For construction companies in Louisiana, having the right insurance is crucial for protecting your business. As a contractor, you face diverse risks ranging from property damage and employee injuries to lawsuits and cyber attacks. Purchasing adequate, cost-effective insurance tailored to your operations can safeguard your assets and future.
This comprehensive guide will uncover typical insurance costs for Louisiana contractors across popular policies like general liability, workers’ compensation, bonds, equipment coverage, and more. We’ll explore the key variables impacting your premiums, provide detailed benchmarking data for small, medium and large contractors, and suggest strategies to secure favorable rates.
Understanding typical contractor insurance expenses in Louisiana 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 inform smart insurance decisions.
Louisiana contractors must navigate unique risks in their work. Our guide on contractor liability insurance is invaluable for protection. Workers comp contractors need is crucial for legal compliance. Our guide on general contractor insurance considerations can help you find suitable options.
Key Factors Influencing Insurance Costs for Contractors
Many variables influence the insurance premiums contractors pay. Being aware of these factors allows you to better control costs through risk management. Here are some of the key factors that can impact insurance costs for contractors:
– Type of work – The type of contracting work being done (construction, plumbing, electrical, roofing, etc.) greatly impacts risk and therefore insurance rates. Certain trades like roofing and electrical are seen as higher risk activities by insurers and thus have higher insurance premiums. More hazardous work leads to higher liability and workers’ compensation insurance costs.
– Years in business – Contractors who are 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 risk. Newer contractors are charged higher rates due to greater uncertainty around their future claims.
– Claims history – Prior claims made against a contractor will often result in markedly increased premiums, especially if the claims were large or frequent. Too many claims can even make a contractor uninsurable. A clean claims history helps lower rates, while frequent claims raise rates.
– Coverage limits – Higher levels of coverage for policies like general liability insurance or workers’ compensation mean greater exposure and therefore higher premiums for insurance companies. Contractors must weigh the cost versus the amount of protection needed when selecting limits. Lower limits can save money but may expose the contractor to large uncovered losses from claims.
– Number of employees – Having more employees on payroll increases the overall risk exposure associated with things like workers’ compensation. Rates will be higher as a direct result of more employees. The exact impact depends on the trade and risk class of the employees. Higher risk trades see a greater jump in premiums per new hire.
– Subcontractor usage – Contractors who rely heavily on subcontracted labor can reduce insurance costs in some areas like workers’ compensation. However, special liability policies may be needed to properly insure and monitor subcontractor risks. A balance is required to optimize cost savings.
– Safety record – Contractors with poor safety histories, past OSHA violations or frequent employee injuries can expect to pay higher premiums across multiple lines of coverage. Proactive safety programs that reduce on the job incidents directly translate into lower insurance costs.
– Business size – In general, larger contracting firms often achieve lower rates based on their scale and the broader distribution of risks over more jobs and employees. Smaller firms frequently pay more for identical coverages. However, small contractors can sometimes access special programs and discounts unavailable to big contractors.
– Insurance provider – Insurance rates for contractors can vary significantly between insurance companies. Choosing the wrong insurer could inflate premiums, while the right carrier may offer premium discounts and favorable policy terms. Comparing multiple contractor-focused insurance carriers through a broker is wise.
– Deductible levels – Selecting higher deductibles, meaning the amount the contractor pays out-of-pocket on claims before insurance coverage kicks in, can dramatically reduce premiums. The downside is assuming more potential risk via the deductible. Contractors must determine their risk appetite.
– Local trends – Regional risk trends for construction in states like Louisiana may influence rates up or down compared to national averages. Understanding local trends such as injury rates, lawsuit awards, weather risks, building codes and contractor licensing can provide context around premiums.
There are additional secondary factors that may impact premiums as well. The key is for contractors to maintain excellent records, safety practices, business processes and employee training while also choosing appropriate coverages and limits to help minimize insurance costs. Controlling risk is the number one way for contractors to secure lower premiums across all policies.
Small, Medium, and Large Contractor Benchmarking in Louisiana
To help contractors understand typical insurance costs, we have provided benchmark ranges for small, medium and large contractors in Louisiana below. This data is for informational purposes and uses common contractor characteristics to give you a basic framework for comparing your costs to industry peers:
| 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 |
– Typical Coverages: General Liability, Workers’ Compensation, Commercial Auto, Inland Marine, Umbrella
Keep in mind premiums fluctuate based on your unique attributes like location, services, safety record, number of employees and vehicles, payroll size, and annual revenue. Contractors who secure tailored coverage with quality carriers and favorable terms may achieve rates well below the averages and toward the lower end of the ranges we provide in the benchmarking that follows.
