Contractors insurance is a policy, or combination of policies, that protect your business from financial harm. This can come from damage or theft of your property or claims by others that during the course of your business, they were harmed or had property damaged. General liability and workers’ compensation are the most common policies. Contractor insurance cost for general liability can range from $275 to $13,000 annually, depending on the industry.
When trying to find coverage, go with a provider that understands your industry’s needs. ERGO – Next Insurance has tailored coverage that fits the different risks and needs of the industry. You can create and share a certificate of insurance (COI) to help you secure a bid online or through the app, and the COI sharing service is free and unlimited. Get a quote and purchase a policy online in 10 minutes or less.
Visit ERGO – Next Insurance for a Quote
Who Needs Contractors Insurance?
By definition, a contractor is any individual or company hired and contractually required to either provide labor, services, or materials for a job. Specifically, there are two types of contractors, all of whom need coverage:
- Contractor: This is the person or entity who has agreed to have taken the job and agreed to complete it per the terms of the contract. They become the general contractor when they oversee the entirety of the project and bring in other contractors to help see it through to completion.
- Subcontractor: This can be a company or individual worker hired by a contractor for a specific task. For example, a general contractor can hire a subcontractor to plumb the bathroom in the addition a homeowner is having built.
Because the definition of contractor is broad, it can apply to a number of different workers in varied industries, including:
- Handypersons
- Landscapers
- Roofers
- Electricians
- Painters
- Heating, ventilation, and air conditioning (HVAC) technicians
- Drywall contractors
- Flooring contractors
- Excavators
Contractor Insurance Cost
When determining your premium, providers will consider a number of factors related to the risk of your specific business, your commitment to safety for your employees, and the size of your business. Contractors who work on large commercial projects, as well as roofers, can expect to pay a higher premium than residential contractors who work on smaller projects.
Below are estimated annual premiums we gathered from a number of quotes from different providers.
| Contractor Industry | Policy Type | Average Annual Premium | Coverage Limit |
|---|---|---|---|
| Electrician | General liability | $500 to $1,200 | $1 million per occurrence and $2 million aggregate |
| Electrician | Business owner’s policy (BOP) | $670 to $2,660 | $1 million per occurrence, $2 million aggregate, and $15,000 business personal property with a $500 deductible |
| Painter | Inland marine | $200 to $850 | $15,000 |
| Painter | Commercial auto | $2000 to $5,000 | $500,000 combined single liability limit |
| Landscaper | General liability | $1,100 to $2,300 | $1 million per occurrence and $2 million aggregate |
| Landscaper | Inland marine | $600 to $1,100 | $20,000 with a $500 deductible |
| Handyperson | General liability | $275 to $2,000 | $1 million per occurrence and $2 million aggregate |
| Handyperson | Inland marine | $300 to $500 | $10,000 with a deductible of $1,000 |
| HVAC Contractor | General liability | $9,000 to $13,000 | $1 million per occurrence and $2 million aggregate |
| HVAC Contractor | BOP | $9,000 to $9,500 | $1 million per occurrence, $2 million aggregate, and $10,000 property coverage with a $500 deductible |
Specific data points providers collect when determining the premium include:
- Type of work: Are you a residential or commercial contractor? Do you work as a subcontractor or a general contractor? What is the scope of the project?
- Claims history: Have you filed a claim in the past three to five years?
- Revenue: What are last year’s revenue and this year’s anticipated revenue?
- Location: What state, or states, do you work in? If you work in multiple states, then this will impact your premium.
- Tools: The value of the equipment that you want to insure is calculated. Some providers will want all of the tools listed when quoting, and others may ask for a ballpark estimate of value.
- Employees: Are you a sole contractor or are you a construction company with employees?
- Licensure: Some states require contractors to be licensed and hold a minimum policy. Providers in those states may ask for proof you are licensed.
