Alabama Contractor Insurance Requirements
Alabama requires contractors to carry workers' compensation insurance once they employ one or more employees, with no opt-out provisions for most industries. General liability coverage is typically required at $1M/$2M for commercial projects, and the Alabama Licensing Board for General Contractors enforces insurance requirements for licensed contractors. Property managers should verify that all vendors hold a current Alabama contractor license along with adequate COI documentation.
Alabama COI Requirements at a Glance
The following table summarizes the minimum insurance requirements for contractors operating in Alabama. Commercial property managers often require limits above state minimums.
| Coverage Type | Minimum / Status |
|---|---|
| General Liability (per occurrence) | $500,000 |
| General Liability (aggregate) | $1,000,000 |
| Workers' Compensation | Mandatory 1+ employees |
| Umbrella / Excess Liability | Commonly Required on Large Projects Common minimum: $1,000,000 |
| Additional Insured Endorsement | Commonly Required |
| Waiver of Subrogation | Commonly Required |
Coverage Notes
GL: The Alabama Licensing Board for General Contractors requires $500K per occurrence / $1M aggregate for licensed GC applicants. Commercial landlords and property managers typically require $1M/$2M.
WC: Alabama Code § 25-5-1 mandates WC for employers with 1 or more employees. Agricultural and domestic workers are exempt. Construction subcontractors are generally treated as employees if they lack their own coverage.
Umbrella: Not mandated by state law, but commonly required on commercial projects over $1M contract value.
Additional Insured: Most commercial contracts in Alabama require the property owner to be named as additional insured on GL and umbrella policies.
Waiver of Subrogation: Standard in most commercial property management contracts; required on most public construction projects.
Alabama-Specific Laws & Regulations
These laws directly affect how contractor insurance requirements are structured in Alabama. Property managers should be familiar with these statutes when reviewing vendor COIs.
Alabama Code § 25-5-1 (Workers' Comp Act)
Requires all employers with 1+ employees to provide workers' compensation coverage. Construction contractors cannot waive this requirement.
Alabama Licensing Board for General Contractors
Contractors performing work over $50,000 must hold a state license, which requires proof of liability insurance before issuance.
Alabama COI Frequently Asked Questions
Common questions from property managers and contractors about insurance requirements in Alabama.
Do contractors in Alabama need workers' compensation?
Yes. Any contractor with one or more employees in Alabama must carry workers' compensation insurance under Alabama Code § 25-5-1. There is no opt-out for construction employers.
What are the minimum insurance requirements for contractors in Alabama?
Alabama licensed general contractors must carry at minimum $500,000 per occurrence / $1,000,000 aggregate in general liability coverage. Workers' compensation is required for any employer with 1+ employees.
Does Alabama require contractors to be licensed?
Yes, general contractors performing work valued at $50,000 or more must be licensed by the Alabama Licensing Board for General Contractors. Proof of liability insurance is required to obtain and maintain the license.
What is a certificate of insurance in Alabama?
A certificate of insurance (COI) is a summary document issued by an insurer that confirms a contractor's active coverage. Alabama property managers use COIs to verify that vendors meet GL, WC, and additional insured requirements before work begins.
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