If in doubt, we encourage you to have an expert review your unique situation rather than simply comparing to averages. The insurance brokers in our network specialize in helping contractors realize significant savings by accessing the right carriers and tailoring coverage to match the specific contractor’s business model and risks.
General Liability Insurance Costs in Louisiana
General liability, also known as CGL or commercial general liability, is an essential policy for contractors to possess. This coverage provides protection if third parties claim your contracting operations led to bodily injury or property damage during projects. For instance, if a subcontractor gets injured on your job site and alleges you were negligent, general liability would provide legal defense and settlement funds (up to policy limits) if you are deemed liable.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,100 | $5,300 | $3,200 |
| – Medium | $3,500 | $16,300 | $8,900 |
| – Large | $5,600 | $36,000 | $18,200 |
| Plumber | |||
| – Small | $8,200 | $19,600 | $12,100 |
| – Medium | $18,200 | $65,300 | $41,800 |
| – Large | $30,500 | $130,700 | $80,600 |
| Painter | |||
| – Small | $3,400 | $8,000 | $4,700 |
| – Medium | $10,300 | $15,450 | $13,300 |
| – Large | $22,400 | $34,100 | $28,600 |
| Landscaper | |||
| – Small | $1,483 | $4,447 | $2,900 |
| – Medium | $2,456 | $13,196 | $7,800 |
| – Large | $3,660 | $28,963 | $15,400 |
| Handyman | |||
| – Small | $3,200 | $9,200 | $7,100 |
| – Medium | $9,800 | $27,200 | $17,400 |
| – Large | $21,400 | $75,400 | $47,000 |
| Carpenter | |||
| – Small | $5,000 | $13,300 | $9,800 |
| – Medium | $15,400 | $35,200 | $27,100 |
| – Large | $34,100 | $72,000 | $58,900 |
| General Contractor | |||
| – Medium | $13,000 | $19,500 | $16,000 |
| – Large | $20,900 | $36,300 | $30,300 |
| – XL | $68,400 | $107,000 | $89,700 |
Typical general liability policy limits for contractors range from $500K up to $2M per occurrence and $1M to $4M in aggregate depending on the size of projects performed. Deductibles usually range from $0 to $10K. Larger contractors may need excess liability above $2M as well.
Here are typical general liability premiums for contractors in Louisiana based on revenue:
Small Contractor: $1,500 – $7,500 annual premium
Medium Contractor: $5,000 – $25,000 annual premium
Large Contractor: $10,000 – $50,000 annual premium
XL Contractor: $25,000 – $125,000 annual premium
Calculating premiums as a percentage of revenues:
Small Contractor: 1% to 5% of revenue
Medium Contractor: 1% to 5% of revenue
Large Contractor: 1% to 5% of revenue
XL Contractor: 1% to 5% of revenue
So for example, a typical $1M revenue large contractor may pay around $20,000 for a $1M occurrence / $2M aggregate general liability policy. For contractors in higher risk trades like plumbing or electrical, rates tend toward the higher end of the ranges.
Some of the key factors that influence general liability insurance costs for Louisiana contractors are:
– Type of trade – The specific contracting niche (roofing, electrical, plumbing) impacts risk and premiums. High risk trades pay more.
– Revenues – Higher revenue contractors face greater potential risk and claims. Premiums increase correspondingly.
– Claims history – Contractors with past GL claims will see significantly increased premiums or possible non-renewal. Too many claims makes a contractor uninsurable.
– Experience – Newer contractors are viewed as less predictable and higher risk. Over time, experience can lower premiums.
– Project risk transfer – Requiring subs to carry GL insurance and securing performance bonds reduces a contractor’s risk exposure.
– Policy limits – GL premiums increase directly with higher limits. Lowering coverage can reduce costs if it still sufficiently covers potential losses.
– Policy deductible – Choosing a higher deductible lowers the premium but increases the out-of-pocket amount the contractor pays for a claim.
– Insurance company – The financial strength and contractor experience of the insurer affects premium pricing in the GL market.
