For contractors working in Arizona, insurance is more than just a safety net—it’s a necessity. Between client expectations, state licensing requirements, and the inherent risks of construction projects, having the right coverage protects your business from costly lawsuits and unexpected expenses. But with so many policies available, many contractors find themselves asking the same question: Do I need general liability insurance, professional liability insurance, or both?
Understanding the difference between the two is critical because each type of policy covers distinct risks. Here’s what Arizona contractors need to know about general liability versus professional liability insurance—and how to decide which coverage fits your business.
What Is General Liability Insurance?
General liability insurance, sometimes called “business liability” or “commercial general liability,” protects contractors from third-party claims involving bodily injury, property damage, or personal injury. If a client, visitor, or bystander is injured on your job site, or if you accidentally damage someone’s property while working, this policy covers legal fees, medical bills, and repair costs.
For example, imagine you’re a general contractor working on a residential remodel in Phoenix. A homeowner’s friend trips over your ladder and suffers a serious injury. Or perhaps your crew accidentally breaks a client’s expensive tile flooring during demolition. In both scenarios, general liability insurance would step in to cover the resulting claims.
In Arizona, general liability coverage is not always legally required for licensing, but many clients, lenders, and project owners insist on it before awarding contracts. Having a policy can also help you qualify for larger projects because it signals financial responsibility and professionalism.
What Is Professional Liability Insurance?
Professional liability insurance—sometimes called “errors and omissions” (E&O) insurance—covers claims that arise from mistakes in your work, bad advice, or failure to meet contractual obligations. While general liability covers physical damages and injuries, professional liability addresses financial losses caused by your professional services.
Picture this: you’re a design-build contractor in Scottsdale, and your plans for a commercial renovation omit a critical load-bearing wall. The mistake delays the project and costs the client thousands in rework. Even though no one was injured and no property was physically damaged, the client sues for negligence. General liability wouldn’t apply here, but professional liability would.
Professional liability insurance is especially important for contractors who provide design, consulting, or project management services in addition to physical construction work.
Which Coverage Do Arizona Contractors Actually Need?
The truth is that many contractors benefit from having both types of coverage because they address different risks. General liability protects you against accidents and injuries on the job site, while professional liability protects you from claims tied to your professional expertise.
- When general liability is a must: If you interact with clients or the public, work at job sites, or use subcontractors, general liability is essential. Nearly every Arizona contractor, from landscapers in Tucson to electricians in Flagstaff, faces the possibility of an accident causing property damage or bodily harm.
- When professional liability is a must: If you provide designs, estimates, inspections, or advice, or if clients rely heavily on your expertise, professional liability is equally critical. This is especially true for architects, engineers, construction managers, and design-build firms.
Skipping either coverage leaves a gap. For instance, a subcontractor who only has general liability would be unprotected if a client accused them of using the wrong materials and causing project delays. Likewise, a contractor who only has professional liability would be vulnerable if a third-party injury occurred on their site.
How Much Does It Cost?
In 2025, general liability insurance for Arizona contractors typically costs between $600 and $1,800 per year for small businesses, depending on your trade, number of employees, and coverage limits. Professional liability insurance averages $900 to $2,500 annually, with higher-risk specialties paying more.
Bundling both policies through the same insurer often reduces the overall premium. Some carriers even offer combined “contractor’s liability” packages tailored to small and mid-sized firms.
General liability and professional liability insurance serve different but equally important purposes. One covers accidents and injuries; the other covers mistakes and oversights. For Arizona contractors, carrying both can mean the difference between a minor setback and a business-ending lawsuit.
Before you choose, consider the scope of your work. Do you primarily perform hands-on labor at job sites? General liability is non-negotiable. Do you also design, consult, or provide specialized expertise? Professional liability is just as critical.
Consulting with an insurance broker who understands the construction industry in Arizona can help you identify the right mix of coverage. When you protect your business from both physical and professional risks, you’ll be able to take on projects with confidence—knowing you’re covered no matter what challenges arise.