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How Much Does General Contractor Insurance Cost? (2022 Rates)

As a general contractor, you work in a somewhat risky industry. Construction sites have a reputation for being host to accidents and injuries. Due to the dangerous nature of the business, you must have appropriate insurance to cover your interests and your employees while on the job. How much does that insurance cost? Continue reading to learn more. 

How much does general contractor insurance cost?

General contractor insurance costs vary depending on what coverages you opt to have and other factors. After intensive research, we have compiled a table with the most common types of insurance that general contractors typically purchase, median limits, deductibles, and average monthly, and yearly costs. 

If a general contractor buys all coverages that he needs, the average cost of a general contractor policy is $7,045 a year, or $588 a month, with the cost of each coverage breakdown shown in the table below

InsuranceLimitDeductibleAverage yearly cost
General liability$1 million per occurrence$500$1,090
Workers’ Compensation$3,175
Commercial Auto$1 million$500$1,990
Contractor’s tools and equipment$5,000$170
Professional liability$300,000 per occurrence$2,500$520
Surety bond$10,000 (bond amount)$100

How much is the average general contractor insurance cost per month?

The average general contractor insurance cost per month is $588. Below is the cost breakdown for each coverage that a general contractor might need:

InsuranceLimitDeductibleAverage cost
General liability$1 million per occurrence$500$90 per month
Workers’ Compensation$265 per month
Commercial Auto$1 million$500$165 per month
Contractor’s tools and equipment$5,000$15 per month
Professional liability$300,000 per occurrence$2,500$45 per month
Surety bond$10,000 (bond amount)$8 per month

In general, all general contractor will need general liability insurance because your clients will not sign the contract without seeing your proof of insurance. You must have commercial auto insurance if you use your vehicle for work. Otherwise, your personal auto insurance doesn’t protect you.

These are just the averages. Your quotes and rates will be different. Be sure to shop around with a few carriers or work with a top broker like CoverWallet or ez.insure or commercialinsurance.net to get and compare several quotes to choose the cheapest one for you. You can also get a fast online quote from Thimble. It shouldn’t take you more than 5 mins to get a quote on Thimble website.

What factors affect general contractor insurance cost?

Insurance for general contractors is some of the most expensive insurance coverage in the insurance industry because accidents are a relatively common occurrence on a construction site. Other than the prevalence of accidents, other factors contribute to the cost of general contractor insurance. 

Location

Your base of operations affects your premiums. Working in a larger metropolitan area makes accidents more likely to happen because of the number of people near your work sites. Your costs increase in response to the increase in risk. 

Size of your crew and number of job sites

The more people you have working for you, the greater the chance someone will cause an accident or get into one. Having multiple job sites also increases your risk. On the other word, the bigger your general contractor business is, the more expensive your insurance is likely to be.

Coverage limits and deductibles

Higher coverage limits cost more. A higher limit provides more coverage protection if there should be an accident. Lower deductibles cost more as well. When there is a claim, if you have low deductible, your out of pocket payment is minimum, but that increases the premiums that you have to pay upfront. On the other hands, if you choose low coverage limit and high deductibles, you will pay low premiums today. But when accidents happen, and you have to file a claim, your out of pocket payment will be a lot more. You have to consider all of these factors to choose the right coverage limit and deductible amount.

Previous claims history

Insurance companies assess risk based on prior history of accidents and claims against your current insurance policies. If you’ve ever had a policy suspended or canceled for any reason other than non-payment, it also contributes to your risk assessment. 

How to save money on general contractor insurance

Just as factors negatively affect the cost of your general contractor’s insurance, some tricks can help you save money on your insurance coverage. Here are some of the best tips we’ve found.

Bundle your policies

As a general contractor, you likely need to purchase multiple policies to have the comprehensive coverage you need for your business. Some companies will allow you to combine multiple policies into a business bundle that saves you money.

The table above outlines different policies that you may need. You can choose to buy all of these policies from one carrier and it is likely that you will have good bundling discount. However, you have to keep in mind that carrier A might offer you the lowest cost for general liability but their quote for commercial auto insurance is one of the highest. In such case, you may not want to buy both policies from carrier A even if they offer good bundling discount. You may be better off buying these two policies from two different carriers who have the lowest quote for each policy. So you have to decide whether it makes sense to buy all policies from one carrier to benefit from bundling discount.

