Operating a construction business in New York comes with an array of risks that require proper insurance coverage. From property damage and injuries to lawsuits and cyber attacks, contractors face diverse exposures that can impact their finances and livelihood. This comprehensive guide examines typical contractor insurance costs in New York and provides helpful tips to secure optimal protection.
New York’s complex contracting landscape demands thorough insurance. Liability insurance fundamentals for contractor operations is crucial for risk management. Workers compensation contractors requirements explained is essential for employee protection. Our guide on contractors insurance considerations provides valuable insights for comprehensive coverage.
Overview of Common Contractor Insurance Policies
It’s crucial for New York contractors to carry adequate insurance tailored to their business needs. Typical policies include:
General Liability Insurance – Covers third party property damage and bodily injury claims arising from your operations. Defends against lawsuits.
Workers’ Compensation – Mandatory coverage in New York. Covers injuries or illnesses sustained by employees occurring on the job.
Commercial Auto Insurance – Protects vehicles used for business purposes like crew trucks.
Inland Marine– Safeguards equipment and tools onsite and in transit.
Builder’s Risk – Protects buildings or structures while under construction.
Surety Bonds– Required for public works and many construction projects. Guarantees contract completion.
Business Owners Policy (BOP)– Packages property and liability coverages for offices and other facilities.
Umbrella Liability – Provides additional liability limits above other policies.
Cyber Liability – Responds to data breaches, hacking, viruses and electronic theft.
Professional Liability– Defends against claims of negligence, errors, and omissions in your work. Protects against design flaws.
Employment Practices Liability – Defends against employee lawsuits around discrimination, harassment, wrongful termination etc.
Choosing the right insurance from trusted providers protects your business from undue risk. It reduces liabilities associated with your contracting work and gives you peace of mind.
Key Variables Impacting Insurance Costs
Insurance premiums for contractors in New York depend on these key factors:
Type of work – Certain trades like roofing, plumbing, electrical, and HVAC are considered higher risk and have higher base rates.
Years in business – New contractors pay higher premiums until establishing a track record over 3-5 years. Experience is an indicator of lower risk to insurers.
Annual revenue size – Contractors with higher revenues have greater risk exposure. Insurers use revenue to gauge the overall size of a contractor’s operations.
Number of employees– More employees on payroll increases risks like workers’ compensation which directly impact premiums.
Claims history – Too many past liability or work injury claims can make a contractor uninsurable. Clean claims reduce costs.
Safety track record – Good safety programs and few OSHA violations lower premiums for liability and workers’ compensation.
Coverage limits – Higher insurance limits mean higher premiums, but lower limits may expose you to uncovered losses.
Deductibles – Choosing a higher deductible reduces policy premiums but increases your upfront costs when a claim occurs.
Insurer– Insurance rates, financial strength, and service quality vary widely between insurance companies.
Premium discounts– Discounts can reduce premiums significantly for things like safety programs, drug-free workplace, timely claims reporting and more. Ask your insurer what discounts you may qualify for.
Policy terms – Things like needing higher general liability completed operations limits due to doing large projects or exclusions for certain work or claim scenarios can impact pricing.
Risk transfer – Requiring subcontractors to carry General Liability and Workers Comp reduces risks to your business.
Typical Contractor Insurance Costs in New York
Insurance costs for contractors in New York vary widely based on your profession, experience, location, payroll, revenue size, and other attributes. Here are some typical premium ranges:
| 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 premiums can vary significantly based on your unique attributes. Reputable contractors who implement sound risk management practices may achieve rates on the lower end of these ranges.
Detailed Overview of Key Contractor Insurance Policies
Let’s take a closer look at some of the most essential insurance policies for contractors operating in New York:
General Liability Insurance
General liability, also referred to as CGL, is crucial insurance for contractors that covers third party incidents arising from your operations or completed work that leads to property damage, bodily injury, personal injury or advertising injury.
| Low | High | Average | |
| Electrician | |||
| – Small | $2,700 | $9,100 | $4,700 |
| – Medium | $8,300 | $23,500 | $14,100 |
| – Large | $18,900 | $51,300 | $27,500 |
| Plumber | |||
| – Small | $9,200 | $16,100 | $13,000 |
| – Medium | $26,000 | $39,000 | $29,600 |
| – Large | $58,800 | $80,000 | $68,100 |
| Painter | |||
| – Small | $2,200 | $4,800 | $3,000 |
| – Medium | $5,800 | $10,700 | $8,200 |
| – Large | $11,700 | $21,800 | $16,300 |
| Landscaper | |||
| – Small | $5,500 | $16,100 | $9,600 |
| – Medium | $9,600 | $49,800 | $25,400 |
| – Large | $15,400 | $109,900 | $56,500 |
| Handyman | |||
| – Small | $4,000 | $7,700 | $5,200 |
| – Medium | $12,300 | $19,300 | $14,900 |
| – Large | $27,100 | $36,400 | $31,300 |
| Carpenter | |||
| – Small | $4,800 | $8,400 | $5,600 |
| – Medium | $14,300 | $21,450 | $16,700 |
| – Large | $32,800 | $42,640 | $36,400 |
| General Contractor | |||
| – Medium | $11,600 | $18,200 | $14,500 |
| – Large | $16,500 | $36,400 | $25,600 |
| – XL | $50,700 | $106,700 | $75,600 |
General liability insurance protects your business from costly lawsuits, legal fees, medical expenses, settlements and judgements. Typical policy limits range from $500,000 up to $2 million in coverage, depending on your size and risk profile.
