Remodeling Insurance: Complete Coverage Guide for Renovation Contractors

Remodeling and renovation work presents unique insurance challenges that standard contractor policies don’t always address. Unlike new construction or specialized trades, remodeling contractors face exposure from working in occupied homes, dealing with existing structures, coordinating multiple trades, and managing projects that can span weeks or months.

At ContractorNerd, we’ve analyzed insurance requirements across thousands of remodeling projects to help contractors understand what coverage they actually need. Whether you’re doing kitchen remodels, whole-house renovations, or commercial tenant improvements, this guide breaks down the specific insurance considerations for your remodeling business.

Understanding Remodeling Insurance vs. Traditional Contractor Coverage

Remodeling insurance isn’t just “contractor insurance with a different name.” The work itself creates distinct risk exposures:

Occupied Property Risk: Unlike new construction on empty lots, remodeling happens in homes and businesses where people live and work. This means higher exposure to claims from property owners, tenants, and visitors who are present during construction.

Existing Structure Liability: You’re working with buildings that have unknown conditions – hidden water damage, old wiring, structural issues that only appear once you open walls. This creates liability that new construction contractors never face.

Scope Creep and Change Orders: Remodeling projects frequently evolve as work progresses. Insurance needs to account for work that wasn’t in the original scope, materials stored on-site waiting for installation, and extended project timelines.

Multiple Trade Coordination: A typical remodel involves plumbing, electrical, HVAC, [carpentry](link to carpenter insurance page), flooring, painting, and more. Your insurance must cover not just your direct work but your liability as the general contractor managing these trades.

Essential Insurance for Remodeling Contractors

General Liability Insurance for Renovation Work

This is your foundation coverage, but remodeling contractors need specific provisions:

Class Code Considerations: Remodeling work uses specific GL codes that recognize the unique nature of renovation versus new construction:

• Code 91340: Carpentry – Residential Remodel (covers residential renovation projects, modifications, and repairs)
• Code 91342: Carpentry – Commercial Remodel (covers commercial tenant improvements, office renovations, and commercial building modifications)
• Code 91580: Contractors – Executive Supervisors or Executive Superintendents (for remodeling companies where owners/managers supervise rather than perform hands-on work)
• Code 91583: Contractors – Subcontracted Work for one or two family dwellings (when you’re acting as GC managing subs on residential renovations)
• Code 91585: Contractors – Subcontracted Work for building construction (when you’re acting as GC managing subs on commercial renovation projects)

These codes recognize that renovation work carries different risks than new construction – you’re modifying existing structures, working around occupants, and dealing with unknown conditions. Proper classification is critical: using code 91583 or 91585 when you subcontract most work can save 20-35% on premiums compared to being classified under direct carpentry codes.

Coverage You Need:

• Property Damage: Covers damage to the client’s existing structure. When you’re tearing out a kitchen and accidentally damage plumbing behind the walls, this protects you.
• Bodily Injury: Protects you if a homeowner, tenant, or visitor gets injured due to your work activities – trips over tools, falls through a temporary opening, or is injured by falling debris.
• Completed Operations: Critical for remodelers because issues often don’t appear until after you’ve left the job site. If that bathroom you remodeled develops leaks six months later, this coverage responds.

Recommended Limits: Most remodeling contractors carry $1 million per occurrence / $2 million aggregate. For larger renovation projects (over $500K value), consider $2M/$4M limits or an umbrella policy.

Builders Risk Insurance: Critical for Major Renovations

This is where remodeling insurance diverges significantly from standard [carpenter insurance](link to carpenter page). Builders Risk is essential for substantial remodeling projects and often overlooked by contractors who don’t realize their general liability doesn’t cover what Builders Risk protects.

What Builders Risk Covers:

• Materials delivered to the job site but not yet installed
• Work in progress during multi-week or multi-month renovations
• Temporary structures, scaffolding, and construction equipment at the project
• Damage to the renovation work from fire, theft, vandalism, or weather
• Soft costs like permit fees and architect costs if the project is delayed by a covered loss

When You MUST Have Builders Risk:

• Any project over $100,000 in value
• Multi-room or whole-house renovations spanning several weeks
• Commercial tenant improvements where the lease requires it
• Projects where you’re storing significant materials on-site (custom cabinetry, specialty fixtures, expensive tile)
• Renovations in areas with weather risks (hurricanes, wildfires, flooding)

Who Provides It: Builders Risk can be purchased by either the property owner or the contractor. Many remodeling contracts now require the contractor to provide Builders Risk coverage, so factor this into your project estimates.

