For construction companies in Texas, having adequate and affordable insurance is critical to protect your business. As a contractor, you face an array of risks from property damage and workplace injuries to lawsuits and cyber attacks. Purchasing tailored, cost-effective insurance policies can safeguard your assets and future.
This extensive guide will uncover typical insurance costs for Texas contractors across popular policies like general liability, workers’ compensation, 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 Texas 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.
Texas contractors face various risks requiring comprehensive insurance. Liability insurance essentials for general contractor operations are essential for risk management. Workers comp for contractors decoded protects your employees on the job. Our guide on insurance requirements for general contractors provides valuable insights.
Key Factors Influencing Insurance Costs for Contractors
Here are some key factors that can influence insurance costs for contractors in Texas:
– Type of work – Certain contracting fields like roofing, plumbing, electrical, painting, masonry, and concrete work are seen as higher risk and have higher premiums. More hazardous work leads to increased insurance costs.
– Years in business – New contractors often pay more until they establish a solid track record. Insurers view experience as an indicator of lower risk and better safety practices. The longer you are in business, the more likely you are to get better rates.
– Claims history – Prior claims made will likely increase your insurance premiums. Too many claims or large claims can make a contractor uninsurable altogether. A clean claims history helps lower rates.
– Coverage limits – Higher liability and workers’ comp coverage limits mean higher premiums. Contractors must weigh the cost versus the amount of protection needed for their business. Lower limits can save money but may expose you to unprotected losses.
– Number of employees – The more employees you have on your payroll, the greater the risk exposure for things like workers’ comp claims. More employees equals higher premiums in most cases.
– Safety record – Contractors with past OSHA violations, job site accidents, poor safety training, and lack of safety policies will pay higher premiums. Those with strong safety programs and low injury rates pay less. Safety pays dividends.
– Business size – In general, larger contracting firms get better rates than smaller contractors, based on economies of scale and their ability to spread risk over more work and employees. But being too small can also reduce your leverage with insurers.
– Insurance provider – Rates can vary a lot between insurance companies, sometimes by thousands of dollars. Getting competitive quotes rather than just renewing saves money.
Controlling risk through good record keeping, safety training, clear jobsite policies, strong contract language, and appropriate insurance coverages helps minimize costs. Let’s look closer at benchmarks and costs.
Small, Medium, Large Contractor Benchmarking in Texas
The key below shows our definition for small, medium and large contractors in Texas along with typical insurance coverages secured. This provides a general benchmark to understand how your costs may compare.
| 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 vary based on your specific location, services, safety record, number of employees and vehicles, payroll costs, revenues, and other unique attributes. Contractors who secure tailored coverage with quality carriers and favorable terms may achieve rates well below these averages and toward the lower end of the ranges we provide below.
If in doubt, we encourage you to explore your program with our network of highly skilled and specialized brokers. The brokers in our network specialize in helping contractors realize savings by accessing the right carriers and tailoring coverage to the contractor’s specific business. Now let’s look at costs.
General Liability Insurance Costs in Texas
General liability, also known as contractor’s liability, protects your business if a third party alleges property damage or bodily injury caused by your construction operations. It covers legal defense costs and settlements up to the policy limits.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,300 | $2,900 | $1,900 |
| – Medium | $3,700 | $6,300 | $5,000 |
| – Large | $6,100 | $11,300 | $9,500 |
| Plumber | |||
| – Small | $2,200 | $9,600 | $6,100 |
| – Medium | $15,800 | $27,400 | $21,200 |
| – Large | $37,400 | $58,800 | $49,300 |
| Painter | |||
| – Small | $1,200 | $2,600 | $1,700 |
| – Medium | $3,400 | $5,600 | $4,400 |
| – Large | $6,200 | $11,200 | $8,700 |
| Landscaper | |||
| – Small | $503 | $2,724 | $1,400 |
| – Medium | $1,034 | $5,222 | $3,400 |
| – Large | $2,306 | $10,238 | $6,600 |
| Handyman | |||
| – Small | $1,900 | $4,500 | $2,900 |
| – Medium | $5,300 | $9,900 | $7,700 |
| – Large | $11,500 | $23,400 | $16,200 |
| Carpenter | |||
| – Small | $1,800 | $10,400 | $4,100 |
| – Medium | $4,900 | $13,100 | $8,800 |
| – Large | $10,600 | $30,900 | $18,900 |
| General Contractor | |||
| – Medium | $4,100 | $15,300 | $7,500 |
| – Large | $7,500 | $21,600 | $12,600 |
| – XL | $17,800 | $50,800 | $29,900 |
Typical premiums for Texas contractors range from 1-5% or more of annual revenue for $1 million per occurrence coverage limits. Umbrella liability can provide additional limits above this.
