Your Contractor Is Insured. But Are You?

Across Los Angeles and the surrounding communities, homeowners are managing demolition and construction projects at a scale the region has not seen in decades. Nearly every one of those projects starts with a contractor’s insurance certificate and a homeowner who assumes it protects them. Some are rebuilding after the fires. Others are replacing an aging structure, adding square footage, or starting over on a lot they have owned for years.

Somewhere in that process, almost every homeowner has the same brief exchange. The contractor mentions they are fully insured. The homeowner nods. The project moves forward.

That exchange feels like it settled something. It did not.

A contractor’s insurance is built to protect the contractor. Unless your contract takes specific steps, it does not protect you. The distinction between standing next to someone who is insured and actually being insured yourself is one of the most valuable things a homeowner can understand before signing anything.

I have been on both sides of this. I have hired contractors on my own property, and I have sat with clients reading their construction contracts after something went wrong. The gap is almost never bad faith. It is that nobody raised it while there was still time to fix it.

What a contractor’s policy actually does

A general contractor’s commercial general liability policy covers the contractor’s own operations, their employees, and their legal liability for bodily injury and property damage. That is its job.

If a worker is hurt on your job site, or demolition damages the neighbor’s fence, the contractor’s policy responds on behalf of the contractor.

You are standing outside that arrangement. You have no direct access to the policy. If a claim arises that involves both you and the contractor, their carrier has no obligation to defend you. And if that carrier pays a claim connected to your project, nothing in a standard policy stops them from turning around and pursuing recovery from you.

The part of California law nobody tells homeowners

Most homeowners assume the contract’s indemnity clause handles all of this. In California, if you are a homeowner, that assumption is weaker than it is for almost anyone else on a job site. This is the single most useful thing in this article, and I have never seen it explained to a homeowner.

California has two anti-indemnity statutes for construction contracts. Civil Code section 2782 is the general one. Section 2782.05, added by Senate Bill 474 in 2011 and applying to contracts signed on or after January 1, 2013, is the one that protects subcontractors.

Section 2782.05 is strong. It voids a subcontractor’s duty to indemnify or defend a general contractor to the extent the claim relates to that GC’s active negligence. Not just sole negligence. Active. That is a wide shield.

You do not get it.

Section 2782.05 applies to indemnity given by a subcontractor. A homeowner is not a subcontractor. And in case that were somehow unclear, subdivision (b)(3) expressly excludes direct contracts with the owner of private property being improved.

So you look to the provision that covers private owners, which is section 2782(c), and it also runs on the active negligence standard. That would be almost as good. Except for subdivision (c)(3), which reads: “This subdivision shall not apply to a homeowner performing a home improvement project on his or her own single family dwelling.”

Read that again. The Legislature wrote a protection for property owners and then carved homeowners out of it by name.

What you are left with is Civil Code section 2782(a), the floor that applies to everyone. It voids indemnity only for the “sole negligence or willful misconduct” of the party being indemnified. Sole. Meaning that a broad-form indemnity clause requiring you to indemnify your general contractor for the contractor’s own active negligence, so long as it was not the only cause, is enforceable against a California homeowner. Comparative fault scenarios, passive negligence scenarios, shared-fault scenarios: all of it can land on you.

A commercial developer down the street gets the active negligence shield. A framing subcontractor on your own job gets the active negligence shield. You, the person paying for the project, get the sole negligence floor.

One qualifier worth knowing: subdivision (c)(3) says “single family dwelling.” If you own a condominium or a duplex, there is an argument you fall back inside subdivision (c) and get the better standard. That is a question for a construction attorney, not for an insurance agent, and it is worth asking.

Here is why I am telling you all of this in an insurance article. Section 2782(a) ends with a proviso: nothing in it “shall affect the validity of any insurance contract.” The anti-indemnity rules limit what a promise on paper can accomplish. They leave the insurance route completely intact.

