Contractors insurance is important, yet many owners and general contractors find getting contractors liability insurance quotes and tailored coverage all too difficult. No more.
At ContractorNerd, we make contractor liability insurance and business insurance tailored, easy, and data-driven. We’ve analyzed quotes for over 800 contractors from top insurance carriers across all 50 states to provide insights on what you need, what it should cost, and how to get quotes. Let’s start with the basics.
Contractors Insurance – What Do You Need?
For general contractors, understanding the necessary insurance coverages is essential for risk management and legal compliance. Your coverage needs change as your business grows. Below are typical insurance coverage needs by business stage:
- Solo Contractors:
- Contractor Liability Insurance (aka General Liability) is fundamental covering property damage and non-employee bodily injury. Many customers will ask if you’re licensed and insured; this is the insurance they are asking about.
- Products & Completed Operations Insurance covers your liability after project completion, unlike general liability which only covers ongoing work. This essential coverage can be as an endorsement onto your Contractor Liability policy.
- Contractor’s E&O (aka Faulty Workmanship) coverage protects you against claims arising out of faulty workmanship, materials or products; typically you can add this at a low limit onto your Contractor Liability policy.
- Inland Marine (aka Tools and Equipment) coverage is also recommended. This covers your tools which enable you to do good work; it can frequently be added onto your Contractor Liability policy at a lower limit or as a standalone policy with a higher limit.
- Commercial Auto coverage is needed if you have a truck you use exclusively for work.
- Contractor Liability Insurance (aka General Liability) is fundamental covering property damage and non-employee bodily injury. Many customers will ask if you’re licensed and insured; this is the insurance they are asking about.
- Small Contractor Business (2-3 Employees):
- Workers compensation is required when you hire employees (not subcontractors)
- Commercial property is important to protect workshops, lumber storage areas, and offices.
- Hired & Non-Owned Auto coverage protects against liability when using rented or employee-owned vehicles for business purposes.
- Leased Equipment Coverage protects rented equipment against damage, loss, or theft. Contractors typically choose $50,000 in coverage to ensure protection when renting equipment for various projects.
- Umbrella Insurance (or higher limits on your Contractor Liability policy) should be considered as your business grows in revenue and project count.
- Established Construction Business (10+ Employees):
- $2-5 Million Liability Umbrella extends your liability coverage beyond the standard $1 million limit required by larger projects. It increases your general liability, workers compensation, and auto liability limits by the amount purchased—for example, a $5 million umbrella adds to your existing $1 million coverage for $6 million total protection.
- Employment Practices protects against employee lawsuits involving discrimination, harassment, wrongful termination, and hiring practices. Essential for companies with multiple employees, especially during growth phases or downsizing.
- Pollution Insurance covers losses from contamination during operations or waste transport. While typically purchased as standalone coverage, some general liability policies can include basic pollution coverage, often starting at $25,000.
- Contractors E&O (aka Professional Liability) coverage protects against errors and omissions in your consulting work or subcontractor mistakes. Essential for businesses that provide construction consulting or manage subcontractors.
- Builder’s Risk Insurance (aka Course of Construction Insurance) protects buildings under construction from fire, lightning, hail, explosions, theft, vandalism, and natural disasters.
- Installation Floater protects materials and equipment while in transit or stored at worksites before installation – essential for contractors who transport and store valuable materials before completing installation work.
Contractor Liability Insurance – aka General Liability Insurance for Contractors
This is one of the most crucial insurance policies for contractors, because it covers the liability risks while actively working on jobsites. Types of claims commonly faced include:
- Property Damage: Accidental damage to a client’s building, floors, walls, etc.
- Bodily Injury: A client, visitor or bystander getting hurt due to your work activities.
- Defective Products: Lawsuits over an installed product that turns out defective.(Add-On)
- Completed Work: Lawsuits over issues from past completed jobs. (Add-On)
Contractor Liability Limits: Most contractors start with $1 million per occurrence/$2 million aggregate. Experts recommend at least $1 million in liability coverage. As your business continues to grow, it is worth exploring higher limits or an umbrella policy to offer additional liability protection.
Contractor Liability Premiums: Premiums will typically fall between 1-3% of annual revenue. Our summarized quote data below shows how this average premiums from leading carriers changes by State. These average premiums are specific to contractors.
