Operating a construction business in Illinois exposes you to substantial risks that make contractor insurance essential. From property damage and workplace injuries to lawsuits and cyber crimes, exposures abound. Purchasing adequate insurance tailored to your business ensures protection for your assets and future.
This guide will uncover typical insurance costs for Illinois contractors across common policies like general liability, workers’ compensation, bonds, equipment coverage and more. We’ll explore the key factors impacting your premiums, provide benchmarking data for small, medium and large contractors, and suggest strategies to secure favorable rates.
Grasping typical contractor insurance expenses in Illinois allows you to evaluate policies fitting your business. While your exact premiums vary based on your unique attributes, this data offers helpful perspective to inform intelligent insurance decisions.
Illinois construction professionals must prioritize proper coverage. General contractors liability insurance safeguards against third-party claims. Workers compensation for contractors ensures your employees are protected on the job. For a comprehensive look at insurance options for a general contractor, consult our expert resources.
Key Factors Influencing Insurance Costs for Contractors
Several key factors can influence insurance costs for contractors:
– Type of work – Certain contracting work like roofing, plumbing and electrical is seen as higher risk and has higher premiums. More hazardous work leads to increased liability costs.
– Years in business – New contractors often pay more until they establish a track record. Insurers see experience as lower risk. Contractors who have been in business for many years tend to get better rates.
– Claims history – Prior claims against a contractor raise premiums, especially if claims were costly. Too many claims or large losses can mean being uninsurable for some coverages. A clean history without major claims helps lower rates.
– Coverage limits – Higher liability policy limits or workers’ compensation coverage selections mean higher premiums. However, limits should adequately protect the contractor without overspending on unnecessary higher limits.
– Number of employees – More employees on payroll increases workers’ comp risk exposure. Rates will rise as a result of more employees. Small contractors with few employees tend to pay less.
– Safety record – Contractors with OSHA violations, worksite accidents, or poor safety records pay higher premiums. Those with proactive safety programs and low injury rates can qualify for discounts. Focusing on safety helps lower risks and premiums.
– Business size – In general, larger contractors often get lower rates based on economies of scale and their ability to spread risks over more work and employees. Small contracting firms with less revenue and fewer employees tend to pay more for the same coverage.
– Insurance provider – Rates can vary significantly between insurance companies based on their financial strength, loss payout reputation, services provided, and the level of competition in the market. A stable, reputable insurer may provide premium savings.
Controlling risk through safety programs, proper coverage limits, business experience, risk transfer, and partnering with the right insurance company helps minimize insurance costs. The goal is to purchase insurance that adequately protects the business without overspending.
Small, Medium, Large Contractor Benchmarking in Illinois
Below we define small, medium and large contractors in Illinois to provide typical revenue, employee, vehicle, and tool ranges. This helps provide general context on business size to compare your costs.
| Criteria | Small Contractor | Medium Contractor | Large Contractor | XL Contractor |
| Revenue | $150K | $500K | $1M | $2.5M |
| Employees | 1 | 3 | 5 | 10 |
| Autos | 1 | 2 | 3 | 5 |
| Worth of Tools | $5K | $10K | $25K | $50K |
| General Liability | Yes | Yes | Yes | Yes |
| Workers’ Comp | Yes | Yes | Yes | Yes |
| Commercial Auto | Yes | Yes | Yes | Yes |
| Inland Marine | Yes | Yes | Yes | Yes |
| Umbrella | No | No | Yes | Yes |
In addition to the general business metrics above, we also highlight typical insurance coverages secured at each contractor size:
| Contractor Type | Insurance Coverages |
|---|---|
| Small Contractor | General Liability, Workers’ Comp, Commercial Auto, Inland Marine |
| Medium Contractor | General Liability, Workers’ Comp, Commercial Auto, Inland Marine |
| Large Contractor | General Liability, Workers’ Comp, Commercial Auto, Inland Marine, Umbrella |
| XL Contractor | General Liability, Workers’ Comp, Commercial Auto, Inland Marine, Umbrella |
Keep in mind premiums can vary based on other attributes like location, services provided, safety record, specific number of employees and vehicles, payroll, and revenue. Contractors who take time to secure tailored coverage with reputable insurance carriers and negotiate favorable terms may achieve rates well below these averages and toward the lower end of the premium ranges we provide.