Use an agent who specializes in business insurance

Typically, those who specialize in home and auto policies don’t have much knowledge about business policies and vice versa. So, choose a broker or agent who specializes in providing insurance for your industry. Companies that specialize in industry-specific coverages could offer you better rates than those that rarely write policies for your industry. 

We recommend CoverWallet, ez.insure, or commercialinsurance.net as the top brokers specializing in small business insurance. They only provide small business insurance, nothing else.

Learn about the insurance rating of the company you are considering.

The insurance rating indicates the financial stability of the company. A financially stable company is more likely to be able to pay claims for companies. Additionally, some clients may require that contractors carry insurance with a specific rating. Companies with the best ratings are less likely to have issues that cause them to fold, causing clients to forfeit any monies they already paid. 

Update your safety procedures

Insurance companies are more likely to back organizations with excellent safety ratings and protocols. When you have updated safety equipment and systems, you reduce injuries which reduces risk in the eyes of the insurance company, which leads to better insurance premiums. Not only does it help you save money on insurance premiums, but you also save money spent on medical bills for your employees. 

Make your construction site as theft-proof as possible

Construction sites are notoriously known as theft magnets. The equipment, tools, and raw materials attract unsavory characters looking to make a quick buck selling expensive tools. However, if you take measures to increase security, it can lead to savings from the insurance company. 

Shop around to compare quotes

Last but not least, always shop around with a few companies or work with a top broker like CoverWallet or ez.insure or commercialinsurance.net to get and compare several quotes to select the cheapest one for you. Different insurance companies assess risks differently and they all have their own business strategies to be in favor for or not in favor for particular industries, that impact their pricing strategies for your business. Getting a fast online quote from Thimble is another good way, even just to see the ballpark of your liability insurance cost.

Who needs general contractor insurance?

Contractors, construction businesses, and other tradespeople can benefit from the purchase of general contractor insurance. Some of those people who can benefit from the insurance coverage are: 

  • Contractors: general contractors as well as concrete, drywall, masonry, excavation, paving, and permanent yard contractors
  • Carpenters, roofers, plumbers, electricians, painters, welders, landscapers, home inspectors, appliance repair technicians, and handypeople
  • Tree services, snow and ice removal professionals, debris removal companies, interior, and exterior construction companies

You will often be required to provide proof of insurance before you can begin work. Some localities may require proof of insurance before you can apply for various permits needed to complete your job. 

Is general contractor insurance required?

Some of the coverages that general contractor need are required by state and federal laws. For example, commercial auto insurance is required by law in all 50 states and federal regulations.

If you hire full-time employees, you must provide workers comp insurance. That is also required by all 50 states, except Texas.

General liability insurance isn’t required by law in any state. However, your customers might require you to have the coverage before signing the contract with you.

Other coverages might not be required by law, but you may want to consider them to protect your general contracting business.

General contractor insurance companies

When purchasing general contractor insurance, it’s a good idea to get multiple quotes. Multiple companies supply insurance for contractors, but they don’t all provide the same coverage or have the same costs. Requesting various quotes will let you compare coverages, limits, prices, customer reviews, and other helpful information. 

There are companies like Next that provide quotes and the ability to purchase insurance coverage online. Thimble has policies that allow you to buy coverage for just one job. Companies like Allstate still benefit from having local agents in many areas of the country. 

The three companies we mentioned are only a few of those offering coverage to contractors. Many of them offer quotes online saving you time when searching for insurance quotes. Here are the best general contractor insurance companies that we recommend:

  • CoverWallet: Best for comparing quotes of leading companies
  • Thimble: Best for flexible coverage and fast online quotes
  • Hiscox: Works with a wide variety of specialized contractor types 
  • The Hartford: Extremely comprehensive business owners policy
  • Affordable Contractors Insurance: Specializes in working with contractors

Final thoughts

General contractors require more than one insurance product to protect their company and employees effectively. The insurance costs can vary, but it’s an essential investment that must be made.

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