Utah General Contractors - Business and Law Practice Exam

Which type of insurance is typically required for general contractors in Utah?

1. Health Insurance

2. Liability Insurance

3. Workers' Compensation Insurance

4. Property Insurance

The correct answer is: Liability Insurance

Liability insurance is a critical component for general contractors in Utah because it provides protection against claims of property damage or injury that may arise during the construction process. This type of insurance ensures that contractors can manage risks associated with their work, as it covers legal fees, medical expenses, and any settlements or judgments that may occur if a third party claims the contractor is responsible for damages or injuries. In Utah, while other types of insurance—such as workers' compensation insurance—are also essential for protecting against employee injuries, liability insurance specifically addresses the contractor's responsibility to clients and the public regarding their work. This makes it a fundamental requirement that helps ensure that contractors can operate securely and with peace of mind. Health insurance and property insurance, while important for a complete risk management strategy, are not typically mandated by state law for general contractors like liability and workers' compensation insurance are. Workers' compensation, although crucial and legal requirement for employees, does not cover third-party claims, making liability insurance particularly important in the construction industry.