Running a construction business in Maryland involves major risks ranging from property damage and employee injuries to lawsuits and data breaches. Having adequate, cost-effective insurance tailored to your operations is crucial for safeguarding your company’s assets and future.
This in-depth guide will uncover typical insurance costs for Maryland contractors across popular policies like general liability, workers’ compensation, surety bonds, equipment coverage, and more. We’ll explore the key variables impacting your premiums, provide benchmarking data for small, medium and large contractors, and suggest strategies to secure favorable rates.
Understanding typical contractor insurance expenses in Maryland allows you to 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.
Maryland contractors should prioritize proper insurance protection. Contractor general liability insurance is crucial for risk management. Understanding contractors workers’ compensation ensures your team is covered in case of workplace injuries. Our guide on general contractors insurance needs provides comprehensive information.
Key Factors Influencing Insurance Costs for Contractors in Maryland
Multiple important factors can influence insurance costs for contractors operating in Maryland:
– Type of work – The specific type of contracting work being done (construction, plumbing, electrical, HVAC, etc.) impacts the level of risk and therefore the insurance rates. Certain high risk trades like roofing, plumbing, and electrical work tend to have considerably higher insurance premiums than lower risk general contracting work. In general, the more hazardous the work, the higher the insurance costs.
– Years in business – Contractors who are new to the business often pay distinctly higher premiums until they have been around for a few years and establish a solid track record. Insurance companies view experience as a good indicator of lower risk. Once a contractor has been operating successfully for 3-5 years, they tend to see insurance costs decrease.
– Claims history – Past claims made against the contractor’s insurance policies will often result in markedly increased premiums, especially if the claims were very large or frequent. Too many claims, or very costly claims, can even make a contractor uninsurable altogether. Maintaining a clean claims history with few if any substantial claims is key to keeping insurance costs down.
– Coverage limits – Contractors who opt for higher levels of coverage for policies like general liability insurance or workers’ compensation (i.e. $2 million instead of $1 million) tend to pay significantly higher premiums. Contractors must weigh the benefit of higher limits against the cost of the additional coverage to find the right balance for their business.
– Number of employees – Having a greater number of employees on payroll increases the overall risk exposure when it comes to policies like workers’ compensation insurance. More employees equals greater risk, which translates into higher insurance rates.
– Safety record – Contractors with histories of OSHA violations, work site accidents, or poor safety records inevitably pay higher premiums across many types of insurance. Proactively maintaining excellent safety standards and performance can help reduce a contractor’s risk profile.
– Business size – In general, larger contracting firms are often able to get lower insurance rates based on economies of scale and having a broader risk distribution. Smaller contractors tend to pay more for insurance.
– Insurance provider – Insurance rates can vary quite a bit between providers. Factors like the financial strength, industry reputation, and competitiveness of the insurance company all impact pricing.
The key is for contractors to maintain stellar records, safety practices, qualifications, experience, and choose appropriate policy coverage limits to help minimize insurance costs. Proactively controlling risk is one of the most effective ways to lower premiums across contractor insurance policies.
Small, Medium, Large Contractor Benchmarking in Maryland
To provide some helpful benchmarks, the table below shows a general definition of small, medium and large contractors in Maryland along with typical insurance coverages secured. Having an idea of where your business falls in terms of size can help you understand how your insurance costs compare to industry norms.
Keep in mind that premiums always fluctuate substantially based on your unique attributes like location, services provided, safety record, number of employees and vehicles, payroll size, and annual revenue. Contractors who take the time to secure tailored coverage with reputable carriers and very favorable policy terms can often achieve insurance rates on the lower end of the ranges provided or even below the average premiums.