For most parties in California construction, the insurance requirements are a belt to the indemnity clause’s suspenders. For a homeowner, the insurance requirements are most of what you have.

The four protections worth requiring

These belong in your contract, and they should apply to the general contractor and to every subcontractor performing work on the project. None are exotic. Any professional contractor working in California will recognize them.

One note before the list. Form editions matter, and they are state-specific. In California the current editions of these endorsements are the 12 19 series. The older 04 13 editions remain current in a handful of other states, so a contract template pulled off the internet may cite the wrong one.

1. Additional insured, ongoing operations (ISO form CG 20 10 12 19)

Being named as an additional insured on the contractor’s general liability policy gives you direct access to that coverage for claims arising out of active construction work. This is the foundation everything else sits on.

It has to reach the subcontractors too. The general contractor’s policy covers the general contractor. If the framing crew causes property damage, or the roofer’s work injures someone, the coverage that matters is on that subcontractor’s own policy. Each sub is a separate business with its own scope of work and its own exposure. Your protection needs to reach that level, not stop at the top of the chain.

Three limitations are built into the current form, and you should know all three going in. Coverage applies only to the extent permitted by law. It will not be broader than what your contract requires, so a vague contract produces vague coverage. And it reaches only liability “caused, in whole or in part,” by the contractor’s acts or omissions, which means your own sole negligence is not covered. There is also a limits cap: the endorsement provides the lesser of what your contract required or the policy limit.

None of that is a reason to skip the endorsement. It is a reason to write the contract requirement carefully, because the endorsement will not do more than the contract asks for.

2. Additional insured, completed operations (ISO form CG 20 37 12 19)

This is the one most often left out, and the one that usually matters most.

Construction defect claims, water intrusion, and latent structural problems tend not to surface while the crew is still on site. They surface after you have moved in. Additional insured status for completed operations extends your protection into that period.

Without this endorsement, your protection can effectively end when the contractor drives away, at the exact moment your exposure as a property owner is beginning.

3. Primary and non-contributory

Additional insured status is not worth much if the contractor’s carrier can turn to your homeowners policy for contribution.

A primary and non-contributory requirement forces the contractor’s policy to respond first and in full before yours is touched. Without it, your policy gets pulled into a claim you had no hand in causing. Your limits erode. Your loss history takes the hit. And at your next renewal, an underwriter sees a claim on your record for someone else’s work.

4. Waiver of subrogation (ISO form CG 24 04 12 19)

When a carrier pays a covered claim, it generally inherits the right to pursue whoever was responsible. That right is called subrogation.

Without a waiver in your favor, a contractor’s carrier that pays a claim on your project can come after you afterward to recover what it paid. A waiver of subrogation cuts that off before it starts.

CG 24 04 is the scheduled version, naming you specifically. Its full title is “Waiver of Transfer of Rights of Recovery Against Others to Us (Waiver of Subrogation).” CG 24 53 is the automatic version that operates when a contract requires it. As with the additional insured forms, the named version leaves less to argue about. One feature of the 2019 editions worth noting: the insurer’s waiver is conditioned on the insured having waived its own claims before the loss.

The exclusion almost nobody checks

Here is the single highest-value thing in this article, and it takes one email to find out.

Ask for the contractor’s forms schedule and look for a residential exclusion.

There is an endorsement, the Multi-Unit and Tract Housing Residential Exclusion, that bars bodily injury and property damage arising out of construction operations on housing tracts and multi-unit residential buildings. It applies to ongoing operations and completed operations alike. And “construction operations” is defined broadly enough to include remodeling, renovation and repair.

California construction defect litigation is why it exists. Carriers have been retreating from residential construction exposure in this state for years, and this endorsement is one of the main instruments. At least one carrier has been reported attaching it to every contractor policy it writes, regardless of the contractor’s class code.

