What is the typical recommended coverage amount for general liability insurance for a small to medium-sized general contracting business?
Correct Answer
C) $1,000,000 per occurrence
Most industry experts recommend at least $1,000,000 per occurrence for general liability coverage. This amount provides adequate protection for most construction risks while remaining cost-effective.
Why This Is the Correct Answer
$1,000,000 per occurrence is the industry standard minimum recommendation for general liability insurance for small to medium-sized general contractors. This coverage amount provides adequate protection against common construction-related claims such as property damage, bodily injury, and personal injury lawsuits. It balances comprehensive protection with reasonable premium costs, making it the most practical choice for most contracting businesses. Many clients and project owners also require contractors to carry at least $1 million in general liability coverage.
Why the Other Options Are Wrong
Option A: $500,000 per occurrence
$5,000,000 per occurrence is typically only necessary for very large contractors working on major commercial projects and would be excessive and unnecessarily expensive for small to medium-sized businesses.
Option D: $5,000,000 per occurrence
$500,000 per occurrence, while better than $100,000, is still below industry standards and may not meet many client requirements or provide adequate protection for construction risks.
Memory Technique
Think 'Million Dollar Minimum' - the standard baseline protection that keeps you in business and meets most contract requirements.
Reference Hint
Florida Construction Industry Licensing Board rules and regulations, Chapter 489 F.S., insurance requirements section
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