For construction companies in Iowa, having proper insurance coverage is essential to protect your business. As a contractor, you face diverse risks from property damage and employee injuries to lawsuits and cyber attacks. Purchasing adequate, affordable insurance tailored to your operations can safeguard your assets for the future.
This comprehensive guide will uncover typical insurance costs for Iowa contractors across popular 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 get favorable rates.
Understanding typical contractor insurance expenses in Iowa allows you to thoroughly evaluate policies suitable for your business. While your exact premiums depend on your unique attributes, this data offers helpful context to make informed insurance decisions.
Iowa’s construction industry requires comprehensive protection. Liability insurance for contractor businesses is crucial for safeguarding your operations. Exploring workers comp insurance contractors need is a legal necessity in most cases. For a thorough overview of contractor business insurance solutions, refer to our detailed guide.
Key Factors Influencing Insurance Costs for Contractors in Iowa
Many elements can influence the insurance costs for contractors in Iowa. Being aware of these key factors allows you to better manage your risk profile and potentially reduce insurance expenses. Here are some of the most significant factors:
- Type of work – The specific type of contracting work being performed (construction, plumbing, electrical, HVAC, etc.) greatly impacts the risk profile and therefore the insurance rates. Certain higher risk trades like roofing, demolition, and excavation tend to have considerably higher insurance premiums.
- Years in business – Contractors who are brand new to the business often pay higher premiums until they establish a solid track record over several years. Insurance companies view experience as an indicator of lower claims risk. Once a contractor has been operating successfully for 3-5+ years, insurance carriers begin offering lower rates.
- Claims history – Past claims made against a contractor will often directly result in increased premiums, especially if the claims were costly or frequent. Too many claims over a compressed period can even make a contractor uninsurable in the standard insurance market. A clean claims history with zero at-fault losses helps lower rates.
- Coverage limits – The selected limits for policies like general liability insurance and workers’ compensation have a direct impact on premiums. Higher liability limits or workers’ comp limits mean higher premium costs, all other things equal. Contractors must carefully weigh the cost of higher limits against the amount of protection that is truly needed for their business.
- Number of employees – Having more employees on the payroll increases the overall risk exposure associated with things like workers’ comp claims, auto accidents, and general liability. As such, premiums charged by insurers will be higher as the employee count rises.
- Safety record – Contractors with poor safety track records, OSHA violations, lack of proper safety protocols, and frequent small worker injuries can expect to pay significantly higher premiums across multiple lines of coverage. Proactively improving safety and reducing hazards can help lower premiums.
- Business size – In general, larger contracting firms are often able to get lower insurance rates based on economies of scale and spreading the risk over more projects, employees, and revenue. Smaller contracting firms with lower revenue and fewer employees end up paying more for comparable insurance coverages.
- Insurance provider – Insurance rates for contractors can vary dramatically between insurance companies. Each carrier has its own loss experience, risk appetite, and operating costs that influence pricing. Competitive bidding is wise to find the best rates.
The key takeaway is that Iowa contractors should focus on maintaining excellent business records, adopting best-practice safety processes, hiring properly qualified staff, securing risk-transfer via contracts, and purchasing appropriate insurance coverages. Taking steps to control risk leads directly to lower premiums.
Small, Medium, Large Contractor Benchmarking in Iowa
To provide some helpful context around typical contractor insurance costs in Iowa, the table below displays common insurance coverages secured by small, medium and large-sized contractors. Having an understanding of standard coverages and expense ranges by business size can help you determine how your costs stack up versus industry norms.
Keep in mind that actual premiums can fluctuate up or down significantly based on your unique attributes like geographical location, the services you provide, your specific safety record, number of employees and vehicles, payroll amount, and annual revenue size. Contractors who take the time to secure tailored insurance coverage from high-quality insurance carriers and negotiate favorable policy terms can often achieve premium rates on the lower end of the ranges we outline below, and sometimes well below the averages.