Now think about what that means for everything above. You can negotiate additional insured status for ongoing and completed operations. You can get primary and non-contributory. You can get a waiver of subrogation. You can collect a certificate every renewal for a decade. And if the underlying policy carries a residential exclusion that reaches your project, all of it is decoration.

The certificate will not tell you. Certificates list coverages and limits, not exclusions. You have to ask for the endorsement pages and the forms schedule, and then you have to actually read the list.

If you take one thing from this article, take that.

About that “ten-year tail”

Construction contract templates circulating in California often tell homeowners to require a ten-year completed operations tail. The instinct behind it is sound. The instruction is not buyable, and the reasoning behind it is usually wrong.

The instinct first. California’s statute of repose for latent construction defects, Code of Civil Procedure section 337.15, runs ten years from substantial completion. A latent defect is one not apparent by reasonable inspection, which is exactly why it can sit undiscovered for years. Ten years is a real number and it is the right thing to be worried about.

Two things about it that get misstated. It is a repose period, an outer cap, not a ten-year right to sue. Subdivision (d) says so directly: nothing in the section extends any other limitations period. The ordinary limitations clocks run first and usually expire first. And the ten years does not necessarily start when you think. Subdivision (g) starts it at the earliest of final inspection, a recorded notice of completion, use or occupation, or one year after work stops.

A note for owner-occupants specifically. The companion four-year period for patent defects, section 337.1, contains subdivision (f): it does not apply to an owner-occupied single-unit residence. If you live in the house, that particular clock is not running against you.

Now the part the templates get wrong. You cannot buy a ten-year tail on an occurrence policy. There is no ISO extended completed operations endorsement. Extended reporting periods are a claims-made device and do not exist on the occurrence general liability policies contractors carry.

And the trigger works differently than most people assume. An occurrence policy responds based on when the damage occurs, not when the work was performed. In California, under the continuous injury trigger our Supreme Court adopted in Montrose Chemical Corp. v. Admiral Insurance Co., progressive damage can potentially trigger every policy in force from the first damage through manifestation.

Which reframes the whole question. The thing that protects you over ten years is not a special endorsement bought once. It is the contractor still carrying general liability insurance, without a residential exclusion, in each of the years the damage is occurring.

That is a fragile thing to depend on, and it is worth being honest about how fragile. California does not require most contractors to carry general liability insurance at all. The Contractors State License Board requires a $25,000 license bond. General liability is mandated only for LLC licensees, at $1 million per occurrence under Business and Professions Code section 7071.19. A sole proprietor or a corporation can hold a license with no GL policy whatsoever.

So what actually helps:

• Confirm the products and completed operations aggregate appears on the policy and is not zero or excluded.
• Check the forms schedule for a residential or multi-unit or tract housing exclusion. Again: this is the one.
• Require additional insured status for completed operations, not just ongoing operations.
• Put a covenant in the contract requiring the contractor to maintain coverage for a stated number of years. Understand that this is a claim against the contractor, not against a carrier, and it is only as good as the contractor’s continued existence.
• Know your real backstops: the license bond, your own homeowners policy, and whether the contractor is still in business.

Notice of cancellation, and the gap in it

If the contractor’s policy is cancelled mid-project, you want to know while you can still do something about it.

Under a standard commercial general liability policy, the carrier’s notice obligation runs to the first named insured, which is the contractor. Ten days for nonpayment of premium, thirty days for anything else. Proof of mailing is sufficient, so the contractor does not even have to receive it. You are not in that chain at all.

I want to correct something that circulates widely in construction contract templates, because I have seen it in contracts here. There is no standard multistate ISO general liability endorsement that gives a third party direct notice of cancellation. CG 02 24, “Earlier Notice of Cancellation Provided By Us,” is real and it is available in California, but all it does is increase the number of days in the cancellation condition. It has no schedule of third parties and it still notifies only the named insured. CG 02 05 does exactly what you would want, and it is a Texas-only form, unavailable here.

