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?
Insurance needs change as your business grows. Here’s a quick guide to essential coverage by business size:
Solo Contractors:
- Contractor Liability Insurance (General Liability)
Covers property damage and non-employee bodily injury. This is the insurance customers typically require when asking if you’re “licensed and insured.” - Products & Completed Operations Insurance
Covers liabilities after project completion. Often added as an endorsement (an add-on or modification) to your general liability policy. - Contractor’s Errors & Omissions (E&O)
Protects you from claims related to faulty workmanship or materials. Usually an inexpensive add-on to general liability. - Inland Marine (Tools & Equipment Coverage)
Covers tools and equipment against damage, theft, or loss, either as an add-on to your general liability policy or standalone policy for higher limits. - Commercial Auto Insurance
Necessary if you use vehicles exclusively for business.
Small Contractor Business (2–3 Employees):
Solo coverages, plus:
- Workers’ Compensation Insurance (required)
Provides benefits for employee injuries or illnesses related to work. - Commercial Property Insurance
Protects your workshops, offices, and storage areas. - Hired & Non-Owned Auto Coverage
Covers rented or employee-owned vehicles used for business purposes. - Leased Equipment Coverage
Protects rented equipment from damage, loss, or theft. Contractors commonly choose around $50,000 coverage. - Umbrella Insurance or Higher Liability Limits
Adds additional liability protection as your business grows (extra coverage above your standard insurance limits, useful for large claims).
Established Construction Business (10+ Employees):
All previous coverages, plus:
- Liability Umbrella ($2M–$5M)
Extends liability limits beyond your standard policy, essential for larger projects. - Employment Practices Liability Insurance (EPLI)
Protects against employee lawsuits involving discrimination, harassment, wrongful termination, and hiring practices. - Pollution Insurance
Covers contamination-related incidents during operations or waste transport. Can be standalone or sometimes added to your general liability policy. - Professional Liability (E&O)
Protects against errors and omissions in your consulting or subcontracting oversight. - Builder’s Risk (Course of Construction)
Covers structures under construction against fire, theft, vandalism, and natural disasters. - Installation Floater
Protects materials and equipment while in transit or stored at worksites awaiting installation (coverage specifically for stored or transported items before they’re installed).
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 (maximum total amount the policy will pay in a policy period, no matter how many claims). 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 (a rating based on your past claims; lower numbers mean fewer claims and lower premiums), 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.