Some costs general liability covers include:
– Legal defense fees
– Court costs
– Settlements and judgements
– Bodily injury damages
– Lost wages
– Medical expenses
– Property damage, like damage to a home you’re working on
– Loss of use, like a homeowner having to stay at a hotel during repairs
Key factors that influence CGL costs:
– Type of work – Certain trades like roofing, plumbing, electrical and HVAC contracting have greater inherent liability risks and higher base rates.
– Revenue size – Larger contractors pay higher premiums. Insurers use revenue as a proxy for size and exposure.
– Claims history – Contractors with past claims will see increased premiums or may be denied coverage.
– Years in business – New businesses pay higher rates until establishing a 3-5 year track record. Insurers associate experience with lower risk.
– Safety record – Good safety leads to lower liability insurance costs. Proactive safety management is key.
– Subcontractors – Requiring subs to carry adequate General Liability reduces risks to your business.
– Policy limits – Higher coverage limits mean higher premiums, but lower limits may expose you to uncovered losses if sued.
– Deductibles – Choosing a higher deductible (for example, $5,000 vs. $1,000) reduces premiums significantly.
– Insurance company – Rates, financial strength, reputation, and service quality vary between insurers.
Workers Compensation Insurance
Workers’ compensation insurance is mandatory in New York to cover injuries employees sustain on the job. It covers lost wages, medical expenses, rehabilitation costs and death benefits. Typical policy limits start at $100,000 and go up to $500,000 or $1 million depending on payroll size.
| Low | High | Average | |
| Electrician | |||
| – Small | $2,700 | $9,100 | $4,700 |
| – Medium | $8,300 | $23,500 | $14,100 |
| – Large | $18,900 | $51,300 | $27,500 |
| Plumber | |||
| – Small | $9,200 | $16,100 | $13,000 |
| – Medium | $26,000 | $39,000 | $29,600 |
| – Large | $58,800 | $80,000 | $68,100 |
| Painter | |||
| – Small | $2,200 | $4,800 | $3,000 |
| – Medium | $5,800 | $10,700 | $8,200 |
| – Large | $11,700 | $21,800 | $16,300 |
| Landscaper | |||
| – Small | $5,500 | $16,100 | $9,600 |
| – Medium | $9,600 | $49,800 | $25,400 |
| – Large | $15,400 | $109,900 | $56,500 |
| Handyman | |||
| – Small | $4,000 | $7,700 | $5,200 |
| – Medium | $12,300 | $19,300 | $14,900 |
| – Large | $27,100 | $36,400 | $31,300 |
| Carpenter | |||
| – Small | $4,800 | $8,400 | $5,600 |
| – Medium | $14,300 | $21,450 | $16,700 |
| – Large | $32,800 | $42,640 | $36,400 |
| General Contractor | |||
| – Medium | $11,600 | $18,200 | $14,500 |
| – Large | $16,500 | $36,400 | $25,600 |
| – XL | $50,700 | $106,700 | $75,600 |
Costs workers’ compensation covers:
– All medical treatment related to the work injury
– Lost wages – covers a portion of lost wages (currently up to $934/week in NY)
– Permanent disability benefits if injury causes permanent impairment
– Death benefits to surviving dependents
– Rehabilitation expenses to help injured workers return to work
Factors impacting workers’ comp costs:
– Payroll – Higher payroll increases premiums, as rates are charged per $100 of payroll.
– Job classification – The type of work impacts rates. High risk construction trades have higher rates.
– Experience rating – Favorable loss history leads to premium discounts. High claims increase costs.
– Safety record – Strong safety programs and few violations earn discounted premiums.
– Premium discounts – Discounts can reduce premiums significantly for things like workplace safety programs, drug-free workplace programs, timely claims reporting and proper classification.
– Policy deductible – Choosing a higher deductible reduces premiums, but increases your upfront costs when a claim occurs.
– Insurance carrier – Rates, financial strength, and services vary between insurance companies.
Commercial Auto Insurance
Contractors require commercial auto insurance to cover vehicles used for business operations, like work trucks transporting equipment and crews. It protects against liability and physical damage risks. Required minimum limits in New York are:
– $25,000 Bodily Injury Per Person
– $50,000 Bodily Injury Per Accident
– $10,000 Property Damage
However, higher recommended limits for contractors are:
– $1 million per occurrence liability
– $2 million aggregate liability
– $1 million uninsured/underinsured motorist
Typical contractors commercial auto policies cover:
– Third party liability for bodily injury and property damage
– Medical payments
– Uninsured and underinsured motorist
– Comprehensive and collision coverage
– Towing and rental reimbursement
Factors impacting commercial auto costs:
– Number of vehicles – More vehicles increases premiums.
