General contractor insurance is essential for any business and coverage should be required before beginning any work. There are any number of accidents that can occur outside of your control and you may be liable for damages. The specific coverage your business requires will depend on the structure, the work performed, the equipment used, and more.

In this guide, we will provide information about general contractor insurance cost to help you make the best decision about your own policy.

We Cover in This Guide

• How much does general contractor insurance cost?
• What is general contractor insurance?
• What does general contractor insurance cover?
• Benefits and risks
• Who needs general contractor insurance?
• Types of insurance general contractors need
• Tips for buying
• FAQ
• Summary

How Much Does General Contractor Insurance Cost?

General contractor insurance cost averages around $90 per month, or $1,090 per year for $1 million limit policies that provide protection against third party injuries and damages. Policy price varies considerably based on the following factors:

• Services offered
• Coverage needed
• Business equipment and property
• Revenue
• Location
• Claims history
• Vehicles operated
• Number of employees

What Is General Contractor Insurance?

As a contractor, the tasks required to meet the deadlines of your projects can expose your business and yourself to unique risks. By using potentially dangerous equipment and working in various households and places of business, your work has the potential to cause injury to third -parties and damage property. Insurance is essential to cover these risks and can help pay for legal costs and damages. General contractor insurance protects your business, assets, and employees in case the unexpected occurs, resulting in significant loss or liability.

What Does General Contractor Insurance Cover?

Basic contractor insurance policies typically cover general liabilities, including:

• Bodily injury: Injury to an employee, client, or third party at your business or on your client’s property in the course of service. Example: A client tripping over a piece of equipment while you are on a job.
• Medical payments: Medical bills associated with injuries claims. Example: A client requires surgery as a result of an injury that took place on a property you were working on.
• Property Damage: Damage to your client’s property or that of a third party during service. Example: Damaging the floor while working on cabinets.
• Advertising Liability: If a business or third party suffers financial damages as a result of a false advertisement, you can be sued for libel, slander, or defamation. Example: Making a false statement about a competitor in a commercial.

Your specific coverage will depend on the package you choose and your declared limits. Review your policy to understand your coverage and add specialized insurance to fill in any gaps.

Benefits and Risks

General contractor insurance offers various benefits to cover risks, including:

• Protect your assets: Since many general contractors are sole proprietors, their personal assets are tied to the business and can be used to cover liabilities. This makes insurance especially important because a lawsuit can not only shut down a business, it can destroy your own finances.
• Cover legal expenses: If a client, employee, or third party files a lawsuit against your business, general contractor insurance will cover the expenses, including attorney fees and damages.
• Peace of mind: ​Knowing that your business is covered in the event of an unexpected occurrence gives peace of mind to you and your customers. Clients are more likely to hire contractors who are adequately insured.

Who Needs General Contractor Insurance?

While the specific insurance required by contractors will vary depending on the service, all general contractors are at risk for liabilities from potential injuries or damages. General contractor insurance will protect you from such scenarios. The following are some examples:

• Handling heavy equipment in and around a client or third party’s property
• Work that may be interrupted due to weather
• Customers frequently entering your property

Types of Insurance General Contractors Need

General contractor insurance offers coverage for the types of service you provide and your individual need.

• General liability insurance: Fundamental coverage. Protects your business from injury or accident claims, property damage, false or misleading advertisement, and pays related costs and expenses.
• Business owner policy (BOP): BOP insurance is a policy package that combines essential coverage for most businesses. Commercial general liability and commercial property are the two primary insurances companies offer.
• Workers’ compensation insurance: Required to operate in many states, workers’ compensation covers your business from medical expenses and lost wages if an employee is injured or becomes ill while working.
• Disability insurance: This policy replaces income if the insured cannot work due to illness or injury. There are generally separate plans for short-term (temporary) and long-term (over two and a half years).

Tips for Buying

General contractor insurance cost can vary considerably; before you make your decision consider the following:

• Identify your risks: Be sure to thoroughly analyze your services and identify potential risks. After that, choose all the insurance you need.
• Work with an independent agent: An independent agent will help you navigate the complexities of general contractor insurance by assessing your needs and directing you to the best broker for your service.
• Compare quotes: Policy costs vary between insurance providers. Consider several quotes to find the best rates and coverage.

FAQ

How can I reduce my general contractor insurance premiums?
Consider insurance bundling. Your insurance provider may provide discounted rates by bundling your various coverage needs.

Do I need commercial auto insurance?
All work vehicles involved in your business require commercial auto insurance. Additionally, personal auto insurance does not cover most business activities of your personal vehicle.

Is general contractor insurance mandatory?
Certain minimum coverage might be legally required depending on your location. Additionally, clients will often require a Certificate of Insurance before signing a contract.

Summary

General contractor insurance protects your business -- and even yourself -- against potential financial ruin or bankruptcy from lawsuits resulting from your work.

By understanding general contractor insurance cost and determining the particular needs of your company and your service sector, you can feel secure that your policy covers you from all potential risks and that your business is safe.