If uncertain about your specific insurance needs, we encourage you to consult our network of highly skilled and specialized insurance brokers. The brokers in our network specialize in contractor businesses and can often help contractors realize significant savings by accessing the right carrier and tailoring the coverage to the specific needs of the contractor’s business model and operations. To get started, simply complete a brief form about your business, and we’ll match you with a specialist who can guide you through the process.
General Liability Insurance Costs in Illinois
General liability, also commonly called contractors liability insurance, protects your business if a third party alleges property damage or bodily injury caused by your ongoing or completed construction operations. It covers legal defense costs and settlements should you be sued.
Typical premiums can range anywhere from 1% to 5% or more of annual contractor revenue for standard $1 million per occurrence policy limits.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,800 | $3,150 | $2,100 |
| – Medium | $4,900 | $9,200 | $6,700 |
| – Large | $8,000 | $16,600 | $12,600 |
| Plumber | |||
| – Small | $2,400 | $9,900 | $7,300 |
| – Medium | $17,200 | $28,400 | $21,800 |
| – Large | $34,700 | $60,800 | $48,400 |
| Painter | |||
| – Small | $1,500 | $4,400 | $2,400 |
| – Medium | $2,600 | $8,600 | $6,200 |
| – Large | $4,100 | $18,900 | $11,500 |
| Landscaper | |||
| – Small | $2,211 | $4,751 | $3,000 |
| – Medium | $6,689 | $10,034 | $8,300 |
| – Large | $12,917 | $19,901 | $16,400 |
| Handyman | |||
| – Small | $2,800 | $6,500 | $4,900 |
| – Medium | $9,100 | $15,700 | $13,500 |
| – Large | $19,300 | $37,200 | $28,300 |
| Carpenter | |||
| – Small | $2,400 | $7,500 | $4,700 |
| – Medium | $7,900 | $17,000 | $12,600 |
| – Large | $14,300 | $39,000 | $26,900 |
| General Contractor | |||
| – Medium | $6,400 | $18,700 | $9,800 |
| – Large | $12,600 | $26,500 | $16,500 |
| – XL | $29,100 | $92,200 | $52,500 |
Below are estimated premium ranges for small, medium and large contractors in Illinois:
| Contractor Type | Est. Premium Range |
|---|---|
| Small Contractor | $1,500 – $7,500 |
| Medium Contractor | $5,000 – $25,000 |
| Large Contractor | $10,000 – $50,000 |
| XL Contractor | $25,000 – $125,000 |
There are several key factors that can influence general liability insurance costs for contractors in Illinois:
– Type of contracting work – Certain types of higher risk contracting work like roofing, plumbing, electrical, and structural work tend to have higher general liability rates. The more hazardous exposures that a contractor’s work presents, the higher premiums will be. More routine lower risk work leads to lower premiums.
– Annual revenues – Insurers use a contractor’s annual sales and receipts as a proxy for overall business size and risk exposure. Contractors with higher revenues will generally pay more for the same coverage limits since they are viewed as having greater overall risk that could lead to potential claims.
– Claims history – If a contractor has past liability claims filed against them for damages or injuries, insurance rates for general liability coverage will increase, especially if the claims were costly or numerous. Too many severe claims that result in high dollar losses for the insurance company can even make a contractor uninsurable. A clean claims history helps lower rates.
– Years in business – New and inexperienced contractors are viewed as higher risk by insurers and will pay higher premiums for general liability until they establish a solid track record in business. Contractors who have been in operation for many years tend to get better rates and premium discounts.
– Risk transfer – Contractors who take steps to transfer or reduce their risk such as requiring subcontractors to carry adequate general liability insurance, securing performance bonds, and requiring proof of insurance from all subcontractors will generally pay lower premiums since they are mitigating risk for the insurance company.
– Policy limits – Contractors who purchase higher general liability limits will pay higher premiums. However, reducing limits too low to cut costs may expose the contractor to uncovered losses should a large claim exceed lower policy limits. Contractors should purchase appropriate limits to cover potential losses without overspending.