Key Factors Impacting Contractor Liability Premium:
- Revenue: Higher revenues mean expanded operations and greater claim exposure. This prompts higher premiums.
- Limits: Higher limits means more risk and higher premiums.
- Claims History: Frequent past claims drive premiums up. A clean record keeps GL affordable.
- Location: State regulations and cost of claims impacts premiums.
- Services Offered: Diverse construction capabilities create unique risks that uniquely influence premiums. Evaluate all services to understand related expenses.
General Contractor Insurance Cost – ContractorNerd’s Quotes Study
We crunched the numbers with over 800 Contractor Liability insurance quotes from leading carriers for general contractors across different states and business sizes. While precise rates are highly individualized, average annual premiums for contractors typically range from:
- Small General Contractor ($500K Revenue) – $4,000 to $6,800
- Medium General Contractor ($1M Revenue) – $6,300 to $13,300
- Large Construction Business ($2.5M Revenue) – $24,300 to $36,500
New general contractors without history may pay 25%+ more initially, as insurers need time to evaluate the risk. After successfully operating for several years without incidents, premiums often decrease, reflecting a more favorable risk assessment.
Below is a table summarizing typical general liability insurance premiums for contractors based on a sample of states. Each scenario assumes the following for each revenue size:
- $500K Revenue: Assumes 1 owner and 3 employees with ~10% subcontracting costs and 5+ years of operating without claims.
- $1M Revenue: Assumes 1 owner and 5 employees with ~10% subcontracting costs and 5+ years of operating without claims.
- $2.5M Revenue: Assumes 1 owner and 10 employees with ~10% subcontracting costs and 5+ years of operating without claims.
| State | $500K Revenue | $1M Revenue | $2.5M Revenue | |||
| Avg. Premiums | % of Revenue | Avg. Premiums | % of Revenue | Avg. Premiums | % of Revenue | |
| California | $5,890 | 1.2% | $14,230 | 1.4% | $30,100 | 1.2% |
| Texas | $9,680 | 1.9% | $15,590 | 1.6% | $47,290 | 1.9% |
| Florida | $10,140 | 2.0% | $16,580 | 1.7% | $42,420 | 1.7% |
| Massachusetts | $7,580 | 1.5% | $12,330 | 1.2% | $41,700 | 1.7% |
| Pennsylvania | $8,610 | 1.7% | $14,450 | 1.4% | $38,080 | 1.5% |
| Illinois | $11,420 | 2.3% | $18,140 | 1.8% | $55,170 | 2.2% |
| Ohio | $4,850 | 1.0% | $7,800 | 0.8% | $21,830 | 0.9% |
| Georgia | $6,000 | 1.2% | $10,160 | 1.0% | $26,560 | 1.1% |
| North Carolina | $5,240 | 1.0% | $8,390 | 0.8% | $23,500 | 0.9% |
| Michigan | $6,000 | 1.2% | $9,700 | 1.0% | $34,910 | 1.4% |
If you’re interested in learning more about contractor insurance in your state, we’ve created state-specific guides tailored for all 50 states. Feel free to explore these to ensure you’re well informed and adequately protected.
For detailed information on the various insurance options available, visit our other businesses page.
Potential Savings on General Liability Insurance for Contractors
Working with an independent insurance agent who specializes in Contractor Insurance can help secure better rates and coverage terms. Below are actual savings examples for contractors at different revenue levels – same operations, different carriers. If your premium matches the averages above, we recommend that you get quotes to see if you could get equivalent or improved coverage at a more competitive rate.
| State | $500K Revenue | $1M Revenue | $2.5M Revenue | |||
| Favorable Rate | Potential Savings | Favorable Rate | Potential Savings | Favorable Rate | Potential Savings | |
| California | $4,260 | 28% | $12,160 | 15% | $29,810 | 1% |
| Texas | $4,010 | 59% | $8,020 | 49% | $26,510 | 44% |
| Florida | $5,000 | 51% | $9,990 | 40% | $28,790 | 32% |
| Massachusetts | $4,830 | 36% | $9,650 | 22% | $24,500 | 41% |
| Pennsylvania | $4,560 | 47% | $9,120 | 37% | $27,450 | 28% |
| Illinois | $5,840 | 49% | $10,410 | 43% | $24,100 | 56% |
| Ohio | $2,310 | 52% | $4,620 | 41% | $13,280 | 39% |
| Georgia | $3,310 | 45% | $6,620 | 35% | $17,420 | 34% |
| North Carolina | $2,140 | 59% | $4,290 | 49% | $12,480 | 47% |
| Michigan | $3,180 | 47% | $6,360 | 34% | $17,090 | 51% |
Workers’ Compensation Insurance for Contractors
Workers’ compensation insurance is a crucial policy for contractors. It provides coverage for your employees if they get hurt or sick because of their job. This insurance helps pay for medical care, lost wages, and other benefits for injured workers.