– Type of vehicles – Rating is based on the class, weight and use of each vehicle.
– Driving records – Tickets, violations, and accidents drive up costs.
– Coverage limits – Higher limits mean higher premiums.
– Age of drivers – Younger drivers are viewed as higher risk.
– Radius – Local radius is lower risk than long haul.
– Deductibles – Choosing a higher deductible reduces premiums.
– Discounts – Driver training, good driving records, anti-theft and more lead to discounts.
– Insurance company – Rates, financial strength and service quality vary between commercial auto insurers.
Inland Marine (Contractors Equipment) Insurance
Inland marine insurance protects a contractor’s tools and equipment against damage or theft. This includes when equipment is on-site at a job, in transit between worksites, as well as at your business location.
Typical inland marine policies cover:
– Theft
– Vandalism
– Fire damage
– Flood damage
– Collision/overturn of equipment while in transit
Inland marine is flexible and can be customized to your specific equipment risks. Typical limits range from $25,000 up to several hundred thousand dollars or more depending on the value of equipment.
Factors impacting inland marine costs:
– Amount of equipment – Higher value of equipment equals higher premiums.
– Claims history – Past claims will increase rates over time.
– Deductible – Choosing a higher deductible lowers premiums.
– Type of equipment – More sensitive equipment may have higher rates.
– Overnight location – Equipment kept at insured business location is lower risk than job sites.
– Discounts – Anti-theft protections like locking equipment leads to lower rates.
– Insurance company – Rates and services vary between insurers.
Professional Liability Insurance
Also called errors and omissions (E&O) insurance, professional liability protects contractors against negligent work or failure to meet the standard of care expected in their profession. It covers financial harm you cause to clients from mistakes or failing to perform contractual obligations. It protects against claims around defective workmanship, construction defects, or design flaws.
Professional liability covers expenses like:
– Legal defense fees
– Court costs
– Settlements and judgments
– Redesign costs
– Tear out and replacement costs
Architects, engineers, and design-build contractors have greater professional liability risks. But even general contractors are exposed to some risk of negligent work claims. Typical limits range from $250,000 up to $2 million. Costs range from about $2,500 to over $20,000 per year based on profession, revenue, services, and other factors.
Cyber Liability Insurance
Cyber liability insurance is fast becoming essential coverage for construction firms of all sizes to protect against cyber attacks and data breaches. Cyber policies cover expenses like:
– Data breach response and notification costs
– Regulatory fines and penalties
– Credit monitoring for impacted parties
– Public relations services
– Forensic investigations
– Legal defense fees
Cyber attacks can be extremely costly. The average data breach in the US costs over $8 million. Cyber liability insurance assists in responding quickly and effectively when hacks or breaches occur to mitigate damage. Typical limits range from $500,000 to $5 million annually. Premiums for small construction firms often start around $500 to $2,000 per year.
Surety Bonds
Many public construction projects require surety bonds to protect taxpayers and communities. They guarantee the contractor will complete the job per contract terms. Common kinds include:
Bid Bonds – Guarantees you’ll enter into the contract if you win a bid. Usually 5-20% of bid amount.
Performance Bonds – Guarantees 100% contract completion. Value equals contract amount.
Payment Bonds– Protects subcontractors and suppliers you fail to pay. Equal to contract amount.
Most government contracts exceeding $150,000 require surety bonds. Typical rates range from 1 – 3% of the bond amount based on qualifications. They provide vital working capital for growth.
Umbrella Liability Insurance
Umbrella insurance provides additional liability coverage above your other policies like General Liability and Auto. It kicks in when damages exceed underlying limits. Typical additional limits are $1 million to $10 million. Rates run approximately $1,000 to $2,000 per million.
Umbrella coverage increases total protection and allows you to carry higher policy limits at an affordable cost. For large contractors and projects, it’s essential protection.
Partnering with the Right Insurance Advisor
Navigating contractor insurance can be complex. Working with a top specialist simplifies the process and helps optimize your coverage. The experts at [ContractorNerd.com](https://www.contractornerd.com) partner with leading insurers to offer New York contractors:
– Quick access to multiple insurance quotes for easy comparison
– Assistance identifying critical gaps in your current program
– Solutions tailored specifically to your business’s unique risks
– Competitive pricing through our network of top providers
– Expert guidance on how to structure your policies and which endorsements to pursue
– Ongoing policy maintenance to ensure adequate coverage as your business evolves
Don’t leave your contracting business exposed or pay too much for insurance. Partner with a [ContractorNerd.com](https://www.contractornerd.com) advisor to start optimizing your insurance program today.