Operating a contracting business involves substantial risks that can lead to significant financial losses if not properly protected. As a contractor in Washington, having tailored insurance coverage in place is crucial to safeguard your company’s assets and future.
This comprehensive 2,500 word guide will uncover typical insurance costs for Washington contractors across key policies like general liability, workers’ compensation, surety bonds, builders risk, business property, cyber liability, and more. We’ll explore the 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 Washington allows you to accurately evaluate policies suitable for your business. While your exact premiums depend on your specific risk attributes, this data offers helpful context to inform smart insurance decisions.
Washington contractors face unique challenges requiring proper insurance. General contractors liability insurance best practices are crucial for business protection. Contractors workers compensation requirements demystified safeguards your employees on the job. Our guide on comprehensive contractors insurance solutions provides valuable insights.
Key Factors Influencing Insurance Costs
Here are some of the main factors that can influence insurance costs for contractors in Washington:
– Type of work – Certain contracting fields like roofing, siding, electrical, plumbing, and framing are viewed as higher-risk trades by insurers, leading to increased premiums. The more hazardous the day-to-day work, the higher the insurance expenses.
– Years in business – Contractors who are new to the industry often pay higher premiums until they establish a solid track record over several years. Well-established contractors with 5+ years experience generally qualify for better insurance rates.
– Claims history – If a contractor has filed multiple past claims, especially costly claims that resulted in large payouts, their premiums will likely increase. Too many claims can even make a contractor uninsurable. Maintaining a clean claims history helps lower insurance rates.
– Coverage limits – The higher the liability coverage limits or workers’ compensation benefits selected, the higher the premiums charged. Contractors must weigh the cost versus the level of protection needed for their business.
– Number of employees – Having more employees on payroll increases the overall risk exposure for policies like workers’ compensation insurance. More employees equals greater exposure, so rates are higher.
– Safety record – Contractors with clean safety records and lack of OSHA violations/citations can qualify for reduced premiums. Conversely, a history of work site incidents, citations and fines leads to significantly increased insurance costs.
– Annual revenue – Within the contractor industry, larger businesses based on annual revenue have greater overall risk exposure. As revenue increases, so does general liability and other premiums to match the heightened exposure.
– Insurance provider – Rates can vary substantially between insurance carriers based on factors like financial strength, reputation, industry experience, and claims payout ratios. A stable insurer with fair rates lowers costs.
Risk transfer – Insured contractors who transfer some risk to others through things like requiring subcontractors to carry General Liability and Workers Comp, securing surety bonds, having owners pay for Builders Risk policies, and requiring indemnifications and insurance from subcontractors will pay lower premiums by reducing their net risk. Transferring risk to other parties results in insurance savings.
Controlling risk is the key lever contractors have to optimize insurance costs in Washington. Now let’s explore typical premium ranges based on contractor business size.
Small, Medium and Large Contractor Benchmarking
Below we have outlined typical insurance coverages secured by Washington contractor businesses of different sizes. This data provides a general industry benchmark to compare your costs against based on your annual revenue and number of employees.
Do keep in mind that actual premiums fluctuate based on your specific risk attributes like your business location, services provided, safety protocols, number of employees, payroll size, vehicles, years in business, and claims history. Contractors who work with expert brokers to access specialized underwriters at quality insurance carriers can often achieve premium rates on the lower end of the ranges we cite. The right insurance advisor makes a major difference in what contractors pay.
| 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
General liability, sometimes called commercial general liability or contractor liability insurance, covers third-party property damage and bodily injury claims that arise from your business operations, completed work, or at your work sites.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,100 | $2,500 | $1,800 |
| – Medium | $2,600 | $6,700 | $4,600 |
| – Large | $3,200 | $16,400 | $9,400 |
| Plumber | |||
| – Small | $4,300 | $11,600 | $8,300 |
| – Medium | $18,800 | $38,600 | $28,600 |
| – Large | $43,300 | $77,300 | $56,900 |
| Painter | |||
| – Small | $1,500 | $2,625 | $2,000 |
| – Medium | $2,000 | $6,700 | $5,200 |
| – Large | $2,400 | $13,400 | $9,600 |
| Landscaper | |||
| – Small | $795 | $2,150 | $1,600 |
| – Medium | $2,373 | $5,309 | $4,100 |
| – Large | $2,892 | $14,011 | $8,000 |
| Handyman | |||
| – Small | $2,300 | $4,300 | $3,500 |
| – Medium | $6,400 | $13,200 | $9,200 |
| – Large | $15,000 | $26,400 | $18,800 |
| Carpenter | |||
| – Small | $2,800 | $4,900 | $3,900 |
| – Medium | $6,900 | $15,000 | $10,000 |
| – Large | $18,500 | $30,000 | $22,400 |
| General Contractor | |||
| – Medium | $6,000 | $9,700 | $7,600 |
| – Large | $12,000 | $15,600 | $12,300 |
| – XL | $28,900 | $34,680 | $29,400 |
For contractors, typical premiums for General Liability insurance range from about 1% to 5%+ of annual gross revenue depending on specific risk factors. Policy limits of $1 million per occurrence and $2 million aggregate are common.
