Building Code Administrators and Inspectors Florida Principle and Practice Licensure Practice Exam

What is the proper aggregate amount of insurance for a General Contractor for Liability and Property Damage?

1. $50,000; $25,000

2. $100,000; $25,000

3. $150,000; $50,000

4. $300,000; $50,000

The correct answer is: $300,000; $50,000

The correct answer reflects the standard insurance requirements for a General Contractor, which typically mandate a higher level of coverage to ensure adequate protection for both liability and property damage. Having an aggregate amount of $300,000 for liability coverage is essential because it addresses potential claims that may arise from third parties due to either bodily injury or property damage related to construction activities. High liability coverage helps safeguard contractors against significant financial losses due to lawsuits or claims resulting from accidents, which can be quite common in the construction industry. The property damage coverage of $50,000 provides additional protection for damages incurred during construction work. In many situations, the loss or damage to property—be it materials, equipment, or structures—can result in considerable expenses. This coverage allows the contractor to mitigate financial risks associated with restoration or replacement. In summary, the chosen aggregate amount ensures that a contractor is sufficiently protected from typical risks encountered in the industry, aligning with insurance best practices and regulatory requirements.