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.