For construction companies operating in Tennessee, having adequate insurance coverage is essential to protect your business from the diverse risks you face. As a contractor, exposures can range from property damage and employee injuries to lawsuits, cyber incidents and more. Purchasing cost-effective insurance tailored to your specific operations can help safeguard your assets and your company’s future. 

This detailed guide will uncover typical insurance costs for Tennessee contractors across popular policies like general liability, workers’ compensation, surety bonds, equipment coverage, and other key policies. We’ll explore the variables that impact your insurance premiums, provide benchmarking data for small, medium and large contractors based on revenue, and suggest strategies contractors can use to secure the most favorable insurance rates possible.

Understanding typical contractor insurance expenses in Tennessee allows you to better evaluate the types of policies and coverage limits suitable for your business. While your exact premiums will depend on your unique risk attributes, this data offers helpful context so you can make informed insurance decisions to properly cover your company.

Contractors in Tennessee must have the right contractor insurance. This includes general liability insurance for contractors to protect against third-party claims and workers’ comp insurance for contractors to cover employee injuries sustained while working.

Key Factors That Influence Insurance Costs for Contractors

Many elements can affect the insurance premiums contractors pay. Being aware of these cost drivers enables you to better manage factors under your control to help minimize insurance expenses. Here are some of the key factors that can influence insurance costs:

Type of Work – The type of contracting work being performed is a big driver of premiums. Certain trades like roofing, plumbing, electrical, and demolition are viewed as inherently higher-risk by insurers compared to lower hazard trades like painting or landscaping. Higher risk work frequently leads to increased insurance costs.

Years in Business – The length of time a contractor has been in business is also an important rating factor. Contractors who are brand new to the industry often pay higher premiums until they establish a track record over several years. Insurance companies view this experience as an indicator that a contractor likely poses less risk, so longer-tenured contractors may see lower rates.

Claims History – A contractor’s past claims experience can significantly impact pricing. Contractors with frequent claims filed against them, large losses, or costly claims will typically see their premiums increased substantially, especially if claims emerge as a pattern. Too many claims can even make an contractor uninsurable. On the other hand, a clean claims history with few if any minor losses helps demonstrate lower risk and often translates into lower insurance rates.

Coverage Limits – The level of coverage chosen for policies like general liability insurance or workers’ compensation directly impacts costs. Opting for higher liability limits or workers’ comp limits means paying higher premiums. Contractors have to weigh the cost versus the amount of protection desired when selecting appropriate limits.

Number of Employees – Having more employees on payroll increases the overall risk exposure associated with some coverages like workers’ compensation. Insurance rates tend to rise as the number of employees increases, since more employees mean a greater likelihood of claims occurring.

Safety Record – Contractors with poor safety records, OSHA violations, lack of formal safety policies, and high injury rates can expect to pay higher premiums. Conversely, those who proactively invest in safety through robust safety programs, new equipment, and employee training can often qualify for discounts resulting in lower insurance costs.

Business Size – Insurance pricing is also frequently influenced by the overall size of the contracting business. Larger contracting firms may qualify for lower rates and premium discounts based on economies of scale and broader risk distribution, while very small contracting firms often pay proportionally more for insurance based on their limited scale.

Insurance Provider – Insurance rates can vary widely between providers. The pricing, financial strength, industry reputation, and level of competition for contractor business from different insurance companies can impact costs. Wise contractors compare quotes from multiple highly-rated insurers to find the best value.

The key is to maintain excellent business records, safety practices, staff qualifications, risk management procedures, and choose appropriate types and limits of contractor insurance coverages to help minimize overall insurance costs. Controlling risk and demonstrating sound business practices translates into lower premiums.

Small, Medium and Large Contractor Benchmarking in Tennessee 

The following table displays a general benchmark overview of typical contractor insurance coverages along with our definitions for small, medium and large contractors in the state of Tennessee categorized by annual revenue. This data is intended to provide you with some context to help understand how your business’ insurance costs may compare to other contractors based on your size.