Based on this data, a contractor with $1 million in revenue would expect to pay around $10,000 to $50,000+ in yearly General Liability insurance premiums for a standard $1 million/$2 million policy.
Some of the key variables that influence General Liability insurance costs for contractors in Washington include:
– Type of work – Certain contracting fields like roofing, siding, electrical, plumbing, framing, and masonry are viewed as higher-risk trades by insurers, leading to increased liability premiums. The more hazardous the day-to-day contracting work, the higher the GL insurance expenses.
– Annual gross revenue – In the contractor industry, businesses with larger annual gross revenues have greater risk exposure. As their revenue increases, so does their General Liability premiums. Insurers use revenue as a proxy for business size and exposure.
– Claims history – Contractors with past General Liability claims filed against them, especially costly claims resulting in large payouts, will see their premiums increased. Too many liability claims can even make a contractor uninsurable. Maintaining a clean claims history helps lower rates.
– Years in business – Contractors who are brand new to the industry often pay higher GL premiums until they build up several years of experience. Well-established contractors who have been in business for 5-10+ years present less risk and qualify for lower rates.
–Risk transfer – Contractors who transfer some third-party liability risk to other parties like having subcontractors add them as Additional Insureds on their GL policies, securing surety bonds, and requiring proof of insurance from all subcontractors can reduce their own liability premiums. Transferring risk leads to insurance savings.
– Policy limits – General Liability policies with higher third-party coverage limits cost more than lower limit policies. Yet choosing limits that are too low leaves the contractor exposed. Balancing cost and adequate protection is key.
– Deductibles – Choosing a higher deductible (the amount the contractor pays on a claim before insurance kicks in) can significantly reduce GL premiums. A higher deductible equals lower premiums but increases financial risk for the contractor.
– Insurance company – Premiums can vary substantially based on the insurance provider. Factors like an insurer’s financial strength, reputation, contracting experience, loss payout ratios, and competitiveness influence rates.
Workers Compensation Insurance Costs
Workers Compensation insurance covers employee injuries, medical expenses, lost wages, rehabilitation, and death benefits in the event an employee is injured on the job.
| Low | High | Average | |
| Electrician | |||
| – Small | $1,187 | $2,596 | $1,483 |
| – Medium | $3,337 | $7,342 | $4,450 |
| – Large | $5,191 | $11,495 | $7,416 |
| Plumber | |||
| – Small | $2,449 | $5,357 | $3,061 |
| – Medium | $6,888 | $15,153 | $9,184 |
| – Large | $10,714 | $23,724 | $15,306 |
| Painter | |||
| – Small | $1,949 | $4,263 | $2,436 |
| – Medium | $5,481 | $12,059 | $7,309 |
| – Large | $8,527 | $18,880 | $12,181 |
| Landscaper | |||
| – Small | $1,072 | $2,345 | $1,340 |
| – Medium | $3,015 | $6,633 | $4,020 |
| – Large | $4,690 | $10,385 | $6,700 |
| Handyman | |||
| – Small | $2,836 | $6,204 | $3,545 |
| – Medium | $7,976 | $17,547 | $10,635 |
| – Large | $12,407 | $27,473 | $17,725 |
| Carpenter | |||
| – Small | $2,810 | $6,147 | $3,513 |
| – Medium | $7,904 | $17,388 | $10,538 |
| – Large | $12,294 | $27,223 | $17,563 |
| General Contractor | |||
| – Medium | $8,508 | $18,611 | $10,635 |
| – Large | $13,294 | $29,246 | $17,725 |
| – XL | $24,815 | $54,948 | $35,450 |
For Washington contractors, typical Workers Compensation premiums can range from 5% to 15%+ of gross annual payroll depending on industry class codes and risk factors. The construction industry has high injury rates, leading to costly premiums.
