CDPH Lead Inspector/Assessor California State Practice Exam

Which type of insurance is preferred by clients for contractors?

1. General liability insurance

2. Occurrence-based insurance

3. Professional liability insurance

4. Short-term insurance

The correct answer is: Occurrence-based insurance

Clients typically prefer occurrence-based insurance for contractors because it provides coverage for incidents that occur during the policy period, regardless of when the claim is filed. This is particularly beneficial in construction and renovation projects, as issues may arise long after the work is completed. Occurrence-based insurance ensures that clients are protected against unforeseen problems that could develop over time, which helps to enhance their confidence in hiring contractors. General liability insurance also plays an important role as it covers bodily injury, property damage, and other incidents that may happen during the course of a contractor’s work. However, clients often find the long-term protection of occurrence-based policies to be more advantageous compared to the specifics of general liability, which may have limitations regarding the timing of claims. Professional liability insurance is more focused on the services provided by the contractor, addressing issues of negligence or failure to deliver as promised, which may not be the primary concern for all clients. Short-term insurance might not provide the comprehensive coverage necessary for extensive projects or contractors who perform ongoing work. Clients generally prefer robust, long-term solutions that protect their interests over multiple years, making occurrence-based insurance a more favorable choice.