– Local trends – Construction lawsuit trends in Louisiana and certain regions may impact GL rates. More litigious environments often increase premiums.
For contractors trying to reduce GL premiums, implementing strong risk management and safety procedures is key. Transferring risk to subs and securing performance bonds also lowers liability insurance costs significantly. Shopping rates and comparing multiple GL carriers may realize additional savings.
Workers Compensation Insurance Costs in Louisiana
Workers’ compensation insurance covers on the job injuries and illnesses sustained by employees. It pays out benefits like lost wages, permanent disability payments, medical costs and rehabilitation expenses tied to job-related injuries without requiring the employee to sue their employer. Every contractor is required to carry a workers’ compensation policy with few exceptions.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,463 | $3,200 | $1,829 |
| – Medium | $4,115 | $9,053 | $5,486 |
| – Large | $6,401 | $14,173 | $9,144 |
| Plumber | |||
| – Small | $1,528 | $3,342 | $1,910 |
| – Medium | $4,297 | $9,454 | $5,729 |
| – Large | $6,684 | $14,801 | $9,549 |
| Painter | |||
| – Small | $2,185 | $4,779 | $2,731 |
| – Medium | $6,145 | $13,518 | $8,193 |
| – Large | $9,558 | $21,165 | $13,655 |
| Landscaper | |||
| – Small | $1,512 | $3,308 | $1,890 |
| – Medium | $4,253 | $9,356 | $5,670 |
| – Large | $6,615 | $14,648 | $9,450 |
| Handyman | |||
| – Small | $5,273 | $11,536 | $6,592 |
| – Medium | $14,832 | $32,629 | $19,775 |
| – Large | $23,071 | $51,086 | $32,959 |
| Carpenter | |||
| – Small | $5,197 | $11,368 | $6,496 |
| – Medium | $14,616 | $32,156 | $19,488 |
| – Large | $22,736 | $50,345 | $32,480 |
| General Contractor | |||
| – Medium | $15,821 | $34,608 | $19,776 |
| – Large | $24,720 | $54,384 | $32,960 |
| – XL | $46,144 | $102,176 | $65,920 |
Workers’ compensation is a highly regulated line of insurance dictated by state laws. Premiums can range significantly based on trade risk classes, loss histories, and state rate regulations. Louisiana ranks around the middle nationally for workers’ comp costs.
Typical Louisiana workers’ comp policies for contractors will have A-rated carriers, $500K occurrence limits, and no deductibles. Contractors may supplement with excess workers’ comp above $500K for additional catastrophic injury coverage if they have high payroll or severe hazards.
Here are typical workers’ compensation premiums as a percentage of payroll for contractors in Louisiana:
Small Contractor: 10% – 20% of payroll
Medium Contractor: 8% – 15% of payroll
Large Contractor: 5% – 12% of payroll
XL Contractor: 3% – 10% of payroll
So for example, a large contractor with a $500K annual payroll may pay around $40,000 annually for workers’ compensation coverage ($500K payroll x 8% = $40K). Higher risk trades like roofers could be near 15% while lower risk contractors might be 5%.
Some of the major factors impacting workers’ comp costs for Louisiana contractors include:
– Payroll – Total payroll directly impacts premiums. Higher payroll increases premiums significantly.
– Risk class – The work trade is assigned a risk class with corresponding base rates. Higher risk trades have more expensive workers’ comp premiums.
– Experience rating – Contractors with frequent past claims get “debit rated” with higher premiums. Low claims may lead to “credits” reducing premiums.
– Industry trends – Poor loss trends in construction as a whole may increase all contractors’ base rates by a state rating bureau.
– Safety – Contractors with strong safety programs and low injury rates may qualify for discounted premiums. High injuries lead to increased rates.
– Subcontractors – Utilizing uninsured subcontractors adds risk and exposure for a contractor. Requiring subs to carry their own WC is best.
– State regulations – Each state has different laws and mandates that directly impact workers’ comp premiums for contractors. State rates affect all contractors uniformly.
– Deductible – Increasing the deductible lowers the premiums but shifts more risk onto the contractor to pay claims costs.
– Insurance carrier – The performance and managed care capabilities of the workers’ compensation insurance company can significantly impact claim expenses and premiums.
The biggest opportunities for contractors to reduce workers’ compensation premiums include maintaining excellent workplace safety, controlling payroll, using insured subs, keeping claims low, and shopping rates across A-rated insurers. States like Louisiana also offer workers’ comp premium discounts for safety certification and drug-free work certification programs.