Washington Workers Comp Premium Ranges
Based on this data, a contractor with a $500,000 payroll would expect to pay around $25,000 to $75,000+ in yearly workers’ compensation premiums.
Some key variables that influence Workers Comp insurance costs for Washington contractors include:
– Payroll – The total annual payroll and number of employees are core factors used to calculate workers’ comp premiums. The higher the payroll, the higher the premiums.
– Class codes – The type of construction work performed by employees is classified into risk category codes. More hazardous occupations like roofing or scaffold erection have considerably higher rates than lower risk codes like clerical work.
– Experience modifier – All contractors are graded on their past workers’ comp loss history. Contractors with fewer and less severe past claims get an ‘experience credit’ on premiums. High claims lead to an ‘experience debit’ increasing premiums.
– Industry trends – Rising workers’ compensation claims frequency and severity among contractors industry-wide will drive rate increases across the board. Poor industry results impact all firms.
– Safety record – Contractors with strong safety programs that result in low past claim frequency and severity can qualify for premium discounts of 5-25%+. Unsafe contractors pay higher premiums.
– Uninsured subcontractors – Using uninsured or underinsured subcontractors greatly increases a contractor’s workers’ comp risks and premiums since they must cover those subs’ employees. Requiring subs to carry valid workers comp is critical.
– Policy deductible – Choosing a higher deductible lowers the annual premium paid by the contractor but increases their financial risk by making them responsible for more of each claim’s costs. There is a tradeoff between upfront premium savings and increased claim payouts.
– Insurance company – The specific insurance carrier’s financial strength, reputation, service quality, and efficiency influence overall workers’ comp costs. A stable and reasonable insurer lowers premiums.
Surety Bonds
Many public works and large construction projects require contractors to carry surety bonds to ensure contract performance and payment. Typical premiums for Surety Bonds range from 1% to 3% of the total bond amount based on the contractor’s financial strength and credit profile.
The two core Surety Bonds contractors need are:
Performance Bond – Guarantees the project will be completed as outlined in the contract. If the contractor fails to finish the job, the bonding company hires another firm to complete the work.
Payment Bond – Guarantees subcontractors and suppliers will be paid. If the contractor doesn’t pay subs/suppliers, the bonding company covers the outstanding payments.
Factors impacting contractor surety bond premiums include:
– Bond amount – The higher the total bond amount, the higher the bond premiums. Bond amount depends on project size.
– Credit score – Contractors with better personal and business credit pay lower surety bond premiums due to less perceived risk of default. Poor credit leads to high premiums.
– Financial strength – Contractors must submit financial statements and tax returns showing adequate working capital for their operations. The stronger the finances, the lower the bond rates.
– Claims history – Past performance problems or failures to finish contracts lead to higher bond premiums. A clean performance record results in savings.
– Indemnity agreement – The indemnity agreement makes the contractor 100% liable for losses the bonding company experiences if they fail on a project. A limited vs unlimited indemnity will alter rates.
Builders Risk Insurance
Builders Risk Insurance covers construction projects during the course of construction against standard property perils as well as unique risks like collapse, theft, equipment damage, and materials damage.
Typical Builders Risk policy premiums range from 0.3% to 3%+ of the completed value of the project, based on risk factors like construction type, project size, location, duration, safety protocols, theft potential, and weather exposures.
Key variables that influence Builders Risk Insurance costs include:
– Completed value – Higher construction values mean higher premiums. Most policies cover 100% of the completed project value.
– Construction type – Wood frame construction tends to have lower premiums than concrete tilt-up, steel buildings, or heavy civil work.
– Project duration – Shorter project timelines reduce risk windows and may lower premiums. Longer projects keep assets at risk longer.
– Location – Construction in heavy catastrophe zones for hurricanes or earthquakes costs more as claims risk is higher. Rural areas are lower risk than urban zones.
– Safety record – Contractors with strong safety programs and protocols that result in fewer project incidents typically pay lower premiums. High incident rates leads to costly insurance.
– Theft – Projects in high crime areas or with expensive materials have increased theft and vandalism risk leading to higher premiums.
–Deductible – Taking a higher deductible lowers premiums but increases contractor risk if a claim occurs. Deductibles often range from $1,000 to $25,000.
– Insurer – Premiums can vary among insurance carriers based on underwriting expertise, financial strength, reputation, and efficiency. An experienced builder’s risk insurer provides stability.
Business Property Insurance
Contractors require property insurance to cover their business offices, warehouses, storage yards, and other real property assets against common risks like fire, water damage, theft, and disasters.
