Alabama general contractor license and insurance requirements

Alabama general contractor license and insurance requirements

Amy Beardsley
By Amy Beardsley
Dec 28, 2023
1 min read

In Alabama, a general contractor license and insurance is required for any residential, commercial or industrial projects that cost more than $50,000, including materials and labor; and any swimming pool construction of $5,000 or more. Over 8,000 general contractors are certified by the Alabama Licensing Board for General Contractors.

If you’d like to become a general contractor in Alabama, just ahead to learn:

How to get a general contractor license in Alabama

Alabama home builders and contractors must meet requirements set by the Alabama Board for General Contractors, submit an application and pay a fee to get a general contractor license. You must submit the contractor license application at least 30 days before board meetings, which are held each quarter. The application fee is $300 for a general contractor license.

Once you’ve applied and gained board approval, you can register for the required exams. You’ll need to pass the Alabama Business and Law Exam with a score of at least 70% and any other specialty classification exams required within your particular trade.

After you’ve passed your contractor exams, your results are made available to the state to access so the Alabama Licensing Board can issue final approval.

Alabama general contractor license requirements

Before you get your general contractor’s license in Alabama, you’ll need to tick a few boxes as you start the application process. For an AL general contractor license (also called a prime contractor license), you must provide:

  • Proof of U.S. citizenship or lawful residence.
  • Proof that your business is registered for a business license in Alabama.
  • General liability insurance coverage that is current.
  • A financial statement, up to one-year-old, prepared by a certified or licensed public accountant.
  • A minimum of $10,000 in net worth or working capital.
  • Proof of your overall work experience.
  • Three references from any combination of a licensed general contractor, registered architect, registered professional engineer, or a person who supervised you on a project.
  • An organizational chart for your business.

Alabama has a more in-depth process for obtaining a general contractor’s license than some other states. Ensure you have all the paperwork ready ahead of time. You’ll need your financial statements and you must register your business with the state.

Since three references are required from people who have supervised you on a project, you’ll need to have enough work experience to appease the board.

You will need approval from the board before you can register for the license exams. The board meets quarterly, so the process could take upwards of three to six months, depending on when you can submit your application and register for the exam.

Reciprocity for Alabama general contractor licenses

Once you are licensed as a general contractor, Alabama has a reciprocity program. Contractors who have held a license in good standing for at least one year may qualify and apply for reciprocity with Arkansas, Mississippi, Louisiana and Tennessee General Contractors Board, as well as for electricians with the North Carolina State Board of Electrical Contractors.

Alabama general contractor license renewal

To renew your general contractor or subcontractor license, you’ll submit your application and renewal fee no more than 45 days before your license expiration date. The Alabama Licensing Board for General Contractors bases the renewal date on the first letter of your company name.

For example, if your company name begins with I, J, K or L, your renewal month is March. You can view a complete chart of renewal dates for more information.

Renewal fees are $200 for general contracting licenses. If you don’t renew within 90 days of your expiration date, you’ll pay a late penalty. If you fail to renew your license within one year of the expiration date, you’ll have to re-apply for your general contractor license.

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Insurance requirements for Alabama general contractors

Every general contractor in Alabama must have business insurance, specifically general liability insurance and workers’ compensation insurance if they have any employees. They also may be required to have commercial auto, commercial umbrella and builder’s risk insurance.

General liability insurance

Alabama general liability insurance can help protect your business against claims of property damage or third-party injury.

In Alabama contractors are required to have commercial general liability insurance at the minimum coverage limits:

  • General aggregate. $2 million dollars per project
  • Products, completed operations aggregate. $2 million dollars per project
  • Personal and advertising injury. $1 million dollars per occurrence
  • Each occurrence. $1 million dollars

Workers’ compensation insurance

Workers’ compensation insurance in Alabama provides coverage for employees who are injured or become ill as a result of their job. The state of Alabama Department of Labor requires construction businesses to have workers’ compensation insurance regardless of the number of employees.

Commercial auto insurance

Commercial auto insurance is another insurance type licensed general contractors in Alabama may need to obtain.

This type of insurance can help provide coverage for any vehicles that you use in your business and can offer some protection if you or your employees get into an accident or suffer an injury while driving. Add hired and non-owned auto coverage for protection if you occasionally rent vehicles or if employees use their personal vehicles for work.

In Alabama, contractors must have a minimum commercial auto insurance coverage of $1 million dollar combined single limits for each occurrence.

Learn more about the cost of general contractor insurance from NEXT.

How NEXT helps protect Alabama general contractors

NEXT has helped thousands of general contractors find customized insurance to help them grow and protect their business.

We can help you quickly get the coverage you need. Start an instant quote to explore options for your business and get a certificate of insurance in minutes.

Get a free quote with NEXT today.

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Amy Beardsley
About the author

Amy Beardsley, insurance expert and contributing writer at NEXT Insurance, is a content marketing writer who specializes in small business coverage. Leveraging her background in the legal field, Amy brings a deep understanding of laws, regulations, and compliance requirements to her work. As a content marketing writer since 2016, she has contributed to publications like Legal & General, Berkshire Hathaway Specialty Insurance, Insurify, and NerdWallet. Her work has also appeared in CNBC, Kiplinger, and US News. When she’s not writing, Amy enjoys playing cards with her family and experimenting with new recipes.

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