If you are ever in doubt about whether your current contractor insurance program is optimal for your business, we highly encourage you to have an expert review your policies. The independent insurance brokers within our national network specialize in contractor businesses like yours. They can provide an initial consultation to assess your current coverages and advise if they see potential gaps or cost-saving opportunities. The specialists in our network have access to multiple insurance markets and can often tap into exclusive products and pricing to craft customized insurance solutions for contractor businesses.
| 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 |
General Liability Insurance
General liability insurance, often called contractor liability insurance, is a core coverage that protects your contracting business in the event a third party alleges property damage or bodily injury arising from your work or active job sites.
| Low | High | Average | |
| Electrician | |||
| – Small | $900 | $1,800 | $1,400 |
| – Medium | $2,900 | $4,600 | $3,600 |
| – Large | $5,100 | $9,700 | $7,200 |
| Plumber | |||
| – Small | $3,700 | $7,300 | $5,700 |
| – Medium | $14,100 | $21,150 | $16,000 |
| – Large | $23,500 | $37,300 | $31,000 |
| Painter | |||
| – Small | $600 | $1,600 | $1,200 |
| – Medium | $1,600 | $5,200 | $3,600 |
| – Large | $3,400 | $14,400 | $7,800 |
| Landscaper | |||
| – Small | $793 | $1,723 | $1,100 |
| – Medium | $2,285 | $3,578 | $3,000 |
| – Large | $4,455 | $7,911 | $5,900 |
| Handyman | |||
| – Small | $1,900 | $3,325 | $2,200 |
| – Medium | $6,000 | $9,000 | $6,600 |
| – Large | $11,000 | $16,400 | $13,400 |
| Carpenter | |||
| – Small | $1,500 | $3,100 | $2,400 |
| – Medium | $3,800 | $9,100 | $6,400 |
| – Large | $5,500 | $18,400 | $13,300 |
| General Contractor | |||
| – Medium | $3,600 | $13,100 | $6,300 |
| – Large | $6,600 | $17,600 | $10,400 |
| – XL | $15,600 | $41,300 | $26,100 |
For small contractors, general liability premiums often range from $2,000 to $7,000+ per year for a $1 million occurrence limit. Medium-sized contractors may pay between $7,000 and $25,000, while large contractors with significant revenue see premiums ranging from $25,000 to $100,000+. Typical general liability policy limits provided by insurers are:
– $500,000 per occurrence
– $1 million per occurrence
– $2 million per occurrence
– $3 million per occurrence
– $5 million per occurrence
Note that policies with higher per occurrence limits have higher premiums. Also know that general liability policies contain an annual aggregate limit which caps the maximum amount payable across all claims made in a single policy period, commonly $1 million to $2 million.
There are several key factors that influence general liability insurance costs for contractors in Iowa:
– Type of work – Certain contracting fields like roofing, siding, plumbing, electrical, and masonry are viewed by insurers as inherently higher-risk. These trades pay significantly higher premiums for general liability coverage vs less hazardous contractors like simple home remodelers or parking lot pavers.
– Annual revenues – As a basic rule of thumb, contractors with higher total annual revenue will pay more for their liability insurance since they have greater overall risk exposure across more projects. Insurance companies use a business’s reported revenue as a proxy for its size and correlated risk level.
– Claims history – Contractors with past liability claims made against them will almost always see their premiums increased at renewal time, especially if the claims were particularly frequent or severe. In some cases, a history of too many claims over a compressed period can even make a contractor uninsurable altogether in the standard markets. Maintaining a clean claims history helps keep liability premiums low.
– Years in business – Brand new contractor businesses are considered higher risk insurance prospects and are charged higher initial rates by insurers. After a contractor has been operating successfully for several years without losses, insurance carriers gain more comfort with reduced risk of future claims. More tenured contractors tend to see lower liability premiums versus brand new market entrants.
– Risk transfer – Prudent contractors take steps to transfer and minimize risk like requiring written subcontractor agreements and maintaining stringent sub qualification processes. Requiring Certificates of Insurance from all subcontractors demonstrating adequate coverage also reduces liability exposures. Such risk-reducing actions directly help lower insurance premiums.
– Policy limits – Contractors selecting higher overall general liability policy limits will pay higher premiums accordingly. But reducing coverage limits too low can be dangerous and still leave the contractor exposed in the event of catastrophic claims or lawsuit awards. Striking the right balance is key.
