West Virginia Contractors License Practice Exam

What is the primary benefit of having general liability insurance for contractors?

1. It guarantees profit on the project

2. It is required to bid on every project

3. It protects against claims for bodily injury and property damage

4. It covers all employee salaries

The correct answer is: It protects against claims for bodily injury and property damage

Having general liability insurance is crucial for contractors because it provides financial protection against claims that may arise from accidents causing bodily injury or property damage during the course of a project. This type of insurance helps safeguard a contractor's assets and ensures they are not held personally responsible for such incidents, which can result in significant legal costs and settlement expenses. As unforeseen accidents can occur even with the best safety measures in place, this insurance allows contractors to operate with a degree of security, knowing they have coverage for potential liabilities. The other options do not accurately reflect the nature of general liability insurance. While guaranteeing a profit or being required to bid on every project may seem beneficial, they do not pertain to the insurance's role in risk management. Similarly, covering all employee salaries pertains to workers' compensation insurance rather than general liability. Thus, the primary advantage of having general liability insurance lies in its protective functions against claims related to bodily injury and property damage.