Contractors Insurance Policies & Coverage
We list suggested, and in some cases required, policies contractors should consider for their business. Which one is right depends on your business operations and state regulations.
| Contractor Insurance Policies | What It Covers |
|---|---|
| General Liability | Third-party claims for injury and property damage |
| Commercial Property | Repair or replacement cost for business-owned property at specific locations |
| Inland Marine | Tools and equipment used on different job sites |
| Commercial Auto | Liability and first-party coverage for vehicles |
| Workers’ Compensation | Medical bills and lost wages for employees’ work-related injuries |
| Builders’ Risk Insurance | First-party property for a construction project |
This is the most common type of small business insurance coverage and is one of the most important ones for your business because general liability insurance covers your business from third-party claims that a person was hurt or had property damaged because of your negligence. For example, a homeowner could claim your ladder damaged their gutter and gutter guard while you were working on their chimney.
This policy covers several areas of your business. Usually, it includes coverage for
- Damage to third-party property
- Bodily injury to another person (not an employee)
- Personal and advertising injury
- Damage to premises you rent (by fire)
The damage to rented premises is usually capped at a limit of $100,000, so the general liability policy may be insufficient depending on the space your business rents.
If your business operates out of an office space that you own or rent, or if you have office furniture (including computers), then you will want to consider commercial property insurance. This is first-party coverage for your property that covers items and buildings at specific, listed locations. Typically, the policy is written on a named-peril basis. This means it only covers losses that are specified, such as fire, theft, or vandalism.
As a contractor, odds are you have expensive tools and equipment you take to the job site. Inland marine insurance is first-party coverage that follows your equipment. This means coverage is not limited to specific, listed locations. Many providers will offer this as an endorsement of general liability.
Commercial auto insurance is one policy with multiple coverages, including liability for others and first-party property for the vehicle. If you have a dedicated work truck for your business or something that hauls equipment or is integral to business operations, then you will need this coverage. This is different from the vehicle you use to commute to work. Review your current policy with your agent before purchasing any new policies.
Workers’ compensation is a required policy in every state except for Texas and South Dakota. Even in those states, it may still be required depending on the specific industry. Workers’ compensation insurance provides coverage for medical bills and lost wages for employees who suffer accidents at work.
If you are operating as a general contractor for a large project, you’ll want to consider builders’ risk insurance. This is a first-party coverage for the property needed to complete the project: materials, fixtures, and equipment. It can even cover the structure itself during construction.
The policy can be written in two different ways: all-risk and named-peril. An all-risk policy covers all forms of risks—except what is specifically excluded. Meanwhile, a named-peril policy only covers the specific risks outlined in the policy, like theft or hail.
Contractor Insurance Requirements by State
Some states require contractors to have insurance, bonds, or both before they can be licensed and registered. Click below to see a brief description of the requirements in your state.
Select stateSelect stateAlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyomingWashington, D.C
Alabama
License Required: Yes. The license is awarded by the Alabama Licensing Board for General Contractors.
Insurance Required: Yes
Coverages Required: Workers’ Compensation Insurance
- Bodily Injury by Accident: $1,000,000 each accident
- Bodily Injury by Disease – $1,000,000 each employee
Alaska
License Required: Yes. Three classifications of licenses are awarded by the Department of Commerce, Community, and Economic Development, Division of Corporations, Business, and Professional Licensing.
Insurance Required: No
Coverages Required: N/A
Arizona
License Required: Yes. The licenses awarded by the Arizona Registrar of Contractors.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Residential contractors: Minimum coverage of $500,000.
- Commercial contractors: Minimum coverage of $1,000,000.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
Arkansas
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $50,000 per occurrence and $100,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
California
License Required: Yes; from the California Contractors State License Board
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $1,000,000 for bodily injury and property damage.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond of at least $15,000 is also required.
Colorado
License Required: No; however, many local governments have contractor license requirements.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Liability Coverage
- Minimum coverage of $200,000 for residential projects and $500,000 for commercial projects.
Connecticut
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Liability Coverage
- A contractor’s license bond of at least $5,000 is required.
Delaware
License Required: No, but need to obtain a business license and register with the Delaware Division of Revenue.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $300,000 per occurrence and $600,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond of at least $25,000 is required.