– Deductibles – Choosing a higher deductible, which is the amount the contractor must pay out-of-pocket on a claim before insurance coverage kicks in, can significantly reduce general liability premiums. This transfers more risk back to the contractor.
– Insurance company – The insurer’s financial strength, loss payout reputation, customer service offerings, and price competitiveness as well as the overall level of competition in the contractor insurance market can impact pricing for general liability policies. Choosing the right carrier is key.
Workers Compensation Insurance Costs in Illinois
Workers’ compensation insurance covers employee injuries, illnesses, and fatalities that happen within the scope of their job duties. Premiums for workers’ compensation can range significantly depending on the size and risk profile of the contractor. However, costs in Illinois typically rank among the highest in the nation compared to other states.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,675 | $3,664 | $2,094 |
| – Medium | $4,711 | $10,364 | $6,281 |
| – Large | $7,328 | $16,227 | $10,469 |
| Plumber | |||
| – Small | $3,509 | $7,676 | $4,386 |
| – Medium | $9,869 | $21,713 | $13,159 |
| – Large | $15,352 | $33,995 | $21,932 |
| Painter | |||
| – Small | $2,326 | $5,088 | $2,907 |
| – Medium | $6,541 | $14,390 | $8,721 |
| – Large | $10,175 | $22,530 | $14,536 |
| Landscaper | |||
| – Small | $1,656 | $3,623 | $2,070 |
| – Medium | $4,658 | $10,247 | $6,210 |
| – Large | $7,245 | $16,043 | $10,350 |
| Handyman | |||
| – Small | $6,754 | $14,774 | $8,442 |
| – Medium | $18,995 | $41,789 | $25,326 |
| – Large | $29,548 | $65,427 | $42,211 |
| Carpenter | |||
| – Small | $5,822 | $12,736 | $7,278 |
| – Medium | $16,375 | $36,024 | $21,833 |
| – Large | $25,472 | $56,401 | $36,388 |
| General Contractor | |||
| – Medium | $20,261 | $44,321 | $25,326 |
| – Large | $31,658 | $69,647 | $42,210 |
| – XL | $59,094 | $130,851 | $84,420 |
Below are estimated workers’ compensation premium ranges for Illinois contractors:
| Contractor Type | Est. Premium Range |
|---|---|
| Small Contractor | $3,000 – $7,000 |
| Medium Contractor | $10,000 – $25,000 |
| Large Contractor | $25,000 – $50,000 |
| XL Contractor | $50,000 – $100,000+ |
There are several important factors that influence workers’ compensation insurance costs for contractors in Illinois:
– Total payroll – The total annual payroll and number of employees are heavily factored into workers’ comp insurance premium calculations. Contractors with higher payrolls and more employees will almost always pay higher premiums.
– Job classifications – Each employee is classified by the type of carpentry, electrical, plumbing, roofing, or other construction work they perform. These job types are assigned various risk classifications, with higher risk work garnering much higher rates. Office employees also get more favorable classifications.
– Experience rating – Premiums are also impacted by a contractor’s past loss history within a set period of time. This results in an ‘experience rating’ which can either lead to an ‘experience credit’ reducing premiums for contractors with fewer and lower cost claims, or an ‘experience debit’ increasing premiums for firms with frequent and more severe claims.
– Industry trends – The rates insurance companies charge for the entire construction industry in Illinois also influence costs. If losses and claims rise across the industry, rates will increase as well. Rates decline if overall loss experience improves.
– Safety record – Contractors with strong workplace safety programs, training, and low injury rates can qualify for discounted premium rates by becoming ‘safety certified’. Unsafe contractors pay more for coverage.
– Subcontractor coverage – Contractors who use subcontractors and do not ensure that those subs carry their own proper workers’ compensation coverage will face significantly higher premiums as they take on that risk for uninsured subcontractors.
– State laws – Each state has unique laws and regulations governing workers’ compensation insurance including benefits, rate-setting, discounts, etc. These laws directly impact the rates Illinois contractors pay for this mandatory coverage.
– Deductible program – Contractors can lower their premiums by choosing a deductible on workers’ compensation policies. This increases the portion the contractor pays out of pocket for each claim.
