A general contractor in Alabama must maintain minimum general liability insurance. What is the required minimum coverage amount?
Correct Answer
B) $300,000
Alabama requires general contractors to maintain minimum general liability insurance of $300,000.
Why This Is the Correct Answer
Alabama requires general contractors (Class A) to maintain minimum general liability insurance of $300,000. This threshold reflects the higher risk and larger project scope associated with general contracting work and must be maintained for license compliance.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 is significantly below the required minimum for Alabama general contractors. This amount would not meet the state's insurance threshold and would leave the contractor out of compliance.
Option C: $50,000
$50,000 is far below any Alabama contractor insurance minimum. This amount is inadequate for the scope of general contracting work and does not meet Alabama licensing requirements.
Option D: $500,000
$500,000 exceeds the required minimum for Alabama general contractors. While carrying more insurance than the minimum is permissible, $500,000 is not the mandated minimum threshold.
Memory Technique
Associate '300K' with 'general contractor' by thinking: General contractors handle big projects, so $300,000 — the bigger number — fits. Class B is the smaller classification at $250,000. Big contractor = bigger number.
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