Purchasing adequate and cost-effective insurance is crucial for construction companies in Indiana looking to protect their business from the diverse risks inherent in the industry. As a contractor, you face potential liabilities and hazards ranging from property damage and employee injuries to lawsuits, natural disasters, and cyber attacks. Having the proper insurance tailored to your specific operations can safeguard your assets and future.
This comprehensive guide will uncover typical insurance costs for Indiana contractors across popular policies like general liability, workers’ compensation, surety bonds, equipment coverage, builder’s risk, and more. We’ll explore the key variables that can impact your insurance premiums, provide benchmarking data for small, medium and large contractors, and suggest strategies to help you secure favorable rates.
Understanding typical contractor insurance expenses in Indiana allows you to better evaluate policies and coverage solutions suitable for your business. While your exact premiums depend on your unique risk attributes, this data offers helpful context to inform smart insurance decisions.
Indiana contractors should be well-prepared with appropriate insurance. Commercial general liability insurance for contractors is essential for risk management. Understanding contractor workers comp insurance protects your workforce from job-related injuries. Our guide on finding cheap contractors insurance can help you find affordable coverage.
Key Factors That Influence Insurance Costs
There are a number of important factors that can influence insurance costs for contractors in Indiana:
– Type of contracting work – The specific trade being performed (roofing, plumbing, electrical, etc.) impacts perceived risk and therefore dictates insurance rates. More hazardous contracting fields are seen as higher risk and tend to have higher insurance premiums.
– Years in business – Contractors who are new to the business often pay higher premiums until they establish a solid track record over time. Insurance companies view experience as an indicator of lower risk.
– Claims history – Past claims made against a contractor will often result in increased premiums, especially if the claims were particularly severe or frequent. Too many claims can even make a contractor uninsurable. Maintaining a clean claims history will help keep rates lower.
– Coverage limits – The higher the limits of coverage sought for policies like general liability insurance or workers’ compensation, the more expensive the premiums. Contractors must weigh the cost of higher premiums versus the amount of protection that is prudent for their business.
– Number of employees – Having more employees on the payroll increases the overall risk exposure primarily for workers’ compensation. More employees equals greater exposure, which translates into higher premium costs.
– Safety record – Contractors with poor safety histories, OSHA violations or worker injuries can expect to pay higher premiums due to their increased level of risk. Proactively maintaining solid safety standards helps reduce insurance costs.
– Business size – In general, larger contracting firms are often able to get lower insurance rates based on economies of scale and their ability to spread risk over a broader base. Smaller contracting businesses usually end up paying more.
– Insurance provider – Insurance rates can vary significantly between different insurance companies based on factors like financial strength, service, industry experience, and underwriting appetite.
The key is to maintain excellent business records, safety practices, trade qualifications, and choose appropriate types and limits of coverage to help minimize insurance costs. Controlling risk through strategic safety programs, contractual risk transfer, and experienced operations reduces claims frequency and severity, thereby lowering premiums.
Small, Medium, Large Contractor Benchmarking
The table below displays typical insurance coverages secured by contractors along with our definitions of small, medium and large contractors in Indiana. This can serve as a helpful general benchmark to give you an idea of how your insurance costs may compare.
| 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 |
Keep in mind your actual premiums can fluctuate based on your specific attributes like business location, services provided, safety track record, number of employees and vehicles, payroll size, annual revenue, and more. In addition, contractors who secure tailored insurance coverage from experienced brokers accessing high-quality insurance carriers with favorable terms may achieve premium rates well below the averages and toward the lower end of the ranges we cite in the benchmarking data that follows.
If you have any doubts, we encourage you to thoroughly review your insurance program with a trusted advisor. The brokers in our network specialize in assisting contractors in realizing significant savings by accessing the right insurance carriers and tailoring coverage to the unique risks and operations of contractor businesses. To get started, you only need to complete a short form, and we’ll match you with a specialist broker who can guide you through the process.