Keep in mind that actual premiums can vary significantly based on your unique attributes like your specific location within Tennessee, the services you provide, your safety practices and claims record, the number of employees on payroll and number of vehicles, your payroll and revenue, the tools and equipment you own, and other factors like experience. Contractors who work with a knowledgeable broker and proactively take steps like securing tailored coverage from quality insurance carriers, maintaining favorable loss history, implementing strong safety programs, and negotiating favorable terms can often achieve rates on the lower end of the ranges or well below the average costs provided in the benchmarking data that follows.

CriteriaSmall ContractorMedium ContractorLarge ContractorXL Contractor
Worth of Tools$5K$10K$25K$50K
General LiabilityYesYesYesYes
Workers’ CompYesYesYesYes
Commercial AutoYesYesYesYes
Inland MarineYesYesYesYes
Tennessee Average Total Insurance Premium

If you are ever in doubt about your specific insurance needs or unsure if you are getting the optimal coverage at a competitive rate, we encourage you to explore your options for savings by having an expert at our agency provide a free assessment of your contractor business’ risk exposures and insurance program. Our team specializes in helping Tennessee contractors identify gaps in their existing coverage, access specialized markets and quality carriers tailored the construction trades, and realize significant savings by ensuring you get the right coverage at the most competitive price. You can get started with a free, no-obligation insurance review by completing our short form to be matched with a specialist.

Next, let’s take a closer look at insurance premium ranges and cost influencing factors for the major insurance coverages most Tennessee contractors need to protect their business.

General Liability Insurance Costs for Contractors in Tennessee

Tennessee Average Premiums for General Liability

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 caused by your construction operations or contractors/employees. 

– Small$800$1,900$1,300
– Medium$1,600$5,100$3,400
– Large$3,300$9,500$6,600
– Small$3,800$8,600$6,500
– Medium$7,000$25,200$18,100
– Large$15,300$50,500$35,500
– Small$1,000$4,200$1,900
– Medium$2,200$7,800$4,800
– Large$4,600$17,100$9,400
– Small$796$2,021$1,400
– Medium$1,699$5,700$3,800
– Large$3,518$13,170$8,000
– Small$1,400$4,700$2,900
– Medium$3,800$11,200$7,600
– Large$8,300$25,600$16,100
– Small$800$3,400$2,300
– Medium$2,600$11,400$6,200
– Large$6,100$22,800$12,700
General Contractor
– Medium$3,200$15,700$6,500
– Large$6,100$21,200$10,700
– XL$15,000$50,000$28,600

For general contractors, masonry contractors, electricians, plumbers, roofers, and other trades, the average cost of general liability insurance in Tennessee often ranges between about 1% to 5% or more of annual revenue, based on the policy limit options chosen. Most contractors opt for $1 million or $2 million in liability limits per occurrence, with a $2 million to $4 million aggregate limit.

![General Liability Premium Cost Ranges](/gl-premium-ranges.png)

The exact rates you will be charged for your business’ general liability insurance policy can vary substantially based on multiple factors:

Type of Work – The trades perceived to carry greater injury and property damage risk pay higher premiums. For instance, roofing contractors may pay 5% while drywall contractors pay 2%, given the same revenue.

Annual Revenue – Insurers use a business’ annual revenue as a key mechanism to estimate general liability premiums. Higher revenue equals greater presumed exposure so higher premiums. $750K revenue may be $15K premium while $5M revenue could be $100K+.  

Claims History – Contractors with past general liability claims filed against them will typically see their premiums increased significantly, especially if the claims were costly or occurred frequently or recently. Too many severe claims can even make a contractor uninsurable in the standard markets. A clean loss run helps lower rates.

Years in Business – New contractors are viewed as higher risk by insurers and charged higher rates until they are more established. Contractors who have been in business for many years tend to qualify for the lowest rates.

Risk Transfer – When general contractors transfer risk through requiring subcontractors to carry adequate insurance and obtain performance bonds, it reduces their overall risk profile so they can qualify for lower premiums.