If you feel unsure about your program, we strongly encourage you to carefully explore your insurance options with a broker from our network. The brokers in our network specialize in helping contractors across Maryland realize significant savings by accessing the best combination of specialized carriers and optimizing coverage to match each contractor’s business model and risk profile.
| 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 Costs for Contractors in Maryland
General liability, sometimes referred to as contractor’s liability insurance, is a policy that provides protection for your contracting business in the event that a third party alleges property damage or bodily injury caused by your construction operations or employees.
| Low | High | Average | |
| Electrician | |||
| – Small | $600 | $1,700 | $1,200 |
| – Medium | $1,400 | $3,900 | $2,900 |
| – Large | $3,000 | $9,000 | $5,600 |
| Plumber | |||
| – Small | $4,300 | $8,000 | $6,200 |
| – Medium | $13,600 | $20,400 | $15,300 |
| – Large | $24,800 | $36,000 | $30,800 |
| Painter | |||
| – Small | $800 | $2,900 | $1,300 |
| – Medium | $1,700 | $5,300 | $2,900 |
| – Large | $2,500 | $11,100 | $5,700 |
| Landscaper | |||
| – Small | $543 | $2,324 | $1,100 |
| – Medium | $1,166 | $4,168 | $2,700 |
| – Large | $2,451 | $8,327 | $5,200 |
| Handyman | |||
| – Small | $1,100 | $3,100 | $2,100 |
| – Medium | $3,000 | $8,000 | $5,600 |
| – Large | $6,600 | $16,800 | $11,700 |
| Carpenter | |||
| – Small | $1,300 | $5,000 | $2,400 |
| – Medium | $3,600 | $11,000 | $6,600 |
| – Large | $7,900 | $24,700 | $13,800 |
| General Contractor | |||
| – Medium | $3,100 | $11,500 | $5,400 |
| – Large | $6,300 | $16,500 | $9,100 |
| – XL | $15,600 | $38,600 | $23,200 |
For most contractors, a $1 million per occurrence limit is recommended for general liability coverage. Typical general liability insurance premiums for contractors fall in the range of 1% to 5%+ of annual revenue depending on the risk level, coverage, and other factors.
Here is a look at typical estimated general liability premium ranges for contractors based on their annual revenue:
| Annual Contractor Revenue | Typical GL Premium Range |
|---|---|
| $150,000 | $1,500 – $7,500 |
| $500,000 | $5,000 – $25,000 |
| $1 million | $10,000 – $50,000 |
| $2.5 million | $25,000 – $125,000 |
There are a number of key factors that can influence general liability insurance costs for contractors in Maryland:
– Type of contracting work – Certain types of higher risk contracting work like roofing, plumbing, electrical, HVAC, and refrigeration/mechanical trades tend to have markedly higher general liability premiums than lower risk trades such as simple home building and repair contractors. The exact type of work being done has a major impact on liability risk exposure.
– Annual revenues – As a general rule, contractors who have higher total annual gross revenues need to carry higher limits of general liability coverage and will also pay higher premiums overall because they have greater overall risk exposure. Insurance companies frequently use annual revenue amounts as a proxy for the relative size of a contracting business and its presumed risk level.
– Claims history – Contractors who have past liability claims filed against them will almost always see their premiums increased significantly, especially if the claims were particularly large and/or frequent. Having too many past claims, or very costly claims, can even make a contractor uninsurable altogether. Maintaining a clean claims history helps keep liability insurance costs down.
– Years in business – Contractors who are new to the industry will likely pay higher premiums for liability coverage until they have been in business for a few years and have an established track record. Insurance companies consider extensive experience to be an indicator of lower risk. Once a contractor has been operating successfully for 3-5+ years, liability rates tend to improve.
– Risk transfer – When contractors take clear steps to transfer some amount of risk, like requiring subcontractors to carry adequate general liability insurance or securing performance bonds, this is looked upon favorably by insurers and can result in lower premiums.
– Policy limits – Contractors who opt to purchase higher limits of general liability coverage (such as $2 million per occurrence rather than $1 million) will invariably be charged higher premiums. Yet purchasing limits that are too low can potentially expose contractors to major uncovered losses should a very large claim arise. Finding the right balance is key.
– Deductibles – Choosing a higher deductible (the amount the contractor pays out-of-pocket on a claim before insurance coverage kicks in) can significantly reduce your premiums. A downside to higher deductibles is that it increases your share of payments on each individual claim.
– Insurance company – The reputation, financial strength, and competitiveness of the insurance company providing coverage will impact premium pricing. A well-regarded insurance company that is financially strong with competitive rates will charge lower premiums.