Additional Insurance Coverages and Typical Premiums
Beyond general liability and workers’ compensation, Louisiana contractors require several supplemental insurance policies to protect their operations depending on their services and client needs:
Commercial Auto Insurance
Covers liability and physical damage risks for company vehicles. Typical premiums range from $1,500 – $4,000 per vehicle annually. Auto policies have $1 million liability limits typically.
Commercial Property Insurance
Protects business properties like offices, warehouses, and job site trailers against damage perils. Typical premiums range from $2,000 to $20,000+ annually depending on property values.
Inland Marine Insurance
Covers contractors tools, equipment, machinery, and materials on job sites and in transit. Typical premiums range from $1,500 to $5,000+ annually for coverage limits of $10K to $100K.
Cyber Liability Insurance
Safeguards contractors against data breaches, hacking incidents, electronic theft and other IT security issues. Typical premiums range from $500 to $5,000 annually with $500K to $1M coverage limits.
Employment Practices Liability
Provides claims defense and settlement funds against employment lawsuits around discrimination, harassment, wrongful termination and other employee issues. Typical premiums range from $2,500 to $7,500 annually with $500K limits.
Professional Liability
Covers financial harm arising from design flaws, estimate errors, and faulty workmanship. Required for trades like architects, engineers, and surveyors. Typical premiums range from $2,500 to $25,000 with $1M limits.
Pollution Liability
Protects against bodily injury and property damage claims originating from pollution releases or environmental damage. Typical premiums range from $2,000 to $10,000 annually with $500K to $1M limits.
Builder’s Risk Insurance
Insures construction projects against property damage during the course of construction. Premiums range from 0.3% to 2% of the total completed project value.
Surety Bonds
Required by law for public works projects. Bonds guarantee the contractor will fully perform work as outlined in the contract. Typical premiums range from 1% to 3% of the total bond amount based on contractor qualifications.
Having the right additional coverages for a contractor’s unique exposures is critical. An expert assessment of operations can identify potential coverage gaps and ensure adequate limits. Things like project size, type of trade, equipment values, financial risks, and client requirements help determine additional policies needed beyond GL and workers’ compensation.
Contractors should carefully evaluate all the coverages above with an insurance professional. Coverages like cyber liability and pollution liability are often overlooked but may be essential depending on the contractor’s services. Some policies like professional liability or pollution liability directly tie to the contractor’s trade.
Partner with ContractorNerd.com
Are you a Louisiana contractor looking to protect your business and secure its future? Look no further than ContractorNerd.com, your dedicated partner in contractor insurance. We understand the unique risks construction professionals face in states like Louisiana and are committed to providing you with the best insurance solutions tailored to your specific contracting operation.
Why Choose ContractorNerd.com?
1. Specialized Expertise: When it comes to contractor insurance, one size does not fit all. Our network of insurance specialists focuses exclusively on contractor’s insurance, ensuring we have a deep understanding of your industry and its intricacies. We know the challenges Louisiana contractors face, and we’re here to help you navigate them.
2. Access to Top Markets: Over the years, we have cultivated strong partnerships with the leading insurance carriers serving commercial contractors. This gives you access to some of the top markets through our trusted network. Our connections allow us to swiftly secure multiple quotes tailored to your unique business.
3. Cost-Effective Solutions: We understand the importance of optimizing insurance costs for contractors. Our team not only helps you find coverage but also identifies potential gaps and cost-saving opportunities. This ensures you get the most coverage per premium dollar spent.
Don’t Leave Your Business Exposed – Contractor insurance costs in Louisiana can vary significantly based on trade, experience, location, and other factors. It’s crucial not to leave your business underinsured or exposed to risks not covered. Partnering with ContractorNerd.com ensures you make smart insurance decisions fully protecting your Louisiana contracting business.
Conclusion
As a commercial contractor, having the proper insurance coverages at the best premiums allows you to run your business with confidence. ContractorNerd.com has the expertise to guide you through the complex process of structuring an insurance program tailored to your specific contracting operation. We have access to the top markets and help identify cost savings opportunities while also closing gaps and managing risk. Our dedicated contractor insurance specialists remove the hassle of insurance, allowing you to focus on your business. Partner with us today to properly protect your business assets and secure your company’s future.