How much is contractors insurance?
Contractors insurance cost ranges from several hundred to thousands of dollars per year, depending on the work you do and the coverages you choose. The price changes based on the size of your business, the projects you handle, and how risky your work is. Finding the right balance between good coverage and a fair price is key to protecting your business without spending too much.
What factors contribute to contractors insurance costs?
Many factors determine what you'll pay for contractors insurance. Understanding what they are can help you better anticipate your expenses and find ways to reduce your premium.
Common factors that affect your contractor business insurance costs include:
Types of insurance
The types of insurance you need influence your overall rate. Each insurance has its own average cost, and you might need more than one coverage to protect your business. Contractors usually consider the following when getting a quote:
Additionally, a business owners policy could be a cost-effective option for contractors with expensive tools and equipment and other commercial property because it combines liability and property coverages into one package.
Coverage amount
In addition to the type of coverage you need, the amount of coverage required affects your contractor insurance cost. Lower coverage amounts will result in lower premiums. As the limits on your policies increase, so will your rates.
Industry and trade
The type of work you do and the field you work in determines the risk you face and the protection you need. For example, HVAC technicians, electricians, painters, and plumbers all have different risk factors and coverage needs that insurers look at when quoting contractors insurance cost.
Number of employees and payroll
Most states require businesses with employees to provide workers' compensation insurance, which is calculated based on your payroll. The more employees you have, the higher your premium will be. Learn more about workers' compensation cost.
Business location
Where you operate can influence how much you'll pay for contractor insurance. Insurers take local laws, accident rates, and the cost of doing business in the area into account. For example, contractors in cities with high litigation rates might face increased liability insurance costs.
Browse business insurance by state and commercial auto insurance by state to learn more about requirements where you live.
Tools and equipment
Expensive tools and equipment can result in additional coverage needs and higher premiums to protect those assets. Learn more about tools and equipment coverage.
Vehicles
Work trucks and delivery vehicles will require commercial auto insurance coverage. The more vehicles you need to insure, the higher your costs will be. Permanently attached equipment, such as tool boxes and ladder racks, can also affect your rate.
Insurance for high-risk businesses
Contractors in high-risk businesses are sometimes required to get insurance from the excess and surplus lines (E&S) market. Industries that may need E&S insurance include general contractors, roofers, tree trimmers, and arborists.
How to get affordable contractors insurance
Finding contractors insurance that works within your budget is possible. The following tips can help make your insurance costs more affordable:
Adjust your limits and deductibles
Manage contractor liability insurance costs by lowering coverage limits and raising deductibles. This can help reduce your premiums, but remember that you would pay higher out-of-pocket costs in the event of a covered loss.
Minimize claim risk
The fewer claims you make, the better insurance rates you'll have. Minimize your risk of making a claim by following best practices for safety and training employees.
Take advantage of discounts
Discounts are a simple way to save on your contractors insurance cost. Your insurer, industry, and location can influence what's available. Ask about discounts when getting your quote to learn whether you're eligible for savings.
Discover your contractor business insurance cost
For the most accurate estimate of how much contractor insurance will cost you, get a customized quote for your business. You can call and speak to an insurance expert who will help guide you, or you can start a quote online. Learn more about how to get a business insurance quote.