For contractors, premiums typically range from $2 to $17+ per $100 of payroll, depending on the specific class code and other factors.
Contractor Workers’ Comp Limits: State-dependent. Each state sets its own requirements for coverage limits.
Contractor Workers’ Comp Premiums: $2 to $17+ per $100 of payroll annually
Key Factors Impacting Contractor Workers’ Comp Premium:
- Class Codes: Employees are categorized based on job type and risk level. Higher-risk roles lead to higher premiums.
- Code 5606 (lowest rate): For project oversight with no direct on-site work
- Code 5645 (medium rate): For small residential buildings up to three stories
- Code 5403 (highest rate): For complex projects over three stories or commercial buildings
- Payroll Size: Larger payrolls generally result in higher premiums, as the formula is typically (Payroll / $100) * Rate * Experience Modifier.
- Experience Modifier: This factor reflects your claims history, starting at 1.0. A lower modifier can decrease premiums, while a higher one increases them.
- State Regulations: Each state has its own workers’ compensation laws, affecting benefits, claims processes, and baseline rates.
- Safety Programs: Implementing and documenting robust safety initiatives can potentially lower your premiums.
- Claims History: A history of frequent or severe claims can significantly increase your premiums.
Remember, while workers’ compensation can seem expensive, it protects both you and your employees. It’s not just a legal requirement in most states—it’s a crucial part of running a responsible and sustainable contracting business.
Most and least expensive states for Contractor’s Workers Compensation Insurance:
| State | Premium per $100K Payroll |
| Georgia | $43,420 |
| South Carolina | $21,480 |
| Illinois | $19,230 |
| Louisiana | $17,760 |
| Connecticut | $17,170 |
| State | Premium per $100K Payroll |
| North Dakota | $3,510 |
| Wyoming | $4,310 |
| Texas | $4,390 |
| Ohio | $4,590 |
| Indiana | $5,560 |
If you’d like to learn more and give our workers comp calculator a spin, please see our in-depth guide on Workers Compensation Insurance for Contractors.
Additional Insurance Contractors Should Consider
Here’s a concise version of all sections:
Inland Marine Insurance
Covers tools and equipment onsite and in transit. For $15k-$50k coverage, expect $1,500-$5,000+ annually. Rates depend on equipment value, use, and storage location.
Commercial Auto Insurance
Covers business vehicles. Annual premiums: $1,000-$4,000 per vehicle, with $500k-$1M limits. Rates vary based on fleet size, vehicle types, and driver records.
Bonds
Guarantees contract fulfillment. Limits vary by location and project ($10,000-$500,000+). Premium: 1-3% of bond amount. Higher rates apply for low credit scores. California requires contractors to carry a $25,000 contractor bond to operate independently. Verify your compliance with all local and project mandates.
Commercial Property Insurance
Protects buildings and offices against damage, theft, and disasters. Annual premiums: $2,000-$20,000+, based on property value, location, and construction type.
Umbrella Liability Insurance
Provides extra liability coverage. $1M limits costs $1,000-$2,000+ annually, Larger construction companies can explore $3M+ limits. Rates vary with company size, services, and claims history.
Employment Practices Liability Insurance (EPLI)
Protects against employee lawsuits. $500k-$1M coverage costs $2,500-$7,500+ annually. Rates based on employee count, revenue, and claims history.
Builder’s Risk Insurance
Protects ongoing construction projects. Premium: 0.15-0.75% of project value. Costs vary with project value, duration, and complexity.
Why Insure Your Contracting Business With ContractorNerd?
Our network of contractor insurance specialists stands apart, offering expertise tailored to your specific needs. At the heart of our service is a unique platform that combines advanced technology with human understanding. This means you get tailored service from an agent who fully comprehends the intricacies of your business. They will shop multiple carriers to find you the right policy with the coverages you need at the best available rate.
Get quotes tailored for your business today.