit or debit.
Being “Not Rated” does not mean a business has a poor safety record or unfavorable claims history. It simply means the business does not currently qualify for an experience modification rating.
For California businesses, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) establishes experience rating eligibility and calculates experience modifications for qualifying employers.
An Experience Modification Rate (EMR) compares a business's historical Workers’ Compensation losses to expected losses for similar businesses. An EMR of 1.00 represents the rating benchmark, while a lower or higher EMR generally results in a premium credit or debit.
Being “Not Rated” does not mean a business has a poor safety record or unfavorable claims history. It simply means the business does not currently qualify for an experience modification rating.
For California businesses, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) establishes experience rating eligibility and calculates experience modifications for qualifying employers.
Claims should be reported promptly to the appropriate insurance company using the reporting instructions provided with the policy. Policyholders should preserve relevant documents, photographs, correspondence, and other evidence. Depending on the policy, notice requirements and reporting deadlines may affect coverage. PSA Insurance Services can assist clients with identifying the appropriate insurance company and reporting procedures; however, the insurance company is responsible for investigating claims and making coverage determinations.
An independent commercial insurance broker can help businesses evaluate coverage options from multiple insurance carriers rather than relying on a single insurance company. PSA Insurance Services specializes in commercial insurance and works with standard and specialty insurance markets to help businesses obtain coverage suited to their operations. Our team also assists with policy servicing, Certificates of Insurance, renewals, and insurance-related questions throughout the policy term.
Contact your insurance broker immediately to determine the reason for cancellation and the effective date. Notices may be issued for nonpayment, underwriting concerns, or other reasons permitted by law and the policy. If cancellation is due to nonpayment, any available reinstatement or payment options should be addressed promptly. Coverage should never be assumed to continue beyond the stated cancellation date without confirmation from the insurance company.
Yes. Depending on the insurance carrier's rating rules and policy terms, payments to subcontractors may be included in the premium calculation. The treatment of subcontractor costs may depend on the work performed, insurance documentation, and applicable underwriting guidelines. Contractors should maintain accurate subcontractor payment records and Certificates of Insurance to support premium audits.
Many Commercial General Liability policies are initially rated using estimated annual sales, payroll, or subcontractor costs. At the end of the policy period, the insurance company may conduct an audit to determine actual exposures. If actual exposures exceed the original estimates, additional premium may be due. If exposures are lower, a return premium may be available, subject to minimum premiums and policy provisions.
Coverage for an unlisted driver depends on the Commercial Auto policy's terms, driver exclusions, endorsements, and applicable law. Some insurance carriers require all regular drivers to be disclosed and approved. An undisclosed or specifically excluded driver may create serious coverage issues. Businesses should promptly report new drivers and verify their eligibility before allowing them to operate company vehicles.
Hired and Non-Owned Auto Liability coverage may provide liability protection to a business when employees use their personal vehicles for company business, subject to policy terms and conditions. This coverage generally does not replace the employee's personal auto insurance or automatically cover physical damage to the employee's vehicle. Businesses should review their automobile exposures and verify that appropriate coverage is in place.
Businesses should disclose all vehicles they own, lease, or use in their operations when applying for Commercial Auto insurance. Whether a vehicle must be specifically scheduled depends on the policy's covered-auto symbols, underwriting requirements, and coverage provisions. Failing to disclose vehicles accurately can create significant coverage and underwriting problems. PSA Insurance Services encourages clients to report vehicle acquisitions, disposals, and operational changes promptly.
Failure to cooperate with a required Workers' Compensation premium audit can result in estimated or additional premiums, policy cancellation or nonrenewal, and other consequences permitted by the policy and applicable rules. Insurers generally require payroll records, employee classifications, subcontractor information, and supporting documentation. Businesses should respond promptly to audit requests and maintain accurate records throughout the policy period.
An Experience Modification Rate, commonly called an EMR or experience mod, is a factor used in Workers' Compensation premium calculations for qualifying employers. It reflects an employer's historical loss experience relative to expected losses for similar businesses, using an established rating methodology. An experience modification below 1.00 generally produces a premium credit, while a factor above 1.00 generally produces a debit, before other adjustments.