Cost: Typically 1-4% of the total project value. For a $200,000 kitchen and bathroom renovation, expect $2,000-$8,000 in Builders Risk premium for a 6-month policy.

Critical Distinction: Your General Liability covers damage you cause to someone else’s property. Builders Risk covers damage to the renovation work itself and materials. Both are necessary for comprehensive protection.

Workers’ Compensation for Remodeling Companies

Required in most states once you hire employees. Remodeling operations use multiple workers’ comp class codes depending on the work:

• Code 5403: Carpentry work on commercial projects or residential buildings over 3 stories
• Code 5437: Carpenters installing cabinets, interior trim, countertops, hardwood floors
• Code 5645: Carpenters building 1-2 family homes up to 3 stories
• Code 5606: Painting and decorating
• Code 5183: Plumbing work
• Code 5190: Electrical work (under 480V)

Rates range from $4 to $15 per $100 of payroll depending on the trade classification and your state. Interior finish work (trim, painting, flooring) carries lower rates than structural work (framing, roofing modifications).

Installation Floater Coverage

Particularly important for remodelers who fabricate custom elements off-site:

• Custom cabinetry built in your shop but not yet installed
• Granite or quartz countertops transported to the job site
• Custom millwork, built-ins, or specialty woodwork in transit

This coverage bridges the gap between when materials leave your control and when they’re installed. Annual premiums run $500-$2,000 depending on the value of materials typically in transit.

Contractor’s Equipment Coverage

Protects your tools and equipment:

• Power tools, saws, compressors, and specialized equipment
• Ladders, scaffolding, and access equipment
• Laser levels, measuring equipment, and diagnostic tools

Unlike [carpenter tool insurance](link to carpenter page), remodeling contractors often have broader equipment needs across multiple trades. Coverage typically runs $300-$1,500 annually for $10,000-$50,000 in equipment value.

Contractor’s Errors & Omissions (E&O)

Also called “Faulty Workmanship” coverage, this is increasingly important for remodelers:

• Covers claims that work wasn’t performed to professional standards
• Protects against allegations of poor workmanship or design
• Responds when a completed remodel has issues even if no one was injured and nothing was damaged

E&O fills gaps that General Liability doesn’t cover. If you install windows incorrectly and they leak, GL won’t respond – but E&O will. Premiums range from $500-$2,500 annually for $100,000-$1M in coverage.

Home Remodeling Insurance Cost Analysis

Based on ContractorNerd’s analysis of 1,200+ remodeling insurance quotes, here’s what contractors actually pay:

Residential Remodeling Insurance Costs

Solo Remodeling Contractor (Owner + occasional helpers, $200K annual revenue):

• General Liability (code 91340): $2,400-$4,200/year
• Tools & Equipment: $400-$800/year
• E&O Coverage: $500-$1,000/year
• Commercial Auto: $1,800-$2,800/year
• Total: $5,100-$8,800 annually (2.5-4.4% of revenue)

Small Remodeling Company (3-5 employees, $750K annual revenue):

• General Liability (code 91340 or 91583): $7,500-$12,000/year
• Workers’ Compensation: $15,000-$28,000/year (depends heavily on trade mix)
• Installation Floater: $800-$1,500/year
• Commercial Property (shop/storage): $1,500-$3,000/year
• E&O Coverage: $1,200-$2,000/year
• Commercial Auto (2-3 vehicles): $4,500-$7,500/year
• Total: $30,500-$54,000 annually (4.0-7.2% of revenue)

Established Remodeling Business (10+ employees, $2M+ annual revenue):

• General Liability ($2M/$4M limits, codes 91580/91583/91585): $20,000-$32,000/year
• Workers’ Compensation: $60,000-$120,000/year
• Commercial Umbrella: $1,500-$3,000/year
• Installation Floater: $1,500-$3,000/year
• Commercial Property: $3,000-$6,000/year
• E&O Coverage: $2,500-$5,000/year
• Commercial Auto Fleet: $12,000-$25,000/year
• EPLI Coverage: $2,000-$4,000/year
• Total: $102,500-$198,000 annually (5.1-9.9% of revenue)

Note: These figures don’t include project-specific Builders Risk, which is typically paid per project and ranges from 1-4% of project value.

