CSLB Contractor's Law & Business Practice Exam

Which is a common type of contractor's liability insurance?

1. Workers' compensation insurance

2. Vehicle insurance

3. General liability insurance

4. Health insurance

The correct answer is: General liability insurance

General liability insurance is a common type of contractor's liability insurance because it protects contractors from financial loss due to claims of property damage, bodily injury, or personal injury that can arise from their business operations. This type of insurance coverage is essential for contractors as it helps them manage risks associated with third-party claims, which can be a significant financial burden. Workers' compensation insurance is designed to cover employees who are injured on the job but is not specifically a liability insurance for the contractor's actions towards others. Vehicle insurance pertains to the vehicles owned and used by the business, which is important but not directly linked to general liability. Health insurance covers medical expenses for employees but does not provide liability protection for the contractor’s business activities. This distinction highlights why general liability insurance stands out as a fundamental protection for contractors in their operations.