Policy Limits – General liability insurance rates directly correspond to the level of liability limits chosen. Higher per occurrence and aggregate limits equal higher premiums, but lower limits leave contractors more exposed in the event of catastrophic claims or lawsuits.

Deductibles – Opting for a higher deductible amount – the amount the contractor pays out of pocket on a claim before the insurance coverage kicks in – can significantly reduce general liability premiums. A $5,000 deductible could reduce premiums 25% or more versus a $1,000 deductible.

Insurer – The reputation, financial strength, loss payout history, and pricing of the insurance carrier all impact general liability costs. Comparing top-rated insurers’ quotes rather than just renewing saves money.

By maintaining excellent records, implementing sound risk management practices, generating adequate revenue, avoiding losses, and securing coverage through reputable regional and national insurance carriers, contractors can often achieve very favorable general liability insurance premiums.

Workers’ Compensation Insurance Costs for Tennessee Contractors 

Tennessee Average Premiums for Workers Compensation

Workers’ compensation insurance covers employee injuries, medical expenses, lost wages, rehabilitation, death benefits and other costs associated with job-related illnesses or accidents. 

For contractors, workers’ compensation is mandatory in Tennessee for any business with 5 or more employees. Premiums and rates can vary significantly based on the risk classification of trades involved, number of employees, payroll size, loss history, and other factors.

– Small$997$2,182$1,247
– Medium$2,805$6,171$3,740
– Large$4,363$9,661$6,233
– Small$843$1,844$1,054
– Medium$2,371$5,217$3,162
– Large$3,689$8,168$5,270
– Small$1,364$2,983$1,704
– Medium$3,835$8,437$5,113
– Large$5,965$13,209$8,522
– Small$656$1,435$820
– Medium$1,845$4,059$2,460
– Large$2,870$6,355$4,100
– Small$4,021$8,795$5,026
– Medium$11,308$24,878$15,077
– Large$17,590$38,950$25,129
– Small$3,493$7,641$4,366
– Medium$9,824$21,614$13,099
– Large$15,282$33,840$21,832
General Contractor
– Medium$12,062$26,387$15,078
– Large$18,848$41,465$25,130
– XL$35,182$77,903$50,260

Based on industry data compiled by the National Council on Compensation Insurance (NCCI) and other sources, typical workers’ comp rates for the construction industry in Tennessee range from around $2.50 to $20 or more per $100 of payroll:

![Workers’ Compensation Premium Ranges](/wc-premium-ranges.png)

However, each contractor’s premium rates are determined individually based on their unique attributes discussed in more detail below:

Payroll & Number of Employees – Total payroll and number people on payroll factor heavily into workers’ comp premium calculations, as higher payroll equals greater perceived risk exposure. Some policies may be rated on employee-count alone.

Risk Classification – The type of contracting work performed by employees is assigned a risk classification code (class code) with corresponding rate. Higher risk roofing work has far higher rates than clerical office work for instance.

Experience Modifier – Contractors are graded on their past loss history. Those with fewer and lower cost claims get an ‘experience credit’ reducing their premiums. Too many or costly claims lead to an ‘experience debit’ increasing premiums.

Industry Trends – Workers’ comp premium rates for the construction sector as a whole influence costs. If industry-wide loss trends rise unexpectedly, rates increase to compensate.

Safety Record – Contractors who invest significantly in improving workplace safety through training programs, new equipment, and establishing robust safety policies can qualify for workers’ comp discounts if they achieve low injury rates. 

Subcontractor Coverage – Insured contractors using uninsured subcontractors increase their overall risk profile and premiums substantially. Requiring subs to carry their own workers’ comp coverage keeps their exposures off the general contractor’s policy.

State Laws – Each state has its own laws and systems for benefit amounts, exclusions, rating rules, and pricing. These variables and regulatory rate setting directly affect premiums contractors pay.