General Liability Insurance Costs
General liability, sometimes referred to as CGL, is an essential policy that protects your contracting business in the event a third party alleges bodily injury or property damage arising from your work or business operations.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,100 | $2,100 | $1,500 |
| – Medium | $3,300 | $5,800 | $4,200 |
| – Large | $6,100 | $10,600 | $7,900 |
| Plumber | |||
| – Small | $4,100 | $9,400 | $7,200 |
| – Medium | $18,900 | $28,350 | $23,300 |
| – Large | $43,600 | $56,680 | $48,400 |
| Painter | |||
| – Small | $1,400 | $4,000 | $1,900 |
| – Medium | $2,700 | $7,300 | $5,000 |
| – Large | $4,200 | $15,200 | $9,700 |
| Landscaper | |||
| – Small | $1,143 | $2,019 | $1,500 |
| – Medium | $3,396 | $5,374 | $4,200 |
| – Large | $5,671 | $10,840 | $8,500 |
| Handyman | |||
| – Small | $1,600 | $3,200 | $2,600 |
| – Medium | $3,800 | $10,000 | $7,700 |
| – Large | $8,800 | $19,800 | $15,200 |
| Carpenter | |||
| – Small | $2,200 | $6,500 | $4,000 |
| – Medium | $7,400 | $13,800 | $11,100 |
| – Large | $13,500 | $30,700 | $23,500 |
| General Contractor | |||
| – Medium | $4,700 | $14,600 | $7,200 |
| – Large | $8,700 | $20,600 | $12,300 |
| – XL | $20,600 | $48,000 | $28,500 |
General liability insurance helps cover legal defense costs and compensatory damages you become legally obligated to pay as a result of a covered claim. Typical general liability insurance policy limits for small to mid-size contractors range from $500,000 up to $2 million per occurrence and aggregate.
Based on these coverage parameters, here are typical estimated general liability premium ranges contractors in Indiana could expect to pay based on their annual revenue:
Typical General Liability Premiums
| Annual Revenue | Est. Premium Range |
|---|---|
| $150,000 | $1,500 – $7,500 |
| $500,000 | $5,000 – $25,000 |
| $1 Million | $10,000 – $50,000 |
Premiums are typically expressed as a percentage of gross annual revenue, and generally fall within a range of 1% to 5% or more depending on various risk factors.
There are a number of important factors that can influence general liability insurance costs for contractors:
– Type of contracting work – The specific trade being performed (roofing, electrical, HVAC, plumbing, etc.) plays a significant role in perceived risk and liability claim frequency, thus impacting rates. More hazardous contracting fields are rated as higher risk.
– Annual revenue – Insurers associate higher gross revenues with larger contracting businesses which equate to greater exposure. That drives proportionally higher premiums.
– Claims history – Past claims made against a contractor will often result in increased premiums, especially if the claims were particularly severe, large, or frequent. Too many claims can even make a contractor uninsurable in the standard insurance market. Maintaining a positive claims history helps keep rates lower.
– Years in business – Contractors who are new to the business often pay higher premiums until they establish a solid track record over a number of years. Extensive experience is viewed as an indicator of lower risk by insurance companies.
– Risk transfer – Contractors who proactively transfer some potential risk through tactics like requiring subcontractors to carry adequate insurance, securing performance bonds, obtaining proof of insurance from all subcontractors, and limiting indemnification can reduce insurance costs.
– Policy limits – Paying for higher liability insurance policy limits means your premiums will be higher. However, lowering limits too much could potentially expose you to major uncovered losses should a large claim arise.
– Deductibles – Choosing a higher deductible, which is the amount the contractor pays out-of-pocket on a claim before insurance coverage kicks in, can significantly reduce premiums. This is because you are self-insuring for a portion of losses.
– Insurance company – Rates can vary among insurers based on factors like financial strength, service reputation, industry experience, loss payout history, and market competition.
Workers Compensation Insurance Costs
Workers’ compensation insurance covers medical expenses and lost wages for employees who sustain an injury or illness caused by or arising from their work. Every business with employees must carry this coverage by law.
| Low | High | Average | |
| Electrician | |||
| – Small | $627 | $1,372 | $784 |
| – Medium | $1,764 | $3,882 | $2,353 |
| – Large | $2,745 | $6,077 | $3,921 |
| Plumber | |||
| – Small | $850 | $1,860 | $1,063 |
| – Medium | $2,391 | $5,260 | $3,188 |
| – Large | $3,719 | $8,235 | $5,313 |
| Painter | |||
| – Small | $815 | $1,784 | $1,019 |
| – Medium | $2,293 | $5,045 | $3,057 |
| – Large | $3,567 | $7,898 | $5,096 |
| Landscaper | |||
| – Small | $936 | $2,048 | $1,170 |
| – Medium | $2,633 | $5,792 | $3,510 |
| – Large | $4,095 | $9,068 | $5,850 |
| Handyman | |||
| – Small | $1,868 | $4,086 | $2,335 |
| – Medium | $5,253 | $11,557 | $7,004 |
| – Large | $8,172 | $18,095 | $11,674 |
| Carpenter | |||
| – Small | $1,550 | $3,390 | $1,937 |
| – Medium | $4,359 | $9,590 | $5,812 |
| – Large | $6,781 | $15,015 | $9,687 |
| General Contractor | |||
| – Medium | $5,604 | $12,259 | $7,005 |
| – Large | $8,756 | $19,264 | $11,675 |
| – XL | $16,345 | $36,193 | $23,350 |
For contractors, workers’ comp premiums can range widely based on risk profile, claims history, safety initiatives, and other factors. Premiums are calculated based on payroll and job classifications. Indiana ranks in the middle of states for average workers’ comp rates.