Cost Factors Specific to Remodeling Insurance

Class Code Selection: This is where many remodeling contractors overpay. If you primarily act as a general contractor managing subcontractors:

• Don’t use codes 91340/91342 (direct carpentry work) – rates are based on you swinging hammers
• Use codes 91583/91585 (subcontracted work) – rates reflect lower exposure when subs carry their own coverage
• Potential savings: 20-35% on General Liability premiums with proper classification

Project Type Mix:

• Cosmetic renovations (paint, flooring, fixtures): Lower rates
• Structural modifications (walls, load-bearing changes): Higher rates
• High-end custom work: Significantly higher due to increased project values

Geographic Location: Remodeling insurance costs vary dramatically by state due to claims frequency, litigation environment, and labor costs:

• Lowest cost states: Idaho, Montana, Wisconsin ($2,000-$3,200 for $200K revenue)
• Average cost states: Most of Midwest, South ($2,800-$4,200 for $200K revenue)
• Highest cost states: California, New York, Florida ($4,500-$7,000 for $200K revenue)

Claims History: One property damage or bodily injury claim can increase premiums 25-40% at renewal. Two claims in three years can make coverage difficult to obtain at any price.

Subcontractor Usage: Heavy subcontractor usage reduces your Workers’ Comp cost but requires rigorous certificate management. Insurers will audit your subcontractor certificates carefully – inadequate coverage by subs exposes you to additional liability and potential audit charges.

Insurance for Commercial vs. Residential Renovation Work

Commercial Renovation Insurance Requirements

Commercial tenant improvements and office renovations face different requirements:

Higher Limits Required: Commercial property owners typically require $2M/$4M General Liability as a minimum. Many require $5M umbrella policies for projects over $1M.

Proper Classification: Commercial remodeling work uses code 91342 (Commercial Remodel) or 91585 (subcontracted commercial work). Don’t let insurers lump commercial projects under residential codes – you’ll face audit charges.

Additional Insured Requirements: Expect to add property owners, property management companies, and sometimes lenders as additional insureds on your policies.

Builders Risk Mandates: Nearly all commercial renovation contracts require Builders Risk coverage with the property owner named. Budget 2-4% of contract value.

Performance & Payment Bonds: Government projects and many private commercial jobs require surety bonds. Bonding capacity depends on your financial strength and requires pre-qualification.

Certificate of Insurance Turnaround: Commercial projects often require COIs within 24-48 hours of contract signing. ContractorNerd provides instant COIs so you never lose a project to paperwork delays.

Home Renovation Insurance Specifics

Residential remodeling has different considerations:

Lower Limits Acceptable: Most homeowners are satisfied with $1M/$2M coverage, though high-net-worth clients may request higher limits.

Occupied Home Provisions: Your GL policy should explicitly cover work in occupied dwellings. Some commercial-focused policies exclude this.

Change Order Coverage: Residential projects frequently expand in scope. Ensure your policy covers revenue increases without requiring mid-term endorsements.

Theft and Vandalism: Residential job sites have higher theft risk (tools, materials, client belongings). Ensure your policy adequately addresses this.

Managing Insurance Costs for Your Remodeling Business

Strategies to Reduce Premiums Without Sacrificing Coverage

1. Accurate Classification This is the #1 way remodeling contractors overpay. If you’re managing subcontractors rather than performing the physical work yourself:

• Ensure your policy uses codes 91583 (residential subcontracted) or 91585 (commercial subcontracted)
• Don’t accept codes 91340/91342 if you’re primarily a GC role
• Use code 91580 if you’re purely supervisory
• Potential savings: 20-35% on General Liability

2. Subcontractor Certificate Management Maintain current Certificates of Insurance from all subcontractors. Insurers will charge you Workers’ Comp on sub costs if you can’t prove they carried their own coverage. This can cost you thousands on a $500K project.

3. Project-Specific Builders Risk Rather than annual Builders Risk coverage, purchase it project-by-project for major renovations. You’ll pay 1-4% of project value only when needed rather than annual premiums.

4. Safety Programs Documented safety programs and training can qualify you for 5-15% discounts on Workers’ Compensation. For a company paying $40K/year in WC premiums, that’s $2,000-$6,000 in savings.

5. Compare Multiple Carriers Remodeling insurance rates vary wildly between carriers. We’ve seen 40% differences in General Liability premiums for identical coverage. One carrier might specialize in residential work while another focuses on commercial – shop accordingly.

6. Bundle Policies Business Owner’s Policies (BOPs) bundle General Liability and Commercial Property for 10-25% less than separate policies. Makes sense if you have a shop, office, or material storage facility.

7. Annual vs. Monthly Payments Paying annually instead of monthly typically saves 5-8% versus financing fees charged for payment plans.

Additional Coverage Considerations

Commercial Auto for Remodeling Contractors

Most remodelers run 2-5 work vehicles:

• Pickup trucks carrying tools and materials
• Cargo vans for equipment transport
• Occasionally dump trucks for debris removal

Required Coverage: Your personal auto policy doesn’t cover business use. Commercial auto is mandatory.

