Are you unsure which contractor insurance policies in Arizona are legally required—and which actually protect your business?
Have you ever worried that one uncovered mistake could cost you your livelihood?
If so, you’re not alone. Many Arizona contractors feel overwhelmed by the maze of policies, legal jargon, and gaps in coverage that can lead to costly surprises.
I’m Kody Houk, founder of Prime Risk Insurance, and we’ve helped over 650 Arizona contractors protect what they’ve built—without wasting money on unnecessary policies.
In this article, you’ll discover the 4 essential insurance policies every Arizona contractor should carry, how they work together, and how to avoid common coverage gaps that could expose your business.
Why Contractor Insurance in Arizona Isn’t Optional
Even one uncovered claim could sink your business.
Running a contracting business means risk—from workplace injuries and vehicle accidents to lawsuits and property damage. Insurance isn’t just a legal checkbox. It’s a financial lifeline.
Whether you’re a general contractor, roofer, plumber, or electrician, the right policies do more than meet minimum state requirements—they protect your income, your team, and your ability to keep working.
1. General Liability Insurance (Required for Credibility)
This is the foundation of any contractor’s insurance plan.
General liability protects your business if you accidentally injure someone or damage property while working. Many job bids require proof of this policy before work can begin.
Typical coverage includes:
- Third-party bodily injury (e.g., visitor slips on-site)
- Property damage (e.g., breaking a client’s window)
- Legal defense costs
- Medical payments
Average general liability claims exceed $75,000 in legal and settlement costs. One oversight can break your budget.
2. Workers’ Compensation Insurance (Legally Required in AZ)
If you have employees, this policy isn’t optional—it’s the law.
Workers’ compensation ensures your team gets medical care and wage replacement after an on-the-job injury—and protects you from lawsuits.
It covers:
- Medical treatment and rehab
- Lost wages during recovery
- Legal protection for workplace injury claims
Even sole proprietors in Arizona can opt in for coverage—talk to a broker to see if that’s right for your setup.
3. Commercial Auto Insurance (Not Covered by Personal Policies)
Personal auto insurance won’t cover your business vehicles.
If you use a truck, van, or trailer for work, you need a separate commercial auto policy. Arizona law and most insurers exclude business use from personal coverage.
Coverage includes:
- Vehicle accidents while working
- Damage to tools inside vehicles
- Liability for injury caused by your drivers
- Theft or vandalism of business vehicles
4. Professional Liability Insurance (Errors & Omissions)
Protects your reputation and income from advice gone wrong.
If you design, consult, manage projects, or advise clients—this is for you. Professional liability covers mistakes that don’t result in physical damage but still hurt your client financially.
It includes protection for:
- Miscommunication or planning errors
- Project delays that cause financial loss
- Breach of contract disputes
- Legal defense for negligence claims
Example: A contractor designs a drainage system that floods later. No broken pipes—but major financial damage. That’s where E&O kicks in.
How These 4 Policies Work Together
Think of these coverages as your core safety net:
- General Liability protects against physical harm or property damage
- Workers’ Comp protects your team
- Commercial Auto protects your vehicles
- Professional Liability protects your advice and planning
Together, they give your business credibility, legal protection, and peace of mind—so you can focus on building.
Don’t Stop at the Basics: Additional Coverages to Consider
Depending on your work scope, you might need more. Here are smart add-ons:
- Builder’s Risk Insurance – Covers structures under construction
- Equipment & Tool Insurance – Protects your gear from theft or damage
- Pollution Liability – Required for hazardous waste or soil remediation jobs
- Umbrella Insurance – Adds protection above other policy limits
A knowledgeable broker will help you tailor the right mix.
Choosing the Right Insurance Broker
Your broker isn’t just your policy vendor—they’re your insurance translator.
Look for someone who:
- Understands Arizona contractor requirements
- Customizes coverage for your risk profile and budget
- Offers simple breakdowns of complicated terms
- Helps with claims, not just paperwork
At Prime Risk Insurance, we’ve helped hundreds of contractors get the right coverage without overpaying. We’ll show you what’s required, what’s smart, and what’s just fluff.
FAQs: Arizona Contractor Insurance
Q1: Is workers’ compensation mandatory in Arizona?
Yes—for most employers. Even if you have just one employee, it’s likely required.
Q2: What isn’t covered under general liability insurance?
- Employee injuries (that’s workers’ comp)
- Bad advice (that’s professional liability)
- Damage to your own property or tools
Q3: Can I use my personal auto policy for work vehicles?
No. Most personal policies exclude business use. You need commercial auto insurance.
Q4: How is professional liability different from general liability?
General liability = physical accidents
Professional liability = financial harm due to advice, mistakes, or delays
Q5: How do I get a free review of my insurance?
You can schedule a free consultation with Prime Risk Insurance. We’ll help you spot gaps and optimize your policies.
Conclusion: Build Your Business on a Rock-Solid Foundation
You’ve worked too hard to leave your future exposed.
At the end of the day, every contractor in Arizona faces legal requirements and real-world risks. Now that you know the 4 core policies and how they work together, your next step is simple: Get your free policy review.
We’ll help you avoid the gaps that put your business—and livelihood—at risk.
I’m Kody Houk, and my team at Prime Risk Insurance is here to help you build something that lasts—on a foundation that protects.
