Here's something most people don't realize about demolition work: your biggest financial risk isn't your equipment breaking down or a project running over budget. It's the moment someone gets hurt on your job site, or when your crew accidentally damages a neighboring property. That's where general liability insurance comes in—and for demolition contractors, it's not just important. It's essentially mandatory.
Whether you're tearing down residential structures or handling commercial demolition projects, general liability (GL) insurance protects you from the claims that could otherwise sink your business. A single lawsuit can easily reach six or seven figures. Your GL policy handles the legal fees, settlements, and judgments so you don't have to pay them out of pocket.
Why Demolition Contractors Need General Liability Insurance
Demolition work is inherently high-risk. You're bringing down structures with heavy machinery, creating dust and debris, and working in environments where things can go wrong quickly. General liability insurance covers the scenarios that keep contractors up at night:
Third-party bodily injury is the first big one. If a passerby, client, or anyone else who's not your employee gets injured because of your demolition work, you're liable. Maybe flying debris hits someone, or a section of wall collapses unexpectedly. Your GL policy covers their medical bills, lost wages, and any legal costs if they sue.
Property damage to third parties is just as critical. Imagine you're demolishing a building and your excavator accidentally damages underground utilities, or vibrations from your work crack the foundation of an adjacent structure. These repairs can cost tens of thousands of dollars. General liability handles those claims.
But here's the practical reality: even if you never file a claim, you still need this coverage because your clients demand it. General contractors, property owners, and municipalities require you to carry GL insurance and provide a Certificate of Insurance (COI) before you can start work. No certificate, no contract. It's that simple.
Standard Coverage Limits and What They Mean
When you look at a general liability policy, you'll see two key numbers: per occurrence and aggregate. Understanding these limits is crucial because they determine how much protection you actually have.
Per occurrence coverage is the maximum your policy will pay for a single incident. The industry standard is $1 million per occurrence. If someone sues you for injuries sustained on your job site and wins a $750,000 judgment, your $1 million per occurrence limit covers it. But if that same incident results in multiple claims totaling $1.5 million, you're personally responsible for the extra $500,000.
The general aggregate is your policy's total limit for all covered claims during the policy period—usually one year. Standard policies offer $2 million aggregate. Once you hit that $2 million threshold from multiple claims throughout the year, you have zero coverage remaining until your policy renews. That's a dangerous position for any active demolition contractor.
The typical starting point for demolition contractors is $1 million per occurrence and $2 million aggregate ($1M/$2M). However, many commercial projects now require higher limits—often $2 million per occurrence and $4 million aggregate ($2M/$4M). Some high-risk projects or large general contractors demand even more, sometimes $5 million in aggregate coverage, especially for demolition work involving hazardous materials or in densely populated areas.
If you work on multiple projects simultaneously, ask your insurance agent about a per-project aggregate endorsement. This modification ensures that your $2 million aggregate applies separately to each project rather than across all your work combined. Without it, a claim on one job could exhaust your coverage and leave your other projects unprotected.
Coverage Specifics for Demolition Operations
General liability for demolition contractors covers more than just injuries and property damage. Your policy typically includes premises liability, which protects you if someone gets hurt simply by being on your work site, even if your crew didn't directly cause the injury. It also covers completed operations—claims that arise after you've finished a job. If a structure you partially demolished collapses weeks later and injures someone, your GL policy responds.
Products and completed operations coverage is particularly important for demolition work. This protects you from claims arising from your finished work. Maybe you demolished a wall and removed load-bearing supports, and six months later the building experiences structural issues. This coverage handles those delayed claims.
Medical payments coverage is a smaller component but valuable. It pays for minor medical expenses (usually $5,000 to $10,000) for injured third parties regardless of fault. If a client trips on your equipment and needs stitches, medical payments can cover that visit without triggering a full liability claim.
Your policy also includes personal and advertising injury coverage. This protects you from non-physical claims like defamation, libel, or copyright infringement. While less common in demolition work, it's included in your standard GL policy.
What general liability doesn't cover is equally important to understand. It won't protect your own employees—that's what workers' compensation insurance is for. It also excludes pollution and hazardous materials claims, which is critical for demolition contractors who may encounter asbestos, lead paint, or other contaminants. You'll need separate pollution liability coverage for those exposures. Professional liability (errors and omissions) and auto accidents involving your vehicles also require separate policies.
Certificates of Insurance and Contractual Requirements
Before you start any demolition project, your client will almost certainly require a Certificate of Insurance (COI). This is a standardized ACORD form that your insurance company issues, documenting your coverage types, limits, policy numbers, and effective dates. It proves you have the insurance you claim to have.
Most contracts also require you to add the hiring party as an additional insured on your GL policy. This means if they get sued because of your work, your insurance policy extends to cover their defense and any settlements. It's a standard requirement that your insurance company can add via endorsement, usually at minimal or no additional cost.
Waiver of subrogation is another common contract requirement. This provision prevents your insurance company from suing the hiring party to recover money they paid out on a claim. Essentially, your insurer waives their right to go after the other party for reimbursement. Like additional insured status, this requires an endorsement on your policy.
Pay attention to the coverage triggers in your contracts. Some specify occurrence-based policies (which cover claims based on when the incident happened), while others may reference claims-made policies. For demolition work, occurrence-based GL coverage is standard and preferred because it covers incidents that occurred during your policy period regardless of when the claim is filed.
How Much Does General Liability Insurance Cost?
For demolition contractors, expect to pay roughly $2,400 to $5,000 annually for a comprehensive general liability policy with $1M/$2M limits. That works out to about $200 to $420 per month. Your actual premium depends on several factors.
Annual revenue is the biggest driver. Insurers typically charge a rate per $1,000 of revenue. A small operation doing $250,000 in annual revenue pays considerably less than a company bringing in $2 million. Your location matters too—insurance costs more in states with higher construction activity and more expensive legal environments.
The types of structures you demolish affect your rates. Residential demolition generally costs less to insure than commercial or industrial work. If you handle hazardous materials abatement alongside demolition, expect higher premiums—or a requirement for separate pollution coverage.
Your claims history has a direct impact on pricing. If you've had multiple liability claims in recent years, insurers view you as higher risk and charge accordingly. Some carriers have even stopped writing coverage for demolition contractors altogether due to the trade's elevated risk profile, which has pushed premiums higher across the industry in 2025-2026.
Getting Started with General Liability Coverage
Start by reviewing your existing contracts to identify the minimum coverage requirements your clients demand. Many contractors discover they need higher limits than they currently carry. Once you know your requirements, gather your business information: annual revenue, number of employees, types of projects you handle, and your claims history for the past five years.
Work with an insurance agent or broker who specializes in contractor coverage—preferably one with demolition experience. They understand the unique exposures of your trade and can access specialty insurance markets that write demolition risks. Many standard carriers won't touch demolition contractors or charge prohibitive rates, so specialized programs often provide better coverage at more competitive prices.
Don't buy general liability in isolation. Most demolition contractors need a complete insurance package including workers' compensation, commercial auto, tools and equipment coverage, and possibly pollution liability. Many insurers offer Business Owner's Policies (BOPs) that bundle general liability with property coverage, though these typically work better for lower-risk contractors. For demolition work, you'll likely need separate, specialized policies tailored to your exposures.
General liability insurance isn't optional for demolition contractors—it's the foundation of your risk management strategy and the key to winning contracts. Make sure your coverage matches both your contractual requirements and your actual risk exposure. The few thousand dollars you spend on adequate GL coverage could save your business from a six-figure disaster.