– Claims deductible – Opting for a higher deductible amount – the out-of-pocket amount the contractor pays on a claim before insurance responds – can significantly reduce premiums. This shifts more first-dollar risk to the contractor.
– Insurer reputation – The insurance company’s financial strength, loss payout reputation, service reputation, and overall contractor-focus also impact pricing. So does the level of competition between insurers in the Iowa market.
Workers Compensation Insurance
Workers compensation insurance covers worksite employee injuries and illnesses. For contractors, workers comp brings some of the highest and most unavoidable premium costs. Premiums can range significantly based on trade, risk profile, claims history, and policy structure. However, Iowa ranks among the more affordable states for workers comp costs.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,673 | $3,661 | $2,092 |
| – Medium | $4,707 | $10,354 | $6,275 |
| – Large | $7,321 | $16,211 | $10,459 |
| Plumber | |||
| – Small | $1,730 | $3,785 | $2,163 |
| – Medium | $4,867 | $10,707 | $6,489 |
| – Large | $7,571 | $16,764 | $10,815 |
| Painter | |||
| – Small | $2,006 | $4,388 | $2,508 |
| – Medium | $5,642 | $12,412 | $7,523 |
| – Large | $8,776 | $19,433 | $12,538 |
| Landscaper | |||
| – Small | $1,384 | $3,028 | $1,730 |
| – Medium | $3,893 | $8,564 | $5,190 |
| – Large | $6,055 | $13,408 | $8,650 |
| Handyman | |||
| – Small | $3,514 | $7,686 | $4,392 |
| – Medium | $9,882 | $21,740 | $13,176 |
| – Large | $15,372 | $34,037 | $21,960 |
| Carpenter | |||
| – Small | $3,346 | $7,319 | $4,182 |
| – Medium | $9,411 | $20,703 | $12,547 |
| – Large | $14,639 | $32,414 | $20,912 |
| General Contractor | |||
| – Medium | $10,541 | $23,058 | $13,176 |
| – Large | $16,470 | $36,234 | $21,960 |
| – XL | $30,744 | $68,076 | $43,920 |
In Iowa, a small contractor may see workers comp premiums between $10,000 to $50,000 per year. A mid-sized contractor could pay $50,000 to $250,000, while large contractors often pay over $250,000. Exact premiums are driven by payroll, employee class codes, and other factors. Typical policies have no deductible and provide statutory benefits.
Here are some of the key variables that influence workers compensation insurance costs for Iowa contractors:
– Payroll – The total annual payroll and number of employees are heavily factored into workers comp premium calculations. The higher the payroll expense, the higher the premiums will run. Payroll manipulations to avoid premium are illegal.
– Job classification – The specific type of work performed by employees is assigned a risk class code, ranging from light office work to hazardous construction trades. Higher risk work carries higher base rates when calculating premiums.
–Experience modifier – Contractors are graded on their past loss history via an experience modification factor, or mod factor. Contractors with fewer or lower cost claims get an ‘experience credit’ reducing their premiums. High claims frequency or severity leads to a premium surcharge. Mods range from 0.75 (credit) to 1.25+ (surcharge).
– Industry trends – Premium rates for the entire construction industry sector also influence costs. If work comp loss trends for contractors rise statewide, rates will follow.
– Safety record – Contractors with demonstrably strong safety programs, training, and accident prevention see lower premiums through formal safety program credits such as a 19% discount for meeting Workplace Safety Program requirements.
– Subcontractor coverage – Contractors misclassifying subs as employees or using completely uninsured subs will pay significantly higher premiums to cover those high-risk worker exposures. Requiring subs to carry compliant workers comp lowers a contractor’s risk profile.
– Premium discounts – Premium reductions are available for things like drug-free workplace programs, contractor alliances, managed care plans, deductible programs, and advance premium discounts.
– Insurer – The insurer’s financial strength, loss experience in contractor classes, underwriting appetite, and overall pricing impact costs. Maintaining coverage with a stable, contractor-focused carrier provides better long term value.
