Construction Contractor Q&A
How much does a $1,000,000 contractor liability insurance policy cost?
Getting sufficient contractor liability insurance (aka Builder’s Risk) is an important part of becoming a licensed contractor and protecting your business. Whether you are applying for a new license or seeking to renew your general contracting license after letting it expire, you may not be familiar with the costs of an insurance policy.
Basic factors affecting your insurance policy costs will vary based on your sales volume, the number of employees you have and the type of your work you do, such as finished carpentry or framing. Finished work will be lower because the volume of work you do will probably be lower. Once you start doing framing and hiring employees your costs will go up. Of course once you are building millions yearly or developing raw land, your costs will be even higher.
What Additional Factors Affect the Cost of My Builders Risk Policy?
To give you a rough idea of what can affect your policy over and above the size of your firm and sales volume, here four additional factors that could impact your annual policy premium.
- Expect to pay some percentage of gross sales (say three percent) of base carpentry.
- You might be accessed additional fees for siding or roofing and other jobs.
- Often you have to pay a portion of the premium up front and the rest spread out in monthly payments.
- Sometimes you can get a deal my combining your homeowners and auto insurance policies with your contractor’s liability policy.
It may seem difficult to obtain general contractor liability insurance, but keep shopping and you will find the right plan and good rates. Rates will also vary by state. In new England, $900 per year for an insurance policy would be very inexpensive. In other states, typical policies for a million dollar policy might run around $750 annually. Of course once the firm audits you at years end, any changes to your business, like hiring subcontractors would make your rates increase. In general, you want to look for an insurance policy that charges your rates based on payroll as opposed to revenue.
Its according to a lot of things. Where you live. Do you have employees ect.
Our Liability Insurance was 600.00 down and 160.00 a month
Hope this helps
Most general liability policies should run less than the 3% of gross sales as mentioned in the article. You can visit http://www.prosourceia.com or call my agent at 888-776-1185. He was very helpful and were a bit cheaper than others I called.
The dollar amount of he cost will vary depending on a number of factors: 1) what type of work (roofing, framing, electrocal, painting…) with the “less hazardous” exposures being less expensive. 2) It will be rated based on your gross receipts and/or payroll expectation for a 12 month period. 3) How mu7ch experience have you had doing this type of work.
I’d recommend you find a good indepndent agent who can offer you multiple quotes so you are sure to get the best coverage at the lowest price. Good luck.
Too many variables – what kind of contractor? What are the gross receipts? What percentage is subcontracted? What type of work do you do?
It could be anywhere from $750 for a one man electrician who does residential work only, to millions of dollars if you’re working out in the gulf doing drilling.
Depending on the trade, but can be as low as $600 per year. You can visit this site generalcontractorsins.com and ask for a quote, they do General Contractots but also other trades.
Depending on the State (New York among other States have higher premiums), Years of experience, percentage of work you sub-contracting, number of employees and of course whether you will be doing major structural work or not (Doing load bearing wall framing or not?).
Options (New York Sate – 5 Boroughs):
1)The cheapest yearly premium starts at $3,800 (non Structural work, 0% Sub contracting, 2 employees including yourself, new business, and $1,000,000 coverage).
2)The second cheapest yearly premium ranges between 6-$7,000 (Structural work, 0% Sub contracting, 2 employees including yourself, new business, and $1,000,000 coverage).
3)Finally, the third cheapest yearly premium is close to mid $20,000 (Structural work, some Sub contracting, 2 employees including yourself, new business, and $1,000,000 coverage).
I hope that helps….
Anastasios, Your reply to this article is amazing! Thank you so much for providing detail on contractor insurance premiums in New York. Indeed, the cost varies, but as you note there are a number of constant factors that will affect the cost of premiums from state to state.
Thank you very much for this information. My son is considering becoming a contractor. I don’t know a whole lot about contracting, but I am pretty sure that they need to have insurance. If someone were to get hurt on one of his job sites, he would need some type of insurance coverage.
Yes, insurance for the contractor and the work along with a bond are requirements for any licensed contractor. Estimates of the cost of 1 million in insurance coverage are on this page. Some states require lower minimums, like 500,000 USD in coverage. Please look up the licensing requirement guides for your state on our site. Good luck to your son!
just started a little biz with my cousin doing residential roofs (mostly repairs) do we need to be insured? and if so, who should we go with?
Congratulations on starting your contracting business! You should protect yourself and your clients by establishing a business, obtaining any licensing or registration, and obtaining insurance as soon as you are able. Be sure to consult professionals (legal, accounting, financial, etc.) for advice on the best type of business to set up for your needs. We can’t recommend a specific insurer, however, you might check out the National Roofing Contractors Association insurance resources at http://www.nrca.net/SafetyAndInsurance/.
Excellent post! I just stumbled upon your blog page and gathered some good ideas for what I am working on.
Glad to hear you found our site useful!
Anyone no how much for pressure washing and landscaping contractor to get 1 million liability insurance in al
Workers comp is the more expensive. I have a company that builds commercial from the ground up 1 m is only 550 a year. Workers comp however for myself is 2200 a year. That is what’s based on payroll and such. Bonding is not required where I live, but it does help you get contracts.
Hi Ralph, Thanks for stopping by! You are right, we get lots of questions about liability insurance and worries over its cost when workers comp and other requirements often cost a lot more. We plan to publish an article soon that goes into more detail about the various types of insurance products a licensed contractor is required to carry depending on their setup and some tips on how to save (e.g. many business owners save money on workers comp by choosing to pay as you go). Thanks again!
I have a cell tower on my property which requires me to carry $1,000,000 liability. How much might that cost?
Hi Jeff, This is not our area of knowledge, but in doing a quick internet search it looks like it might run you about 60 – 70 cents per $100 of value. We hope you’ve found the answer!