Here are typical estimated workers’ compensation premium ranges contractors in Indiana may expect based on their annual payroll:
Typical Workers’ Comp Premiums
| Annual Payroll | Est. Premium Range |
|---|---|
| $100,000 | $2,500 – $12,500 |
| $500,000 | $12,500 – $62,500 |
| $1 Million | $25,000 – $125,000 |
Workers’ compensation insurance costs share some key influencers with general liability, but also have some unique drivers including:
– Payroll – Total payroll and number of employees factor prominently into premium calculations, as it is the exposure basis. Higher payroll exposure means higher premiums.
– Job classification – Each employee is assigned a risk class based on their occupation and duties. Higher risk work such as roofing has higher rates than clerical office work.
– Experience rating – Businesses are graded on their loss history, with firms having fewer and lower cost claims getting an ‘experience credit’ reducing their premiums. High frequency claims lead to an ‘experience debit’, increasing premiums.
– Industry trends – Workers’ comp premiums may rise across the board if losses for the construction industry as a whole rise. The industry’s risk environment impacts rates.
– Safety initiatives – Proactive safety programs and low injury rates can qualify contractors for discounted premiums of up to 25% in Indiana. However, frequent injuries and safety incidents lead to significantly increased premiums due to elevated risk.
– Subcontractor coverage – Contractors misclassifying uninsured subcontractors or not requiring subs to carry their own workers’ comp coverage can face dramatically increased premiums and fines. Following proper independent contractor classification procedures and contractual risk transfer lowers premium costs.
– State laws – Each state has its own laws regulating benefits, exclusions, experience rating formulas, premium discounts, and other rules that directly impact the costs of workers’ comp insurance for employers in that state. The unique regulations in Indiana influence costs.
– Insurance carrier – Rates can vary among insurers based on factors like financial strength, underwriting appetite, service reputation, and local pricing model. Additionally, the chosen insurer’s expertise in contractor operations can impact the quality of coverage.
Additional Insurance Coverages
Beyond general liability and workers’ compensation insurance, contractors in Indiana need to address risks with supplemental insurance policies:
Commercial Auto Insurance
Covers vehicles used for business purposes like trucks, vans, trailers. Typical premiums range from $1,500 – $4,000 per vehicle depending on factors like vehicle type, radius of operations, driver safety, desired liability limits, and more.
Inland Marine (Equipment & Tools) Insurance
Protects equipment and tools used for contracting operations – both at work sites and in transit. Typical premiums range from $1,500 – $7,500 annually. Coverage limits generally start at $15,000 and go up to $100,000 or more.
Builder’s Risk Insurance
Covers projects under construction. It protects against property damage from causes like fire, theft, vandalism, and natural disasters. Premiums range from around $2 per $1,000 of completed value, or are based on the project budget.
Surety Bond
Required for public works and many large construction projects. Typical premiums range from 1-3% of the total bond amount, based on contractor qualifications and financial strength.
Commercial Property Insurance
Safeguards business properties like offices, warehouses, showrooms and more. Typical premiums range widely from $500 – $50,000+ depending on factors like location, building value, coverage limits, and deductibles.
Professional Liability
Protects against errors and omission in professional services that cause financial harm to clients. Premiums range from about $2,500 to over $25,000 for higher revenue contractor service providers.
Cyber Liability Insurance
Responds to cyber risks like data breaches, hacking, malware, identify theft and electronic fraud. Premiums typically range from $500 – $5,000 or more annually depending on revenue.
Employment Practices Liability
Defends against employment related lawsuits around issues like wrongful termination, discrimination, harassment. Typical premiums range from $2,500 to $10,000 annually.
Umbrella Liability
Provides additional liability coverage above and beyond other policies’ limits for scenarios like major lawsuits. Added premiums range from $1,000 – $7,000 per $1 million in extra coverage.
Partner with ContractorNerd.com
As an Indiana contractor, it’s crucial to protect your business from diverse risks with tailored insurance. ContractorNerd.com has specialized expertise helping contractors just like you secure cost-effective coverage.
Our dedicated specialists gain you access to top insurance markets, ensuring you get quality protection without overpaying. We find the right fit based on your unique risks and requirements. Don’t leave your business exposed or overpay for insurance. Partner with ContractorNerd.com to invest in your company’s future the smart way.