What is Contractors' Public Liability?

Contractors’ public liability refers to the liability that a contractor carries when working on projects located at sites owned by clients. The extent of the liability will vary, based on the type of tasks involved in the project. Typically, the contractors' liability will involve any damage that is sustained as the result of interacting with employees of the client, or damage that takes place to the property as the direct result of miscalculation, omissions, or actions taken by the contractor. In order to provide some type of protection, many contractors carry insurance coverage that is known as contractors’ public liability insurance.

Managing contractors’ public liability is often very important to the task of securing clients. In fact, many companies will not work with a contractor that does not carry this type of insurance protection. The potential for someone to be injured on the work site, or for damage to be done to the land or buildings located at the site, is too great to risk working with anyone without adequate coverage. For high-profile projects, it is not unusual for clients to require proof of the insurance from the underwriter, with that documentation not only confirming the existence of the coverage, but also the amount.

In addition, some local jurisdictions may require contractors to carry this type of liability coverage in order to maintain their licenses or certification to work in the area. Significant fines may be invoked if a contractor is found to be without the coverage, either due to allowing it to lapse or failing to secure it at all. Along with the fines, the issuing agency may have the right to revoke a contractor’s license when he or she does not maintain contractors’ public liability insurance, requiring the individual to secure the coverage then go through the licensing process all over again.

As with most types of public liability insurance, coverage for contractors’ public liability can be quite costly. The benefit is that having the coverage can pave the way for a great deal of business that would be impossible to obtain otherwise. In addition, one incident of needing to file a claim on the coverage will often more than pay for the cost of the premiums for a number of years. Without some type of contractors’ public liability coverage, the chances of being successful within this field are reduced, and the potential for sustaining a crippling financial loss is greatly enhanced.