Hired & Non-Owned Coverage: Covers you when employees use their personal vehicles for company business or when you rent vehicles for large material pickup.

Premiums: $1,500-$3,000 per vehicle annually depending on vehicle value, driver records, and coverage limits.

Commercial Property Insurance

If you operate from a shop, warehouse, or office:

• Covers building (if you own it) or tenant improvements (if you lease)
• Protects stored materials, equipment inventory, and office contents
• Includes business interruption coverage if fire or other damage shuts you down

Essential for Remodelers Who:

• Fabricate cabinets, millwork, or custom elements
• Store significant material inventory (tile, fixtures, hardware)
• Have a showroom where clients select finishes

Premiums: $1,200-$5,000 annually depending on location, property value, and fire protection class.

Umbrella / Excess Liability

Provides additional liability coverage above your General Liability and Auto Liability limits:

• Typically adds $1M-$5M in coverage
• Responds after underlying policies are exhausted
• Required by many commercial renovation contracts
• Relatively inexpensive: $500-$1,500 annually for $1M

Particularly important for remodeling contractors working on high-value properties where a single incident could generate multi-million dollar claims.

Employment Practices Liability Insurance (EPLI)

Protects against employee claims of discrimination, harassment, wrongful termination, and other workplace issues. Becomes important once you have 5+ employees. Annual premiums: $1,000-$5,000. Policy limits: $100,000-$1M.

Protect Your Remodeling Business Properly

Remodeling and renovation work creates unique insurance challenges that generic “contractor insurance” doesn’t always address. Between occupied properties, existing structure liability, coordinating multiple trades, and managing extended project timelines, remodeling contractors need specialized coverage.

Why Remodeling Contractors Choose ContractorNerd

✓ Remodeling-Specific Coverage – We work with carriers who understand renovation risks, not just new construction. Get policies that actually cover remodeling work with proper class codes (91340, 91342, 91583, 91585).

✓ Builders Risk Expertise – Don’t get caught without project-specific coverage. We’ll help you determine when Builders Risk is essential and get competitive quotes.

✓ Instant Certificates of Insurance – Commercial clients need COIs immediately. Generate and send them in seconds, not days. Never lose a project to paperwork delays.

✓ Comprehensive Shopping – Compare General Liability, Workers’ Comp, Tools, E&O, Commercial Auto, and Builders Risk from multiple A-rated carriers. See all your options in one place.

✓ Renovation-Focused Advice – Our team understands the difference between new construction and remodeling risk. We’ll ensure your classification matches your actual business model for maximum savings.

The difference between adequate coverage and a policy that actually protects your remodeling business often comes down to understanding renovation-specific exposures and proper classification. We’ve helped hundreds of remodeling contractors find the right coverage at competitive rates.

Ready to see what comprehensive remodeling insurance actually costs?

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Remodeling Insurance FAQs

What insurance do I need for a remodeling business?

At minimum: General Liability ($1M/$2M) with proper class codes (91340 for residential, 91342 for commercial, 91583/91585 if managing subs), Commercial Auto if you drive for work, and Tools/Equipment coverage. Once you hire employees, Workers’ Comp is required. For projects over $100K, add Builders Risk. E&O (faulty workmanship) coverage is highly recommended since remodeling claims often involve workmanship disputes rather than accidents.

How much does remodeling insurance cost?

For a solo contractor doing $200K annually: $5,100-$8,800/year for complete coverage. Small companies (3-5 employees, $750K revenue): $30,500-$54,000/year. Established businesses ($2M+ revenue): $102,500-$198,000/year. Costs vary significantly by state, claims history, and type of work. High-end custom remodeling costs more to insure than basic renovations. Critical: proper classification (using subcontracted codes 91583/91585 if you manage subs) can save 20-35%.

Do I need Builders Risk for remodeling projects?

Yes, for any substantial renovation. If the project is over $100K, spans multiple weeks, involves storing materials on-site, or includes custom work, you need Builders Risk. Your General Liability doesn’t cover damage to the work itself – only damage you cause to things outside your work area. Builders Risk protects the renovation work in progress, materials waiting for installation, and protects the project from fire, theft, weather, or vandalism. Cost: 1-4% of project value.

What’s the difference between remodeling insurance and general contractor insurance?

