Whether you build decks, install flooring, wire electrical systems, or manage entire construction projects, working as a contractor means taking on real responsibility every day. With that responsibility comes risk. A job site accident, a damaged property, or an injury to a worker can all result in significant costs. Contractors insurance is intended to help protect your business when those situations arise.
This guide covers the types of insurance coverage that may be worth considering for contractors, so you can make a more informed decision about how to protect your work.
Why Contractors Need Insurance
Contractors face unique risks compared to other types of businesses. You work in environments that change from job to job, often alongside other trades, clients, and the general public. Tools and equipment may be spread across multiple sites. A single mistake or accident on the job could result in a lawsuit, property damage claim, or serious injury.
Without adequate insurance, those costs could fall entirely on you or your business.
Many general contractors and property owners require subcontractors to show proof of insurance before setting foot on a job site. Having the right coverage in place can mean the difference between landing work and losing a contract.
Types of Insurance That May Apply to Contractors
General Liability Insurance
General liability insurance is typically the most important coverage for contractors. It is intended to provide coverage for third-party claims of bodily injury or property damage that happen as a result of your work. For example, if a client trips over your equipment and gets hurt, or if your crew accidentally damages a client’s property, general liability insurance is intended to help cover the associated costs.
Commercial Auto Insurance
If you use a truck, van, or any vehicle for your contracting work, a personal auto policy may not provide coverage while you are on the job. Commercial auto insurance is intended to provide coverage for vehicles used in the course of business, including liability, collision, and comprehensive coverage.
Workers Compensation Insurance
If you have employees, most states require you to carry workers compensation insurance. It is intended to provide coverage for medical expenses and lost wages if a worker is injured on the job. Construction and contracting work carries a higher than average injury risk, making this coverage especially important.
Workers compensation laws differ by state. Some states exempt sole proprietors or businesses with fewer than a certain number of employees. Before assuming you do not need coverage, check the requirements in your state and consult with a licensed insurance agent.
Tools and Equipment Coverage
Your tools are your livelihood. Tools and equipment coverage is intended to help protect your tools, equipment, and machinery from theft, vandalism, or damage. Standard general liability policies typically do not cover your own tools, so this is often purchased as a separate policy or as an add-on.
Builder’s Risk Insurance
If you are involved in new construction or significant renovation projects, builder’s risk insurance is intended to provide coverage for the structure itself while work is ongoing. It may help cover losses from fire, vandalism, theft of materials, or weather events during the construction phase.
If you work as a subcontractor, make sure you understand how your coverage interacts with the general contractor’s policy. In some cases, you may still need your own general liability insurance even if the GC has a project policy in place.
What Affects the Cost of Contractors Insurance
Insurance premiums for contractors can vary based on several factors. These may include the type of work you do, the size of your crew, your annual revenue, your claims history, and the state where you operate. Higher-risk trades like roofing, electrical, and structural work tend to have higher premiums than lower-risk work like painting or flooring.
Get a Quote for Your Contracting Business
If you are ready to find out what contractors insurance may cost for your business, getting a quote is a good first step.
Get a Small Business Insurance Quote
Final Thoughts
Contractors face risks every day that most office-based businesses never have to think about. The right insurance plan is intended to help protect your business, your crew, and your clients so that a single incident does not derail everything you have built.