What does exist is carrier-proprietary “notice to others” endorsements. They are not standard, they vary in whether they cover cancellations for nonpayment, they generally do not apply when the insured cancels voluntarily, and they have to be requested from the insurer. If you require one, get written confirmation from the contractor’s agent that it was actually issued and attached.

California statute fills in more of the gap than most homeowners realize, and then leaves a hole you should know about. Insurance Code section 677.2 requires written notice for commercial policies, ten days for nonpayment or fraud and thirty days otherwise, stating the reasons, delivered to the named insured and to the producer of record. Section 678.1 requires sixty to one hundred twenty days for nonrenewal. Section 676.2 limits cancellation after the first sixty days to eight enumerated grounds. That framework is real protection, and it means the contractor’s agent knows.

The hole: Insurance Code section 675.5(d)(7) excludes surplus line insurance from all of it. And a substantial share of California residential contractor general liability is written in the non-admitted market, precisely because admitted carriers have been retreating from residential construction. For those policies, none of the statutory notice framework applies.

Which is a practical instruction, not a counsel of despair. Ask whether the contractor’s general liability policy is admitted or surplus lines. It is on the certificate, in the “INSR LTR” and insurer columns, and any agent can tell you in a sentence. If it is surplus lines, your notice protection is whatever the policy says and nothing more, and a proprietary notice endorsement becomes worth asking for rather than optional.

The certificate is not the coverage

Before anyone begins work, collect certificates of insurance confirming the required coverages. Then require updated certificates every time a policy renews or is replaced during the project. Construction schedules routinely outrun a single policy period, and a lapse mid-project is a real exposure nobody notices until a claim.

But understand what a certificate is. It is evidence that a policy existed on the day it was issued. It does not create coverage, confer rights, or obligate anyone to anything.

The ACORD 25 form, the standard certificate used across the industry, says so on its face, in capital letters:

“THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.”

Directly beneath it sits a notice stating that if the certificate holder is an additional insured, the policies must have additional insured provisions or be endorsed. A statement on the certificate does not confer rights in lieu of the endorsement.

The current edition, ACORD 25 (2025/12), added a line that every homeowner should read twice:

“LIMITS SHOWN ARE INCLUSIVE OF AMOUNTS REQUESTED BY THE CERTIFICATE HOLDER AND MAY NOT REFLECT POLICY LIMIT AMOUNTS IN EXCESS OF THOSE REQUESTED.”

In plain terms: the limits printed on the certificate may be the limits you asked for, not the limits the contractor actually carries. If your contract asked for $1 million and the certificate shows $1 million, that tells you the contractor has at least $1 million. It does not tell you the policy is not eroded, does not tell you what the aggregate has left on it, and does not tell you anything about exclusions.

And the cancellation line promises nothing at all. It reads that notice “will be delivered in accordance with the policy provisions,” which loops right back to the contractor as first named insured.

So the certificate tells you a policy exists. The endorsement pages and the forms schedule tell you whether you are protected by it. Ask for those.

Before you sign

A construction contract is not just a scope of work and a payment schedule. It is the document that decides what happens when something goes wrong, drafted at the one moment when everyone is optimistic.

The protections here are standard, insurable, and well understood by any professional contractor working in California. Requesting them is not an accusation. It is the same conversation a lender or a commercial landlord would have without hesitating.

And if a contractor pushes back hard on providing scheduled endorsements for both ongoing and completed operations, or will not produce a forms schedule, that reaction is itself useful information. You are learning it at the cheapest possible moment.

We work through these requirements with clients before construction starts, and we are happy to read a contractor’s endorsements and forms schedule with you before you sign. Call us at (818) 322-4744. Be insurance wise.

Frequently Asked Questions

My contractor showed me a certificate of insurance. Am I covered?

A certificate is evidence that a policy exists. It does not create coverage or give you rights under the policy, and the ACORD 25 form says so on its face. The current 2025/12 edition adds that the limits shown may be only the amounts you requested rather than the contractor’s actual limits. What determines whether you are protected is the endorsement pages and the forms schedule. Ask for those, not just the certificate.