Florida
License Required: Yes; license is awarded by the Florida Department of Business and Professional Regulation.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $300,000 per occurrence and $1,000,000 aggregate for general contractors.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Liability Coverage
- Minimum coverage of $50,000 for Division I contractors and $100,000 for Division II contractors.
Georgia
License Required: Yes. License is for work that exceeds $2,500 on private, commercial, industrial, public, and other building projects.
Insurance Required: Yes
Coverages Required:
- General Contractor: $500,000
- General Contractor-Limited Tier: $500,000
- Residential-Basic Contractor: $300,000
- Residential-Light Commercial Contractor: $500,000
Hawaii
License Required: Yes, for any commercial, residential, or public works that are worth more than $1,000 or require a building permit.
Insurance Required: Yes
Coverages Required:
- Hawaii general contractor license applicants must submit COIs for bodily injury liability with minimums of $100,000 for each person and $300,000 for each occurrence
- Licensed contractors in Hawaii must also have a COI for property damage liability with a minimum of $50,000 for each occurrence.
Idaho
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $300,000 per occurrence and $600,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond of at least $2,000 is required for residential contractors and $10,000 for public works projects,
Illinois
License Required: No state license requirement for general contractors.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond of at least $20,000 is required for general contractors.
Indiana
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Liability Coverage
- A contractor’s bond of at least $10,000 is required for residential contractors.
Iowa
License Required: Any construction contractor (individual or business) who earns at least $2,000 a year doing construction work, must register with the Iowa Division of Labor.
Insurance Required: No
Coverages Required:
N/A
Kansas
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
Kentucky
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Liability Coverage
- A contractor’s bond of at least $20,000 is required for residential contractors.
Louisiana
License Required: Yes
Insurance Required: Yes
Coverages Required:
- Residential contractors are required to have a minimum of $100,000 in coverage
- Mold contractors must have $50,000
- Home improvement contractors must also have $100,000.
Maine
License Required: No
Insurance Required: No
Coverages Required:
N/A
Maryland
License Required: No
Insurance Required: Yes
Coverages Required:
At least $50,000 in general liability coverage to obtain a general contractor license for home improvements
Massachusetts
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond of at least $5,000 is required.
Michigan
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond of at least $10,000 is required for residential builders and $25,000 for commercial builders.
Minnesota
License Required: No
Insurance Required: Yes
Coverages Required:
General liability with at least $100,000 per occurrence and $300,000 aggregate.
Mississippi
License Required: Yes. licenses are awarded by the Mississippi State Board of Contractors.
Insurance Required: Yes
Coverages Required:
- For residential contractor applications, you must provide a COI for general liability. There is no minimum required coverage.
- Commercial general contractor license: Minimum coverage of $300,000 per occurrence and $600,000 aggregate.
Missouri
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for most general contractors.
Montana
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $100,000 per occurrence and $300,000 aggregate for most residential contractors.
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for most commercial contractors.
Nebraska
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $100,000 per occurrence and $300,000 aggregate for most residential contractors.
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for most commercial contractors.
Nevada
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $300,000 per occurrence and $600,000 aggregate for most residential contractors.
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate for most commercial contractors.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond is required, and the amount varies based on the license classification and monetary limit of the projects.
New Hampshire
License Required: No
Insurance Required: Yes
Coverages Required:
Comprehensive general liability insurance against all claims of bodily injury, death, or property damage, in amounts of not less than $250,000 per claim and $2,000,000 per incident or occurrence.
New Jersey
License Required: No
Insurance Required: Yes
Coverages Required:
General liability with a limit of at least $500,000 per occurrence.
New Mexico
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $300,000 per occurrence and $600,000 aggregate for most residential contractors.
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate for most commercial contractors.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond is required, and the amount varies based on the license classification and monetary limit of the projects.
New York
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Disability Benefits Insurance
- Required for contractors with one or more employees.