Typical business property premiums range from about $2,000 per year for a basic policy up to $20,000+ annually for larger contractors with multiple locations and high property values. Average costs tend to range around $5,000 per year.
Key factors impacting business property insurance costs include:
– Property values – The higher the combined value of covered buildings and business personal property, the higher the premiums. Values drive property premiums.
– Construction type – As with Builders Risk, wood frame buildings tend to have lower premium factors than steel, concrete, or masonry. Composition impacts risk.
– Deductible – Selecting a higher deductible lowers premiums but shifts more financial risk to the contractor if a claim occurs. A minimum deductible is usually $1,000.
– Theft – Contractors with fenced yards, security systems, secure entry ways, and limited employee access to valuables pay lower property premiums due to reduced theft risk.
– Location– Properties located in remote areas with limited fire response have higher premium factors than those within municipal fire districts. Location contributes to risk.
– Loss history – Multiple past property claims drive up premiums. Clean loss history keeps rates lower.
– Insurer – The insurance company’s financial strength, reputation, and expertise also impact property insurance costs.
Cyber Liability Insurance
Cyber Liability insurance covers contractors against costs associated with data breaches, hacks, viruses, identity theft, and electronic theft.
For small to mid-sized contractors, typical Cyber Liability premiums range from about $500 per year up to $5,000+ annually for higher policy limits. Most policies start at $500,000 in coverage.
Factors affecting cyber insurance costs include:
–Coverage limits – Contractors who opt for higher cyber policy limits pay more in premiums. Most small contractors only buy the minimum $500,000 in coverage.
– Revenue – Larger contractors based on annual revenue tend to pay slightly higher premiums for Cyber Liability insurance due to perceived greater cyber risk.
– Data risks – Contractors who maintain substantial customer data, accept credit card payments, control health records, and rely on computer networks pay higher premiums due to increased data breach and hacking exposure. Minimal data storage lowers costs.
– Security protocols – Contractors using modern data encryption, firewalls, secured WiFi networks, dual authentication logins, and regular software updates benefit from lower premiums due to reduced cyber risk.
– Deductible – Cyber Liability policies have high minimum deductibles of $5,000 to $25,000. Choosing a higher deductible reduces premiums but shifts financial risk to the contractor if a cyber-attack occurs.
– Insurer expertise – Cyber liability is a highly technical coverage requiring specialized expertise. Carriers new to cyber insurance often misprice policies leading to lower premiums until claims occur. Expert insurers help avoid coverage gaps.
Umbrella Liability Insurance
Umbrella Liability insurance provides contractors with additional liability limits above and beyond the limits in their General Liability, Auto Liability, and Employers Liability policies.
Typical Umbrella Liability premiums range from about $1,000 per year for $1 million in additional coverage up to $7,000+ annually for $5 million in extra protection. Umbrella coverage usually starts at $1 million.
Factors impacting contractors umbrella insurance premiums include:
– Coverage limits – Each additional $1 million in Umbrella coverage limits adds around $1,000 in premium costs. So $5 million of extra protection would cost $5,000 more in premiums.
– Underlying liability – Contractors who already carry $2+ million in underlying liability typically pay less for Umbrella coverage due to reduced gaps. Lower underlying limits increases Umbrella premiums.
– Claims history – Contractors with past liability claims on underlying policies often pay more for Umbrella coverage due to perceived risk. Clean history helps lower costs.
–Safety – Strong safety programs and protocols that reduce the chances of catastrophic workplace or job site injuries help lower Umbrella premiums due to reduced risk of a large liability claim.
– Deductible – Umbrella Liability comes with high minimum deductibles of $10,000 or $25,000. Choosing a higher deductible reduces premiums but shifts claim risk to the contractor.
– Insurer – Umbrella coverage requires substantial financial strength. Rates vary based on the insurer’s financials, reinsurance, and loss ratios. A seasoned Umbrella carrier provides rate stability.
Employment Practices Liability
Employment Practices Liability Insurance (EPLI) protects contractors against employee lawsuits around issues like discrimination, wrongful termination, sexual harassment, overtime payment, and other employment law disputes.
Typical annual EPLI premiums for contractors range from about $2,500 up to $7,500+ for higher limits. Most small to mid-size contractors buy policy limits ranging from $500,000 to $1 million.
Key variables impacting contractors EPLI insurance costs:
– Policy limits – Higher EPLI coverage limits translate into higher annual premiums. Most contractors only opt for up to $1 million in coverage due to the expense.
– Number of employees – Having more employees increases the odds of an