Insurance in Arizona

Arizona does not mandate commercial general liability coverage as a condition of AZ ROC contractor license issuance. The license requirement is a surety bond under ARS 32-1152 (the license bond protects the public if you fail to perform or pay), not a liability policy. That is a floor, not a ceiling. General contractors and commercial owners will almost always require you to carry CGL with specific limits and additional-insured endorsements before you can step on site. Most Arizona trades operators carry $1,000,000 per-occurrence / $2,000,000 aggregate CGL at a minimum, with higher limits for commercial work. Workers' compensation. Arizona makes workers' compensation mandatory. ARS 23-901 defines "employee" broadly: "every person in the service of any employer subject to this chapter," explicitly including minors legally or illegally allowed to work for hire. The exclusion is narrow: employment that is both casual AND not in the usual course of the employer's trade or business. For a contracting business, nearly all work you direct is in the usual course of your trade, so the exclusion rarely applies. The Industrial Commission of Arizona (ICA) administers the system. Sole proprietors with no employees are not required to cover themselves but may elect coverage. Residential Contractors' Recovery Fund. For residential work, ARS 32-1132 requires licensees to participate in the Recovery Fund through an assessment at license issuance and at renewal. The fund pays actual damages to homeowners up to the statutory cap per licensee when a judgment cannot be collected. ARS 32-1152(C) allows a dual-license contractor to substitute a $200,000 surety bond or cash deposit in lieu of Recovery Fund participation. Other coverages trades operators typically carry in Arizona: - Commercial auto for trucks and vans. Personal auto policies carve out business use. Arizona's minimum financial responsibility limits are low. Commercial buyers expect well above the state minimum. - Hired and non-owned auto for employees driving their own vehicles on company errands. - Inland marine (contractor's equipment) for tools, equipment, and materials in transit or on site. Tool theft from Arizona job sites is not rare. - Pollution liability for refrigerants, solvents, and fuel handling. Material for HVAC, mechanical, and underground trades. - Heat-illness exposure. Arizona has no state-specific heat standard beyond federal OSHA general-duty enforcement, but claims follow the workers' comp system under ICA. Written heat-illness procedures reduce loss frequency and can affect your experience modification. - Umbrella for $1M–$2M over the underlying CGL and auto layers, commonly required by commercial GCs. Shop the market annually. Arizona trade associations (ABC Arizona, AGC Arizona chapters, PHCC of Arizona) run group programs that sometimes price below street rates. Whatever you buy, keep the AZ ROC bond current and the ICA workers' comp policy active. Lapses on either are license-impacting.