North Carolina
License Required: Yes; must have a state license to work if the projects worked on are worth more than $30,000.
Insurance Required: Yes
Coverages Required:
Minimum of $1M or more for commercial or residential contractors.
North Dakota
License Required: Yes; requires a state license to work on projects worth more than $4,000.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $100,000 per occurrence and $300,000 aggregate for residential contractors.
- Minimum coverage of $300,000 per occurrence and $600,000 aggregate for commercial contractors.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
Ohio
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for general contractors.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond is required, and the amount varies based on the license classification.
Oklahoma
License Required: No
Insurance Required: Yes
Coverages Required:
Requires general contractors to have a COI for a minimum of $50,000 general liability insurance and a minimum of $100,000 workers’ compensation insurance.
Oregon
License Required: Yes
Insurance Required: Yes
Coverages Required:
All general contractors in Oregon must have general liability insurance. The required insurance varies by endorsement and ranges from $100,000 to $500,000 per occurrence for residential structures licenses. Commercial licenses must have $500,000 per occurrence and $2 million aggregate insurance limits.
Rhode Island
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for general contractors.
- Workers’ Compensation Insurance
- Required if the contractor has employees, regardless of the number of employees.
- Contractor’s Bond
- A contractor’s bond is required, and the amount varies based on the license classification.
South Carolina
License Required: Yes
Insurance Required:No
Coverages Required:
N/A
South Dakota
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $100,000 per occurrence and $300,000 aggregate for residential contractors.
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for commercial contractors.
Tennessee
License Required: Yes
Insurance Required: No
Coverages Required:
N/A
Texas
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate.
Utah
License Required: Yes
Insurance Required: Yes
Coverages Required:
General liability with a minimum limit of $100,000 per incident and $300,000 total.
Vermont
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for general contractors.
Virginia
License Required: Yes
Insurance Required: No
Coverages Required:
N/A
Washington
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $200,000 per occurrence and $600,000 aggregate for most residential contractors.
- Minimum coverage of $1,000,000 per occurrence and $2,000,000 aggregate for most commercial contractors.
West Virginia
License Required: Yes. Any work on projects worth more than $2,500 require a general contractor license, issued by the West Virginia Division of Labor.
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for general contractors.
Wisconsin
License Required: Yes, the license is issued by the Wisconsin Department of Safety and Professional Services (DSPS).
Insurance Required: No
Coverages Required:
N/A
Wyoming
License Required: No
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $300,000 per occurrence and $600,000 aggregate for residential contractors.
- Minimum coverage of $500,000 per occurrence and $1,000,000 aggregate for commercial contractors.
Washington, D.C
License Required: Yes
Insurance Required: Yes
Coverages Required:
- General Liability Insurance
- Minimum coverage of $50,000 per occurrence and $100,000 aggregate for residential contractors.
- Minimum coverage of $100,000 per occurrence and $300,000 aggregate for commercial contractors.
Note:
The information provided is only the requirements to get a state license or register with the state. Cities and counties may have additional requirements. Moreover, most states mandate employers to carry workers’ compensation, even if they don’t require it for the license.
To get a job, contractors often bid on a project to get the job—and part of the bidding process is to provide a COI, which will show the project owner that your business is properly insured. A COI is also sometimes required, as you may have seen in our state information above for Hawaii, Mississippi, and Oklahoma.
If you get the job, you will sometimes be requested to provide a COI for project owner’s records. Or, they may request to be added as a certificate holder. This means their name will be added to your policy as an additional insured. The quicker you can provide a COI, the better your prospects are of getting the job and moving forward.
Bottom Line
Contractors insurance is a valuable part of a successful business. It protects your business from financial harm: whether by helping your employees, paying for lost income when your business cannot operate, or protecting your company from a lawsuit by a third party.
ERGO – Next Insurance is a great provider for contractors because it has customized coverage targeted toward contracting businesses with five or fewer employees and revenue under $5 million. To help you in the bidding process, you can create and share an unlimited amount of COIs through its app. The process takes just seconds.