Deductible Programs – Choosing higher workers’ comp deductibles – the amount the contractor pays per claim before insurance kicks in – lowers premiums but increases out-of-pocket costs when claims occur.

Insurance Company – The insurer’s financial health, service reputation, and competitiveness influence workers’ compensation costs. Choosing the right partner helps control premiums.

Savvy contractors work closely with an advisor to utilize all available variables under their control to minimize workers’ compensation costs while still properly protecting their employees.

Overview of Additional Insurance Coverages and Typical Premiums

Beyond general liability and workers’ compensation which form the foundation of most contractor insurance programs, additional types of coverages are frequently needed to address supplementary exposures:

Commercial Auto Insurance – To cover vehicles driven for business purposes like work trucks, cargo vans, and trailers. Typical annual premiums range from approximately $1,500 – $4,000+ per vehicle depending on factors like vehicle type, radius, deductibles, and liability limits.

Inland Marine Insurance – Specialized coverage to protect expensive contractor equipment like backhoes, generators, scaffolding, air compressors, and tools against theft, vandalism, damage, or other losses on the job site or in transit. Average premiums range from about $2,500 per year up to $15,000 or more annually for contractors with higher value equipment.

Surety Bonds – Required bid, performance and payment bonds for many public works and large-scale projects. Typical rates range from approximately 1% – 3% of the total bond amount required based on the contractor’s financial strength and credit profile.

Builders Risk Insurance – Covers construction projects while under active construction from start to completion. Average premiums range from around 0.3% – 2% or more of the completed building value, depending on size, location, exclusions and limits.

Cyber Liability Insurance – Provides vital protection against data breaches, hacking incidents, wire transfer fraud, and other costly electronic threats facing contractors today. Typical premiums range from approximately $500 – $5,000 per year based on revenue and coverage limits.

Umbrella Liability Insurance – Provides additional liability limits above a contractor’s underlying general liability and auto coverage. Average premiums range from about $1,000 to $4,000+ annually per $1 million in added umbrella limits.

Proactively addressing these potential gaps with proper coverages and adequate limits ensures contractors avoid surprises that could put their business at risk. An experienced agent or broker familiar with contractor risks can advise on appropriate solutions for your business.

Securing Tennessee Contractor Insurance with

Are you a contractor in Tennessee seeking to protect your business and obtain long-term stability? Look no further than – your dedicated partner for contractor insurance. We understand the unique risks contractors face and are committed to providing you with the best insurance solutions tailored to your specific needs.

Why Work with

Industry Expertise – Our network is comprised of insurance agents and brokers who focus exclusively on contractor businesses. This ensures we have specialized expertise and an intimate understanding of insurance issues and challenges specific to the trades – allowing us to craft tailored solutions.

Access to Top Markets – Over many years, we have cultivated strong relationships with high-quality regional and national insurance carriers and wholesalers. This provides you valuable access to some of the top insurance markets open to contractors today. Our connections enable us to swiftly secure competitive quotes from trusted partners.

Cost-Effective Solutions – Our approach is to find you optimal protection at competitive rates through unbiased advice on potential gaps, cost-saving opportunities, deductible options, and more. With, you get the coverage you need without overpaying.

Don’t Leave Your Business Exposed

As this overview indicates, precise contractor insurance costs in Tennessee vary substantially depending on your profession, experience, location, number of employees, revenue, safety record, and multiple other variables. However, one constant rings true – it is crucial not to leave your business underinsured or exposed. By partnering with the dedicated specialists at, you ensure that you are making wise, informed insurance investments to properly safeguard your company’s future.


For Tennessee contractors, your business is your livelihood and legacy. Protecting it by securing proper insurance tailored to address your specific risks is an essential business safeguard. Don’t settle for generic policies that leave you vulnerable or waste precious time shopping quotes across different agents. Instead, partner with the knowledgeable experts at to take a strategic approach, leverage our carrier relationships to your advantage, and secure your contractor business’ future through comprehensive protection at competitive rates. Get an insurance review today!