– State factors – The general legal environment, political landscape, and construction industry trends within Maryland also influence general liability insurance costs to some degree. Insurance companies may raise or lower rates based on state-specific environments.
By maintaining great records, safety practices, qualifications, experience levels, and choosing appropriate policy coverage limits, contractors can minimize their general liability costs. Proactively controlling risk is key to reducing premiums.
Workers Compensation Insurance Costs for Maryland Contractors
Workers’ compensation insurance covers work related injuries and illnesses that employees experience while on the job. For contractors, workers’ compensation premiums can vary quite significantly based on states laws, risk classifications, experience rating, number of employees, overall payroll, and other factors.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,345 | $2,942 | $1,681 |
| – Medium | $3,782 | $8,321 | $5,043 |
| – Large | $5,883 | $13,028 | $8,405 |
| Plumber | |||
| – Small | $1,978 | $4,327 | $2,473 |
| – Medium | $5,563 | $12,239 | $7,418 |
| – Large | $8,654 | $19,163 | $12,363 |
| Painter | |||
| – Small | $1,475 | $3,227 | $1,844 |
| – Medium | $4,149 | $9,127 | $5,532 |
| – Large | $6,453 | $14,290 | $9,219 |
| Landscaper | |||
| – Small | $1,160 | $2,538 | $1,450 |
| – Medium | $3,263 | $7,178 | $4,350 |
| – Large | $5,075 | $11,238 | $7,250 |
| Handyman | |||
| – Small | $3,021 | $6,608 | $3,776 |
| – Medium | $8,496 | $18,691 | $11,328 |
| – Large | $13,216 | $29,263 | $18,879 |
| Carpenter | |||
| – Small | $2,497 | $5,461 | $3,121 |
| – Medium | $7,022 | $15,448 | $9,362 |
| – Large | $10,923 | $24,186 | $15,604 |
| General Contractor | |||
| – Medium | $9,062 | $19,824 | $11,328 |
| – Large | $14,160 | $31,152 | $18,880 |
| – XL | $26,432 | $58,528 | $37,760 |
Maryland falls somewhere in the middle of the spectrum when it comes to workers’ compensation costs compared to other states. Premiums are generally not as high as some states like California, but not as low as states like Texas.
Here is a look at typical workers’ comp insurance premium ranges for contractors based on their annual payroll:
| Annual Payroll | Typical WC Premium Range |
|---|---|
| $75,000 | $2,000 – $7,500 |
| $250,000 | $7,500 – $20,000 |
| $500,000 | $15,000 – $40,000 |
| $1 million | $25,000 – $80,000 |
There are several important factors that can influence workers’ compensation insurance costs for contractors in Maryland:
– Total payroll – The total annual payroll amount and number of employees that a contractor has are major variables factored into workers’ compensation premium calculations. Quite simply, the higher the payroll, the higher the premiums.
– Job classifications – The specific types of job duties performed by employees are classified by insurance companies into various risk categories based on the chance of injury. Higher risk construction work such as roofing or electrical work has significantly higher workers’ comp premium rates than lower risk office administrative work.
– Experience rating – Contractors are graded by insurance carriers based on their past loss histories over the past 3-5 years. Contractors with fewer claims, lower cost claims, and minimal workplace injuries tend to get an ‘experience credit’ applied to reduce their premiums. Too many costly claims lead to an ‘experience debit’ that increases premiums.
– Industry trends – Workers’ compensation premium rates for the construction industry as a whole within each state also have an influence on costs. If greater losses are occurring across the entire construction trade, rates tend to rise.
– Safety record – Contractors who make safety a high priority and work diligently to prevent employee injuries often qualify for preferred ‘safety certified’ premium discounts by maintaining low injury rates. Having poor safety programs and procedures leads to higher insurance costs.
– Subcontractor coverage – Contractors who use subcontractors with inadequate or non-existent workers’ compensation coverage end up absorbing far more risk. This leads to notably higher premiums to account for uninsured subcontractor employee exposures. Requiring subs to carry their own workers’ comp coverage lowers a contractor’s risk substantially.