Remodeling insurance uses specific class codes (91340 residential, 91342 commercial, 91583/91585 for subcontracted work) that account for renovation-specific risks: working in occupied structures, dealing with unknown existing conditions, extended project timelines, and coordination of multiple specialty trades. [Carpenter insurance](link to carpenter page) focuses on woodworking trade risks, while remodeling insurance covers the broader general contractor role in renovation projects. Key additions: Builders Risk for major projects, Installation Floater for materials in transit, and higher Completed Operations coverage since renovation issues appear months later.

Does homeowner’s insurance cover remodeling work?

No. Homeowner’s policies specifically exclude work performed by contractors. This is why you need your own remodeling insurance. If you damage the home, cause an injury, or if the work you’ve completed has issues, the homeowner’s policy won’t respond – they’ll look to you and your insurance. For major renovations, consider requiring the homeowner to purchase a separate Builders Risk policy to protect the project (though many contracts require the contractor to provide this).

What insurance do I need for commercial renovation projects?

Higher limits than residential: $2M/$4M General Liability minimum, often $5M Umbrella. Use proper class codes: 91342 for direct commercial carpentry work, or 91585 if you’re managing subcontractors (saves 20-35%). Builders Risk is nearly always required by the property owner. You’ll need to provide Additional Insured endorsements to property owners and management companies. Commercial projects typically require proof of insurance (COIs) before you start work, sometimes within 24-48 hours of contract signing. [ContractorNerd provides instant COIs] so you never delay project starts.

How much is liability insurance for a home improvement contractor?

General Liability for home remodeling contractors runs 1-3% of annual revenue. At $200K revenue: $2,400-$4,200/year. At $500K revenue: $6,500-$10,500/year. At $1M revenue: $13,000-$21,000/year. California, New York, and Florida run 30-50% higher than national averages. Claims history is the biggest cost driver – one claim can increase premiums 25-40%. Classification matters: if you primarily manage subcontractors, ensure your policy uses code 91583 (residential) or 91585 (commercial) instead of direct carpentry codes to save 20-35%.

Do I need insurance if I mostly use subcontractors?

Absolutely yes – but use the right class codes. Your General Liability should be classified under code 91583 (residential subcontracted work) or 91585 (commercial subcontracted work) rather than codes 91340/91342 (direct carpentry). This reflects your actual risk profile and can save 20-35% on premiums. You need: (1) General Liability covering your oversight role, (2) Commercial Auto if you visit job sites, (3) Rigorous collection of subcontractor Certificates of Insurance. If a sub doesn’t have adequate coverage and gets injured or causes damage, their claim could come back to you as the general contractor.

What’s Contractor’s E&O and why do remodelers need it?

Errors & Omissions (E&O), also called “Faulty Workmanship” coverage, protects you from claims that your work didn’t meet professional standards – even when there’s no accident or property damage. Example: You remodel a bathroom but the tile work cracks six months later. No one was injured, you didn’t damage anything else, but the client wants you to pay for repairs. General Liability won’t cover this (no “accident”), but E&O will. Critical for remodelers because so many claims are about workmanship quality, not accidents. Cost: $500-$2,500/year for $100K-$1M coverage.

Can I get insurance if I just started my remodeling business?

Yes, but expect higher premiums (20-40% more) for the first 1-2 years until you establish a track record. New contractors typically pay: $3,500-$5,500 for GL at $200K revenue (versus $2,400-$4,200 for established contractors). Some carriers won’t write new ventures, but ContractorNerd works with carriers who specialize in startup contractors. You’ll need to provide detailed information about your experience, even if your company is new, to get approved.

How does Workers’ Comp work for remodeling contractors?

Required in most states once you hire employees (not subcontractors). Premium = (Total Payroll ÷ 100) × Rate × Experience Modifier. Rates vary by trade classification: interior work (painting, trim, cabinets – code 5437) runs $4-$8 per $100 payroll, structural work (framing, commercial carpentry – code 5403) runs $10-$15 per $100. If you pay $300K in annual wages and your average rate is $9 per $100, you’ll pay approximately $27,000 in WC premiums. Claims history creates an “experience modifier” that can increase or decrease this base rate by 20-50%.

What GL class code should I use for my remodeling business?

Depends on your actual operations:

• Code 91340: Use if you perform residential carpentry/remodeling work yourself
• Code 91342: Use if you perform commercial carpentry/remodeling work yourself
• Code 91580: Use if you’re purely supervisory (executive/superintendent role)
• Code 91583: Use if you manage subcontractors on residential projects (saves 20-35% vs 91340)
• Code 91585: Use if you manage subcontractors on commercial projects (saves 20-35% vs 91342)

Most remodeling contractors overpay because they’re classified under direct work codes (91340/91342) when they should be under subcontracted codes (91583/91585). Verify your classification at each renewal.

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This article was last updated November 2025