Texas General Liability Premium Ranges:
| Annual Revenue | Est. Premium Range |
|---|---|
| $100,000 | $1,000 – $5,000 |
| $500,000 | $5,000 – $25,000 |
| $1 Million | $10,000 – $50,000 |
| $5 Million | $50,000 – $250,000 |
Premiums depend on the underlying risk of your trade and business. For example, a 1-person carpentry firm with $150K revenue may pay $2,500/year while a 5-person roofing contractor with $500K revenue could pay $18,000/year, all factors being equal.
Key factors that influence general liability insurance costs for Texas contractors:
– Type of work – Certain high-risk trades like roofing, plumbing, electrical, painting, masonry, and concrete contractors have higher premiums due to the nature of their work. More hazardous work leads to increased liability costs.
– Annual revenues – Contractors with higher total annual revenues have greater risk exposure across more jobs, so they pay more for liability coverage. Insurers use revenue as a proxy for your business’s overall size and risk level.
– Claims history – Contractors with past liability claims filed against them will see their premiums increased significantly, especially if the claims were large or frequent. Too many claims can make a contractor uninsurable altogether. Maintaining a clean claims history helps lower rates.
– Years in business – Newer contractors are seen as higher risk and will pay more for liability insurance until they establish a solid track record over several years. Contractors who have been in business for 10+ years tend to get the lowest rates.
– Risk transfer – Contractors who take concrete steps to transfer or reduce risk – like requiring subcontractors to carry adequate insurance and getting certificates of insurance from all subs – will pay lower premiums.
– Policy limits – Choosing higher liability policy limits means higher overall premiums, but reduces the likelihood of uninsured losses. Lower limits may expose you to uncovered claims but cost less upfront. Finding the right balance is key.
– Deductibles – Selecting a higher deductible, which is the amount you pay out of pocket on a claim before insurance coverage kicks in, can significantly reduce your liability premiums. This saves money but increases your share of loss costs.
– Insurance company & market competition – The financial strength, reputation, and loss payout record of your insurer matters. So does the level of competition among insurers in the Texas contractor market, which impacts pricing.
Workers Compensation Insurance Costs in Texas
Workers’ compensation insurance covers employee injuries, medical expenses, lost wages, and rehabilitation costs from job-related illnesses and accidents. Premiums can vary widely for Texas contractors.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,022 | $2,237 | $1,278 |
| – Medium | $2,876 | $6,326 | $3,834 |
| – Large | $4,473 | $9,905 | $6,390 |
| Plumber | |||
| – Small | $1,118 | $2,446 | $1,398 |
| – Medium | $3,145 | $6,918 | $4,193 |
| – Large | $4,892 | $10,831 | $6,988 |
| Painter | |||
| – Small | $873 | $1,911 | $1,092 |
| – Medium | $2,457 | $5,404 | $3,275 |
| – Large | $3,821 | $8,461 | $5,459 |
| Landscaper | |||
| – Small | $608 | $1,330 | $760 |
| – Medium | $1,710 | $3,762 | $2,280 |
| – Large | $2,660 | $5,890 | $3,800 |
| Handyman | |||
| – Small | $1,483 | $3,245 | $1,854 |
| – Medium | $4,172 | $9,178 | $5,562 |
| – Large | $6,490 | $14,370 | $9,271 |
| Carpenter | |||
| – Small | $1,433 | $3,135 | $1,791 |
| – Medium | $4,031 | $8,867 | $5,374 |
| – Large | $6,270 | $13,883 | $8,957 |
| General Contractor | |||
| – Medium | $4,450 | $9,734 | $5,562 |
| – Large | $6,953 | $15,296 | $9,270 |
| – XL | $12,978 | $28,737 | $18,540 |
Texas Workers’ Compensation Premium Ranges:
| Payroll | Est. Premium Range |
|---|---|
| $100,000 | $1,500 – $6,000 |
| $500,000 | $7,500 – $30,000 |
| $1 Million | $15,000 – $60,000 |
| $2.5 Million | $37,500 – $150,000 |
A roofing contractor with $1 million of payroll may pay $45,000/year for workers’ compensation while a similar sized electrical contractor could pay $75,000/year, due to the higher loss risk.
Key factors that influence workers’ compensation insurance costs for Texas contractors:
– Payroll – The total payroll and number of employees are big factors in premium calculations. Higher payroll equals greater overall risk exposure, so higher premiums.
– Job classification – The type of work performed by employees is classified into risk categories based on injury data. High risk roofing work has higher rates than lower risk office work.