– Maryland state laws – The statutory state laws around benefits, workplace injury exclusions, rate-setting policies, and allowable premium discounts have a major influence on costs. State rate mandates directly affect what contractors pay in premiums.
– Deductible programs – As with general liability, choosing a higher deductible for workers’ compensation lowers premiums substantially but increases the portion the contractor must pay themselves for each worker injury claim before insurance coverage kicks in.
– Insurance company – The reputation, financial strength, premium rates, and level of services offered by your insurance carrier also impacts workers’ compensation costs. More stable companies with fair pricing tend to provide greater savings.
Maintaining excellent records, safety practices, hiring practices, and controlling all aspects of risk are the most effective ways contractors can reduce their workers’ compensation premiums in Maryland. Preventing workplace injuries is absolutely fundamental to lowering insurance costs.
Additional Core Insurance Policies for Maryland Contractors
Beyond just general liability and workers’ compensation coverage, contractors in Maryland need to secure several other essential policies to fully protect their business:
Commercial Auto Insurance
Covers vehicles used for business purposes like company trucks. Typical commercial auto premiums range from approximately $1,500 – $4,000+ per vehicle annually based on factors like vehicle type, radius of operations, driving records, number of vehicles, etc. Limit recommendations are $1 million per accident.
Inland Marine (Contractors Equipment) Insurance
Inland marine insurance covers a contractor’s tools and equipment, both at work sites and in transit. Average premiums range from about $1,500 up to $5,000+ per year for contractors that need $15,000 to $50,000+ in equipment coverage limits.
Surety Bonds
Surety bonds are required by law for contractors bidding on public sector projects. Many private contracts also require bonding. Typical premiums range from 1-3% of the total bond amount, based heavily on the contractor’s personal and business credit profile.
Commercial Property Insurance
Property insurance covers buildings, offices, warehouses, fixtures, business possessions and inventory. Average premiums range from approximately $2,000 up to $20,000+ per year depending on amount of coverage, deductibles, and other factors.
Employment Practices Liability
Covers legal expenses and settlements for employment related lawsuits around issues like wrongful termination, discrimination, harassment etc. Typical premiums range from $2,500 to $7,500+ per year with $500,000 limits.
Cyber Liability Insurance
Covers costs associated with data breaches, network security compromises, hacking events, electronic theft, and more. Average premiums range from $1,000 to $5,000+ per year for $500,000 limits.
Umbrella Liability Insurance
Provides additional liability limits above existing general liability, auto liability and employer’s liability coverage. Typical premiums range from approximately $1,000 to $2,000+ per year for each $1 million in additional coverage limits.
Purchasing the right insurance coverage for your contracting business is absolutely essential, but requires careful consideration of the options. Choosing the wrong policies or limits could leave you underinsured or overpaying. Working with highly experienced contractors insurance brokers is invaluable to determine the optimal insurance solutions for your business.
Partner With ContractorNerd.com for Your Maryland Insurance Needs
Making sure you have the best possible insurance program to fully protect your contracting business at the most cost effective rates is vital to your company’s long-term success.
The team at ContractorNerd.com is dedicated to helping contractors across Maryland make smart insurance decisions that safeguard their assets without overspending. When you partner with ContractorNerd.com, you get:
– Industry expertise – Our insurance specialists focus exclusively on contractor businesses, unlike most generalist brokers. We understand the unique risks you face in this trade inside and out.
– Access to top markets – We maintain partnerships with the leading insurance carriers and access to specialized programs not available to the general public. This allows us to shop many carriers to find you the optimal combination of coverage, service and pricing.
– Cost savings – Our experts don’t just place policies with carriers, they negotiate aggressively to help realize savings for contractors in Maryland. We also provide actionable advice to lower your risks, deductibles, exclusions and more across your policies.
– Efficient service – Our streamlined application process, online account access, and clear communications remove headaches and enable us to secure coverage quickly.
Don’t leave anything to chance when it comes to protecting your contracting business. The team at ContractorNerd.com has the expertise, access, and tenacity to ensure your risks are covered properly while achieving real savings. Get a free quote today!