Workers' Compensation premiums are generally calculated using employee payroll, applicable job classifications, insurance company rates, and experience modification factors when applicable. Premiums may also be affected by underwriting credits, debits, assessments, and other policy-specific adjustments. At the end of the policy term, insurers typically conduct a premium audit to determine actual payroll and classifications, which may result in additional premium or a refund.
Certain California contractor license classifications must maintain Workers' Compensation insurance even if they have no employees, subject to applicable exemptions. Other contractors without employees may qualify to certify their exemption with the Contractors State License Board. Because these requirements can change, contractors should verify the rules applicable to their specific license classification directly with the CSLB.
California generally requires employers with one or more employees to maintain Workers' Compensation insurance, even if employees work part-time. Special requirements also apply to certain licensed contractors, including some who have no employees. Workers' Compensation insurance provides statutory benefits for qualifying work-related injuries and illnesses. Failure to maintain required coverage can result in significant penalties and other consequences.
Contractor insurance may cover residential construction, but coverage depends on the policy's underwriting classifications, endorsements, and exclusions. Some insurers restrict or exclude certain residential operations, including condominium construction, tract housing, new residential developments, or work involving specified types of projects. Contractors should accurately disclose their residential construction operations and verify that their insurance policies are appropriate for the work they perform.
A per-project aggregate endorsement modifies how the General Liability aggregate limit applies to designated construction projects. Rather than having a single general aggregate limit shared across all operations, qualifying projects may have separate general aggregate limits, subject to the endorsement's terms and any applicable overall limitations. Many construction contracts require this endorsement to help preserve available limits for individual projects.
General contractors should establish procedures to verify that subcontractors maintain appropriate insurance coverage before beginning work. This commonly includes obtaining Certificates of Insurance, reviewing required endorsements, and confirming appropriate General Liability and Workers' Compensation coverage. Depending on the project, Additional Insured, Primary and Non-Contributory, and Waiver of Subrogation endorsements may also be required. Insurance requirements should be addressed in written subcontract agreements and reviewed with qualified legal and insurance professionals.
A California contractor license bond is a surety bond intended to provide financial protection to certain parties harmed by specified violations of contractors' license law. It is not liability insurance for the contractor, and the contractor generally must reimburse the surety for valid bond payments. General Liability insurance, by contrast, provides coverage for certain third-party bodily injury and property damage claims, subject to policy terms. California licensed contractors generally must maintain the required CSLB license bond.
Products-Completed Operations coverage is an important component of many Contractors General Liability policies. It can provide protection for covered bodily injury or property damage arising from a contractor's completed work after the project has been finished. For example, a plumbing installation that later causes covered water damage may trigger a completed operations claim. Coverage depends on the policy language, exclusions, and applicable limits.
Commercial General Liability insurance generally does not function as a warranty or guarantee of a contractor's workmanship. The cost of repairing or replacing defective work itself may be excluded. However, certain resulting property damage caused by defective work may be covered depending on the circumstances, applicable exclusions, exceptions, endorsements, and policy language. Contractors should not assume all construction defect claims are covered.
Contractor General Liability insurance premiums vary depending on the contractor's trade, annual revenue, subcontractor costs, claims history, coverage limits, and operations. Higher-risk trades, such as roofing and certain structural construction operations, may have different pricing and underwriting requirements than lower-risk trades. PSA Insurance Services works with insurance carriers and specialty markets to help California contractors obtain competitive quotes based on their specific business operations.
General Liability insurance typically addresses covered third-party bodily injury, property damage, and personal and advertising injury claims. Professional Liability insurance, also called Errors and Omissions insurance, generally addresses certain claims arising from professional services, mistakes, or negligence. Businesses providing consulting, design, engineering, or other professional services may need both policies because General Liability insurance often excludes professional liability exposures.
A Business Owners Policy, commonly called a BOP, combines Commercial Property and General Liability insurance into one policy. It is designed for eligible small and medium-sized businesses and may include Business Income coverage and other optional protections. A BOP can provide a convenient and potentially cost-effective insurance solution, although eligibility and available coverage vary by insurance carrier and business classification.
California does not generally require every business to carry Commercial General Liability insurance. However, landlords, customers, general contractors, and other parties frequently require it through contracts. Certain licensing arrangements may also impose insurance requirements. General Liability insurance typically covers specified third-party bodily injury, property damage, and personal and advertising injury claims, subject to policy terms, conditions, and exclusions.