– Experience rating – All contractors are graded on their past loss history. Those with fewer and lower cost claims get an ‘experience credit’ reducing premiums. Too many claims lead to an ‘experience debit’, increasing premiums.
– Industry trends – Premium rates for the whole construction industry influence costs. Rates rise across the board if industry-wide workplace injury claims increase beyond insurer projections.
– Safety record – Contractors with strong safety programs, training, and low injury rates can qualify for premium discounts for being ‘safety certified’ workplaces. Those with poor safety generally pay more.
– Subcontractor coverage – Contractors using uninsured subcontractors will pay higher premiums to cover those exposures. Requiring subs to carry their own compliant workers’ comp lowers risk.
– State laws – Texas has specific laws around benefits, exclusions, premium discounts, and rate-setting regulations which shape costs. State mandates directly impact what Texas contractors pay.
– Deductible programs – Like general liability, a higher deductible lowers workers’ comp premiums but increases the share contractors pay out of pocket for each workplace injury claim.
– Insurance carrier – The insurer’s financial strength, loss payout reputation, and pricing influence overall costs. Choosing a stable, established carrier provides the most protection.
Additional Insurance Coverages and Typical Premiums
Beyond general liability and workers’ compensation, most Texas contractors need supplemental insurance policies:
Commercial Auto Insurance
Covers vehicles used for business purposes. Typical annual premiums range from $1,500 – $4,000 per vehicle, depending on factors like type of vehicle, radius, deductibles, and more.
Inland Marine (Tools & Equipment) Insurance
Protects tools, equipment, machinery, and contractor-owned materials from theft, damage, or loss on the job site or in transit. Typical annual premiums range from $1,500 – $7,500+ for $15,000 to $50,000 in coverage limits.
Surety Bonds
Required by law for public works and many large jobs. Typical premiums range from 1-3% of the total bond amount, based on contractor qualifications and credit history.
Builders Risk Insurance
Covers construction projects and properties while under construction. Typical annual premiums range widely based on project size and duration. Generally $2,000 to $20,000+ for residential projects up to $500k.
Commercial Property Insurance
Safeguards your business properties like offices, warehouses, showrooms and more against damage. Typical annual premiums range from $2,000 for small spaces up to $50,000+ for larger properties.
Employment Practices Liability
Protects against claims like discrimination, wrongful termination, sexual harassment in the workplace. Typical annual premiums range from $2,500 to $7,500+ depending on number of employees.
Cyber Liability Insurance
Responds to cyber risks like data breaches, theft of digital assets, computer virus attacks and more. Typical annual premiums range from $500 to $5,000+ depending on revenue size.
Umbrella Liability Insurance
Provides additional limits above primary general liability and auto policies. Added layer of protection. Average annual premiums range from $1,000 to $5,000 per $1 million in extra coverage limits.
Contractor Insurance Savings Tips
Here are some tips that can help Texas contractors control insurance costs and find savings:
– Compare rates from multiple insurance providers before renewing or purchasing new policies. This ensures you get competitive pricing.
– Ask about premium discounts for safety programs, training, drug testing, trade association membership, and workers’ comp deductible programs.
– Pay premiums annually rather than monthly to avoid fees. Consider a longer 2 or 3 year policy term to lock in rates.
– Raise liability deductibles prudently to reduce premiums, but have funds set aside to cover your share of losses.
– Cut unnecessary coverage limits or extras to save premium dollars. But don’t go too low on key coverages like liability and workers’ compensation.
– Improve site safety, document training, and fix hazards to control your experience rating and lower premiums. Preventing claims is ideal.
– Make sure subcontractors carry current insurance policies. Get certificates of insurance to transfer the risk.
– Work with an independent agent or broker who can shop multiple insurance carriers and find you the best deal.
Partner with ContractorNerd.com
Are you a Texas 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 your contracting business faces and are committed to providing you with tailored insurance solutions specific to your needs.
Why Choose ContractorNerd.com?
1. Specialized Expertise: Our network of insurance specialists focuses exclusively on contractor businesses. They have an in-depth understanding of your industry to ensure you get the right coverage.
2. Access to Top Markets: Over the years, we’ve cultivated partnerships with leading insurance carriers. This means we can quickly secure multiple quotes tailored to your specific requirements.
3. Cost-Effective Solutions: Our specialists advise on potential gaps, cost-saving discounts, and ways to optimize your insurance protection without overspending.
Don’t leave your Texas contracting business exposed. Partnering with ContractorNerd.com ensures you make a smart investment to fully safeguard your company’s future and assets. Get a personalized quote today and take the first step towards comprehensive, cost-effective insurance protection.