Contractors need specific business insurance to protect against the unique risks of their industry. General liability for Contractors averages $1,200 per year. Here is exactly what coverage you need.
What Insurance Do Contractors Need
Contractors face significant liability risk from job site injuries, property damage, and completed operations claims. General liability is required by most clients and municipalities before work begins.
Required coverage for Contractors:
- General Liability
- Workers Compensation
- Commercial Auto
- Tools and Equipment
Optional but strongly recommended:
- Commercial Umbrella
- Builder's Risk
- Professional Liability for design-build
How Much Does Contractors Insurance Cost
| Coverage Type | Typical Annual Cost | What It Covers |
|---|---|---|
| General Liability | $1,200/year | Third-party bodily injury and property damage claims |
| Business Owner's Policy | $2,400/year | GL plus commercial property bundled at a discount |
| Workers Compensation | $500–$5,000+ per employee | Employee injuries and occupational illness |
| Commercial Auto | $1,200–$3,600/year per vehicle | Company vehicles used for business purposes |
How to Get the Best Contractors Insurance Rate
- Compare quotes from at least 3 business insurance providers — rates vary significantly for contractors.
- Bundle coverages into a Business Owner's Policy where applicable for 10–25% savings.
- Implement documented safety procedures and training — insurers reward businesses with strong safety records.
- Maintain a clean claims history — even one significant claim can increase premiums 30–50% at renewal.
- Work with an independent insurance agent who specializes in contractors since they access markets that specialize in your trade.
- Review and update coverage annually — over-insurance and under-insurance both cost you money.
Industry Tip
Get certificates of insurance from all subcontractors and require them to add you as an additional insured on their policy. Subcontractors without proper insurance can create uninsured liability under your general liability policy.