Business insurance premiums depend on several factors, including industry, annual revenue, payroll, employee count, claims history, coverage limits, and location. A small office-based business may have significantly different insurance costs than a construction contractor or manufacturing operation. PSA Insurance Services works with multiple insurance carriers and specialty markets to help businesses compare available coverage options and pricing.
The insurance a California business needs depends on its operations, employees, vehicles, property, and contractual obligations. Common coverages include General Liability, Commercial Property, Workers' Compensation, Commercial Auto, and Professional Liability insurance. California generally requires employers to carry Workers' Compensation insurance, while other coverage requirements vary by business type and industry. PSA Insurance Services helps California business owners evaluate their exposures and identify insurance solutions appropriate for their operations.
Yes. Contractors and construction businesses are a major focus of PSA Insurance Services. We work with general contractors, artisan and specialty contractors, and other construction-related businesses to arrange General Liability, Workers’ Compensation, Commercial Auto, Inland Marine, Umbrella and Excess Liability, Builders Risk, Bonds, and other commercial insurance coverage.
Hired and Non-Owned Auto coverage can provide liability protection for certain vehicles your business rents, hires, or uses but does not own. Non-Owned Auto exposure can arise when employees use their personal vehicles for company business. This coverage does not necessarily provide physical damage coverage for the vehicle itself.
Possibly. Coverage for business use varies among personal auto policies, and some business activities or vehicle types may not be adequately covered. Contractors who regularly use vehicles for business should review their auto exposure to determine whether Commercial Auto or other business auto coverage is appropriate.
Builders Risk, sometimes called Course of Construction insurance, provides property coverage for a building or structure while it is being constructed or renovated. Depending on the policy, coverage may include the structure, building materials, supplies, and certain property associated with the project. The construction contract should be reviewed to determine which party is responsible for obtaining the coverage.
Contractors commonly use Inland Marine or Contractors Equipment coverage to protect tools and mobile equipment that travel between locations and job sites. Coverage can often include smaller tools on a blanket basis and higher-value equipment on a scheduled basis. Limits, deductibles, theft provisions, and coverage away from scheduled locations should be reviewed carefully.
Yes. Payments to uninsured subcontractors can potentially be included in the exposure used to calculate Workers’ Compensation premium, depending on the circumstances and applicable rules. Maintaining appropriate documentation and verifying subcontractor insurance before work begins can help avoid unexpected issues at audit.
It depends on the policy. Contractor policies can contain conditions, limitations, or exclusions involving subcontracted work. Contractors should also verify that subcontractors maintain appropriate insurance and obtain certificates and required endorsements. Using uninsured or inadequately insured subcontractors can create significant liability and Workers’ Compensation exposures.
A Certificate of Insurance is evidence of insurance, but the certificate itself generally does not amend, extend, or alter the coverage provided by the policy. If a contract requires Additional Insured status, Primary and Non-Contributory coverage, a Waiver of Subrogation, or another specific provision, the actual policy endorsements determine whether that coverage has been provided.
A Waiver of Subrogation generally limits an insurance carrier’s ability to recover certain amounts it has paid from another party when the applicable policy and endorsement provide for the waiver. Contractors are frequently required by contract to provide Waivers of Subrogation on General Liability and Workers’ Compensation policies.
Primary and Non-Contributory wording generally requires your insurance to respond on a primary basis for a covered claim involving an Additional Insured without seeking contribution from the Additional Insured’s own insurance, subject to the terms and conditions of the applicable policies and endorsements. This requirement is common in construction contracts.
An Additional Insured endorsement extends certain liability protection under your policy to another person or organization, such as a general contractor, property owner, developer, or property manager. Construction contracts frequently require contractors to provide Additional Insured coverage for ongoing operations, completed operations, or both. The specific endorsement used can be important because not all Additional Insured endorsements provide the same coverage.
Contractors General Liability insurance can provide coverage for covered claims involving bodily injury, property damage, and certain other liabilities arising from your business operations. Coverage varies by policy, and exclusions can be particularly important for construction risks. Contractors should review not only their limits but also endorsements and exclusions that may restrict coverage for particular operations, projects, subcontracted work, or completed operations.
