1.   What protection does General Liability Insurance provide to a contractor's customer - specifically a property owner or community association? 

There are two types of protection: general liability and products and completed operations.

General liability provides protection against any bodily injury or property damage caused by a contractor. For example, if a carpenter left nails on the ground and a property owner stepped on a nail and injured a foot, then the carpenter's general liability insurance would pay the medical bills associated with that injury.

Products and completed operations insurance provides coverage for the products manufactured by a contractor or for the work completed by a contractor.  For example, if a plumber replaced the pipes in a property, and if those pipes were not installed properly or if the pipes were faulty, and if those pipes later failed and caused water damage, then the cost to repair the damage would be covered by this insurance.

2.  What types of limits should a property owner or community association require?

Property owners and community associations should require a minimum limit of $1,000,000 per occurrence with a $2,000,000 aggregate. That means $1,000,000 is available to cover any one claim (occurrence) and $2,000,000 is the total amount available to the contractor to cover all claims during the term of the policy, which generally equals one year in length.

The other risk to consider is if a person is injured or a property is damaged by a contractor's vehicle, then the automobile liability coverage would pay for the associated medical bills and/or property repairs.

In general, do not use an uninsured or underinsured contractor. It's not worth the risk. Often uninsured or underinsured contractors can afford to undercut their competition, because they don't have insurance premiums to pay. By using such a contractor, however, you may save money, but you may also pay dearly, if the contractor is negligent in any way.