CSLB Law & Business ExamInsurance and LiensEasy
A general liability insurance policy carried by a licensed contractor primarily protects against which type of loss?
- AThe contractor's own vehicle being stolen from a jobsite
- BLost profits due to a delayed material shipment
- CThird-party bodily injury or property damage arising from the contractor's operations
- DEmployee injuries suffered while performing job duties
Show answer & explanationAnswer & explanation
Correct answer: C. Third-party bodily injury or property damage arising from the contractor's operations
General liability (GL) insurance covers claims made by third parties (not employees) for bodily injury or property damage caused by the contractor's work, products, or operations. Employee injuries are covered by workers' compensation, not GL.
Why the other options are wrong
- A. Theft of the contractor's own property is a first-party loss, not covered by GL.
- B. Lost profits are a business/financial risk, not a GL claim.
- D. Employee on-the-job injuries fall under workers' compensation insurance.
General Liability Insurance
Insurance that protects a contractor against claims from third parties for bodily injury or property damage caused by the contractor's work or operations.
- Covers third-party claims, not the contractor's own losses
- Does not cover employee injuries (that's workers' comp)
- Often required by clients, lenders, or for bonding purposes
Memory trick: GL guards the guy next door, not the crew or your own gear.