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Demolition Insurance covers mainly liability exposures. However, demolition work is inherently seething with liability transfer to the contractor.Without insurance for demolition contractors in place, you would be liable to pay the settlement amounts yourself. Demolition Contractors Supplemental Application. When pulling permits, contractors must provide proof that the new insurance requirements have been met. Any comprehensive demolition insurance package needs to include general liability insurance. Demolition Contractors—Annual Policy—General Liability Application.