Additional Contractor Insurance Coverages
Beyond core general liability and workers compensation policies, Iowa contractors require several additional forms of coverage for comprehensive protection:
Commercial Auto Insurance – Covers all company vehicles used for business purposes whether owned, hired, rented, borrowed, or employee-owned. Typical auto liability limits are $500,000 to $1 million. Premiums run approximately $1,500 – $4,000 per vehicle. Make sure to disclose all drivers to avoid coverage gaps.
Inland Marine Insurance – Also called contractors equipment coverage, inland marine protects tools, equipment, scaffoldings, trailers, and similar contractor assets when on your premises and while in transit between projects. Typical limits range from $25,000 up to $500,000+ with premiums starting around $1,500 per year. Require coverage for subcontractor equipment also.
Builders Risk / Installation Insurance – Builders risk insurance covers contractors for materials, property, and equipment damages that occur at an active construction site through no fault of the contractor. Premiums vary based on project size and duration. This covers perils not included in the commercial general liability policy.
Surety Bonds – Contractors seeking public project and some private contracts must obtain bid, performance and payment surety bonds to ensure project completion and payment of suppliers/subs. Typical surety bond costs range from 1-3% of the total bond amount required, based on the contractor’s financial strength and credit.
Professional Liability – Needed if providing any professional design-build services to cover damage arising from design flaws or deficiencies. Protects against negligence claims.
Commercial Property Insurance – Covers contractors’ business premises including offices, warehouses, storage sheds, and yard space. Provides protection against property damage from fires, storms, theft, vandalism, and more. Typical limits range from $100,000 up to $5 million.
Cyber Liability Insurance – Provides protection against first and third-party losses arising from data breaches, payment card industry (PCI) compliance failures, hacking damage, and various electronic threats that contractors face daily.
Employment Practices Liability – Provides lawyers to defend against wrongful termination, discrimination, harassment and other employment-related claims made by employees, former employees, or potential candidates. Iowa construction companies face high EPLI risks.
Business Income / Extra Expense Coverage – Reimburses contractor businesses for income lost, and extra expenses incurred, when projects are halted due to covered property losses. This protects a contractor’s revenue stream when physical assets are compromised.
Umbrella Liability Insurance – This supplemental liability coverage adds an additional layer of limits above primary insurance policies like general liability and auto liability for added protection from catastrophic claims. Typical additional limits purchased range from $1 million up to $5 million or more.
Expert Iowa Contractor Insurance Guidance
Figuring out the optimal insurance coverages and limits to properly insure your contracting business can be daunting. To make the right choices that protect your company without overspending, consider engaging the specialists at ContractorNerd.com.
Our independent insurance brokers focus exclusively on the needs of contractors. We’ll assess your current coverages and advise if we see any potential gaps or opportunities to improve your program. Our goal is obtaining tailored insurance protection at the lowest rates possible.
When you work with the ContractorNerd.com broker network, you gain access to exclusive products, markets and pricing unavailable to everyday retail agents and carriers. We leverage our specialized expertise and carrier relationships to craft custom insurance solutions on behalf of contractor clients.
Benefits of working with ContractorNerd.com include
– Free expert assessment of your current contractor insurance policies
– Access to exclusive general liability products priced for contractors
– Competitive workers compensation options from Iowa’s top-rated insurers
– Cost-saving advice based on our operations experience
– Risk control guidance to improve workplace safety and lower premiums
– Annual contractor insurance program reviews to ensure adequate evolving coverage
Don’t leave your Iowa construction business exposed to gaps in coverage or overpaying for insurance. Achieve peace of mind by having a ContractorNerd.com specialist review your insurance program to confirm it provides the coverage your company needs at the best available pricing.
As an Iowa contractor, you pour your time, money and effort into building a successful enterprise. But your business and personal livelihood are at risk without proper insurance tailored for construction contractors.
Purchasing the right contractor insurance coverages at the fairest rates allows you to run your business with confidence no matter the operating conditions. Understanding typical costs, evaluating your unique risks, and seeking specialized broker expertise ensures your company has a smart insurance investment that will pay dividends over the long term.
ContractorNerd.com is committed to securing the future of Iowa contracting businesses by providing access to quality coverage at competitive pricing. We simplify your insurance process so you can focus on construction – not coverage contracts. Learn more about securing your business by requesting a free quote today.