Utah General Contractors - Business and Law Practice Exam

True or False: General liability insurance will protect the contractor against claims brought by third parties who are not employed by the contractor.

1. True

2. False

3. Only for specific projects

4. Only for contractual claims

The correct answer is: True

General liability insurance is designed to protect contractors from claims made by third parties who suffer damages or injuries as a result of the contractor's work. This type of insurance covers a range of situations, including bodily injury, property damage, and personal injury that can occur during the execution of construction projects. When a contractor is engaged in work that affects people or property outside of their direct employment, such as clients, neighboring properties, or passersby, general liability insurance provides crucial protection. It ensures that if a third party files a claim due to damages incurred as a result of the contractor's activities, the insurance can help cover legal fees, settlements, and other related costs. In contrast, other types of coverage, such as workers' compensation or professional liability insurance, cover different aspects of business and legal exposure. Workers' compensation, for example, is intended to address workplace injuries of employees, not third parties. Therefore, the assertion that general liability insurance covers claims from third parties unrelated to the contractor's employment is accurate.