Contract Requirements vs. Your Insurance Policy: What Contractors Miss (Until There’s a Claim)

In construction, you can build a job perfectly… and still get crushed by paperwork.

One of the most expensive mistakes we see contractors make doesn’t happen in the field.
It happens in the contract.

  • ✅ The contract requires one thing

  • ❌ The insurance policy doesn’t actually provide it

Most contractors don’t find out until there’s a claim. And when that happens, you don’t get judged by what you meant. You get judged by what’s written—both in your contract and in your insurance policy.

That’s where things get ugly.

Below is where construction contracts routinely overreach, where contractors typically fall short, and what to do before you sign.

How Owners and GCs Commonly Word Insurance Requirements

Most owner and GC contracts include aggressive boilerplate language that sounds like this:

  • “Contractor shall name Owner and GC as Additional Insureds for ongoing and completed operations.”

  • “Coverage shall be primary and non-contributory.”

  • “Waiver of subrogation required.”

  • “Provide 30/45/60 days’ notice of cancellation.”

  • “Insurance shall cover all liability arising out of the project.”

  • “Contractor shall indemnify Owner/GC for claims relating to the work.”

To the average contractor, it reads like a checklist.

To an attorney, it reads like risk transfer.

To an insurance carrier, it reads like:
“Let’s see if your policy actually agrees.”

And that’s usually where the disconnect starts.

Where Contractors Usually Fall Short (Until There’s a Claim)

1) Additional Insured: The COI Is Not the Coverage

Most contractors assume that if the certificate of insurance says “Additional Insured,” they’re covered.

But in a claim, the certificate does not control coverage.
The endorsement form does.

In construction, there are two very different buckets of Additional Insured coverage:

Ongoing Operations
Coverage while you’re actively working on the job.

Completed Operations
Coverage after you’re done—when many of the biggest claims show up:

  • water intrusion

  • faulty installation

  • structural issues

  • electrical or fire losses

  • slip-and-fall claims tied to completed work

Here’s the problem:
A lot of contractors only carry Additional Insured coverage for ongoing operations.

So when a claim comes in after the job is complete, the GC or Owner expects protection—and the carrier says:

“That endorsement doesn’t apply.”

Now you’re the contractor trying to explain why the GC isn’t covered… during a claim… with attorneys involved.

Real fix:
Confirm that your Additional Insured endorsement includes completed operations, and confirm the actual endorsement form number on your policy. Never rely on certificate language alone.

2) Primary & Non-Contributory: Everyone Requires It—Not Every Policy Delivers It

This phrase shows up in almost every construction contract now:

“Contractor’s insurance shall be primary and non-contributory.”

Translation: your policy responds first, without tapping the GC or Owner’s insurance.

But many policies only provide this:

  • if the correct endorsement is attached

  • only when required by written contract

  • or not at all, depending on the carrier or program

If it’s not properly endorsed, here’s what happens in the real world:

  • a claim hits

  • your carrier tries to share the loss

  • the GC’s carrier pushes back

  • everyone argues

  • the claim drags on

  • relationships get damaged

Meanwhile, your loss history and MOD factor take the hit.

Real fix:
Verify that primary and non-contributory language exists by endorsement, or that your policy clearly triggers it when required by written contract.

3) Waiver of Subrogation: Often Assumed, Rarely Confirmed

Waiver of subrogation is another common contract requirement. It means your carrier won’t come back after the GC or Owner to recover claim costs.

Here’s what contractors often don’t realize:

  • General Liability waivers usually apply only if agreed to in writing before the loss

  • Workers’ Comp waivers typically require a specific endorsement

  • Some policies limit waivers or apply them inconsistently by coverage line

Many contractors assume waiver is handled because their certificate “shows it.”

Then a loss happens—and the carrier says:

“We didn’t waive subrogation on that policy.”

Now the GC thinks they were protected. Your contract says they were. Your policy says they weren’t.

Real fix:
Confirm waiver of subrogation endorsements exist in the actual policy, and that they apply to the correct lines—usually General Liability and Workers’ Comp, and sometimes Auto.

4) Notice of Cancellation: Contract Language vs. Reality

This is where construction contracts completely disconnect from how insurance actually works.

Contracts routinely demand:

  • 30, 45, or 60 days’ notice

  • notice for cancellation, nonrenewal, or material change

  • direct notice to the Owner or GC

Most carriers will not provide that.

Most states only require notice to you, the named insured—not the entire job chain.

Certificates often say “will endeavor to notify,” but that language has no teeth and creates no obligation.

So if a policy cancels and the Owner asks:

“Why weren’t we notified?”

The exposure lands on you. Not your broker. Not the carrier.

Real fix:
Treat cancellation notice requirements as a contract negotiation issue, not an insurance checkbox.

The Bigger Issue Contractors Miss

Here’s the hard truth:

Your contract can create liability your insurance policy won’t cover.

A contract can require you to:

  • indemnify others for their negligence

  • assume responsibility beyond your scope

  • agree to coverage that doesn’t exist

  • promise notice and endorsements carriers won’t grant

  • transfer risk that simply isn’t insurable

And when it collapses, it collapses during a claim—when you have zero leverage.

What Contractors (and GCs) Should Do Before Signing

This isn’t complicated—but it has to happen early.

1) Send Insurance Requirements to Your Broker Before Signing

Treat insurance requirements like plans and specs.

Review them before you mobilize—not the night before a COI is due.

Once the job has started, your options shrink fast—and costs go up.

2) Ask for a Gap Checklist

This is one of the most effective tools a contractor can use.

A proper checklist should clearly show:

  • what the contract requires

  • what your policy actually provides

  • where gaps exist

  • whether endorsements are available

  • what the recommendation is

This turns confusion into a plan—and protects you when someone later says, “You agreed to this.”

3) Negotiate Contract Language (Yes, Contractors Can Negotiate)

Most insurance language in construction contracts is boilerplate. It’s often written by attorneys focused on transferring risk—not whether it’s realistic or insurable.

Reasonable changes are often accepted, especially when:

  • the requirement isn’t available in today’s market

  • the scope doesn’t justify it

  • the obligation is uninsurable

  • the language is overly broad

Even small revisions can dramatically reduce exposure.

One-Line Takeaway

Before you sign, make sure your insurance policy can actually back up what your contract demands.

Because when there’s a claim, the job isn’t evaluated by how well it was built.
It’s evaluated by what’s written.