– Insurance company – The reputation, services, stability and pricing of the insurance carrier all impact overall costs. Choosing a high-quality workers’ comp insurer provides stability and potential savings.
Overview of Additional Common Insurance Coverages for Contractors
In addition to general liability and workers’ compensation coverage, contractors in Illinois need several other standard policies to fully protect their business. Here is an overview of supplemental coverages along with typical premiums:
Commercial Auto Insurance
Covers vehicles used for business purposes from liability claims. Typical annual premiums range from approximately $1,500 – $4,000+ per vehicle depending on factors like vehicle type, loss history, and policy limits.
Commercial Inland Marine (Tools & Equipment) Insurance
Protects expensive tools and equipment a contractor uses for their projects from damage, theft or loss whether on a job site or in transit. Typical premiums range from approximately $1,500 – $5,000+ annually for limits between $15,000 to $50,000+ in coverage, depending on the value of tools.
Surety Bonds
Required bid, performance and payment bonds for many public works and large-scale construction projects. Typical premiums range from approximately 1-3% of the total bond amount required, but this varies widely based on the contractor’s credit and financials.
Commercial Property Insurance
Safeguards buildings like offices, warehouses, and other commercial properties a contractor owns from damage or loss. Typical premiums range from approximately $2,000 – $20,000+ annually depending on property values, locations, and coverage limits.
Employment Practices Liability Insurance
Protects against employee lawsuits for discrimination, wrongful termination, harassment etc. Typical premiums range from approximately $2,500 – $7,500+ annually depending on company size and limits.
Cyber Liability Insurance
Responds to cyber risks like data breaches, hacking, computer virus attacks and electronic theft. Typical premiums range approximately $1,000 – $5,000+ annually depending on revenue and coverage limits.
Umbrella Liability Insurance
Provides additional liability limits above other policies like general liability. Typical premiums range approximately $1,000 – $2,000+ annually per $1 million in additional coverage limits.
Purchasing the right mix of these contractor insurance policies from financially reputable providers ensures your business is properly protected at competitive rates. Work with a knowledgeable specialist to customize your coverages.
Partnering With ContractorNerd.com For Your Illinois Insurance
Finding the right insurance for your contracting business is crucial. Look no further than ContractorNerd.com, your dedicated partner in securing contractor insurance. Our team of experts understands the unique risks contractors face. We aim to provide you with tailored solutions that properly safeguard your company’s interests.
Why Choose ContractorNerd.com?
1. Specialized Expertise We recognize that one size does not fit all in insurance for contractors. Our network is comprised of insurance specialists focused exclusively on the needs of contractor businesses. We grasp the intricacies and challenges you face to help guide tailored solutions.
2. Access to Top Providers: Over the years, we’ve cultivated strong insurance carrier relationships. Choosing us gives you access to a broad range of trusted insurers. Our connections facilitate securing multiple quotes designed around your specific requirements.
3. Cost-Effective Coverage: We understand balancing adequate protection and affordable premiums. Our specialists identify the right coverage, while spotting potential gaps and savings opportunities. This enables optimizing protection without overspending.
4. Personalized Guidance: Our dedicated team takes time to understand your business and goals. Rather than just selling insurance, we aim to educate, consult and build long-term relationships. We’re here to answer all your questions.
5. Streamlined Experience: We simplify the insurance process, helping demystify coverages. Our online tools, resources and support make securing the proper contractor insurance straightforward.
Don’t Leave Your Illinois Business Exposed
Insurance costs for contractors in Illinois vary based on profession, experience, location and other factors. Don’t leave your business vulnerable by either overpaying or being underinsured. Partnering with ContractorNerd.com provides peace of mind that you are making smart insurance investments.
Conclusion – Partner With the Experts at ContractorNerd.com
Your contractor business is your livelihood, and protecting it is imperative. At ContractorNerd.com, we’re committed to properly safeguarding your company. Don’t settle for generic insurance or spend endless hours gathering broker quotes. Choose the dedicated experts at ContractorNerd.com to secure your business for the long haul. Get a personalized quote today – it’s the first step toward comprehensive, cost-effective protection tailored to your contracting business.