Does California law protect me if my contract has a broad indemnity clause?

Less than it protects almost anyone else on the job. Civil Code section 2782.05 gives subcontractors a shield against indemnifying a general contractor for that contractor’s active negligence, and section 2782(c) gives most private property owners a similar shield. But 2782(c)(3) expressly excludes a homeowner performing a home improvement project on their own single family dwelling. A homeowner is left with section 2782(a), which voids indemnity only for the other party’s sole negligence or willful misconduct. If you own a condominium or a duplex rather than a single family home, ask a construction attorney whether you fall back inside the broader protection.

What is the difference between ongoing operations and completed operations coverage?

Ongoing operations coverage applies to claims arising from work while it is in progress. Completed operations applies to claims that surface after the project is finished, which is when most construction defect and water intrusion problems appear. They are separate endorsements, and having one does not give you the other.

Can I require a ten-year completed operations tail on a California project?

Not as a purchasable product. There is no ISO extended completed operations endorsement, and extended reporting periods are a claims-made feature that does not exist on the occurrence policies contractors carry. An occurrence policy responds based on when the damage occurs, not when the work was done, so what protects you across the years is the contractor continuing to carry general liability coverage without a residential exclusion. You can require that by contract, but it is a promise from the contractor rather than a commitment from a carrier.

What is a residential exclusion and why does it matter so much?

It is an endorsement barring coverage for bodily injury and property damage arising out of construction operations on housing tracts and multi-unit residential buildings, including remodeling, renovation and repair. It applies to both ongoing and completed operations. If the contractor’s policy carries one that reaches your project, additional insured status and every other requirement in your contract may be worth nothing. It will not appear on a certificate of insurance. Ask for the forms schedule.

Will I be told if my contractor’s policy is cancelled during the project?

Not automatically. The carrier’s notice obligation runs to the contractor as first named insured, not to you. There is no standard multistate ISO general liability endorsement that provides notice to a third party. California Insurance Code section 677.2 requires notice to the named insured and the producer of record for admitted commercial policies. Section 675.5(d)(7) excludes surplus line insurance from that framework, and a substantial share of California residential contractor coverage is written non-admitted. Ask whether the policy is admitted or surplus lines, and consider requiring a carrier-issued notice-to-others endorsement.

Do I need these protections from subcontractors, or is the general contractor enough?

Both. The general contractor’s policy covers the general contractor. If a subcontractor’s work causes the loss, the coverage that responds is on that subcontractor’s own policy. Each subcontractor is a separate business with its own scope and its own exposure, so the requirements should flow down through the entire chain.

Is a blanket additional insured endorsement good enough?

It can work, but it carries risks a scheduled endorsement does not. The common blanket form, CG 20 33, activates only when there is a written construction agreement with that policy’s named insured, which may not describe your relationship to a subcontractor. It also covers ongoing operations only. The blanket completed-operations counterpart is a separate form, CG 20 39, which carries a professional services exclusion that the scheduled CG 20 37 does not. And because you are not named in the policy, the carrier has no record of you.

Sources

• California Legislative Information, Civil Code section 2782 and section 2782.05 (construction contract indemnity)
• California Legislative Information, Code of Civil Procedure section 337.15 and section 337.1 (construction defect repose periods)
• California Legislative Information, Insurance Code section 677.2 and section 675.5 (commercial cancellation notice, and the surplus line exclusion)
• Contractors State License Board, licensing, bond and insurance requirements; Business and Professions Code section 7071.19 (LLC general liability requirement)
• ACORD, certificate of insurance forms (ACORD 25, 2025/12 edition)
• Supreme Court of California, Montrose Chemical Corp. v. Admiral Insurance Co. (1995) 10 Cal.4th 645 (continuous injury trigger)

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate. Figures and form editions reflect research current to August 2026.