Handyman insurance refers to the coverages small repair or construction businesses need in their business owner’s policy (BOP). Handyman insurance is for owner-operator contractors or repairmen who have no more than a few employees. Handyman BOP’s include general liability, workers compensation, and other coverages depending on the type of projects you work on.
Finding the right BOP can be time consuming, often taking weeks to get coverage. As an owner-operator handyman, your attention should be on getting your jobs done instead of worrying when you’ll have insurance coverage. Next Insurance can get you approved for up to $1 million in general liability handyman insurance in as quick as 10 minutes.
Common Types of Handyman Insurance
| Handyman Insurance Type | ||
|---|---|---|
| Commercial General Liability | ||
| Workers Compensation | ||
| Commercial Auto | ||
| Builder’s Risk | ||
| Equipment Insurance | ||
| Umbrella Insurance |
Required Handyman Insurance
The insurance coverage you need as a handyman is going to depend on the work you perform and how often you do it. Every handyman needs to have commercial general liability coverage as part of their BOP and some may also need workers compensation if they have employees who work for them.
The two main types of required handyman insurance coverages are:
Commercial General Liability
Regardless of how often you work as a handyman, you’ll need a general liability policy to cover your work on each job. If anything goes wrong and you damage the property you’re working on, you’ll likely be protected with a $1 million general liability policy for less than $1,000 per year. This is important because it covers everything a handyman can do for their business, including:
- Damage to the homes or properties you work in
- Work completed by subcontractors
- Incomplete work you promised to perform
- Medical payments from accidents for you/others around the worksite that are your fault
- Injury from advertising
Next Insurance offers general liability specifically for small handyman businesses. Their familiarity with your industry can help you lower costs by just getting you the coverage you need. Plus, they can get you covered within a few minutes directly from your computer or smartphone.
Workers Compensation
Workers compensation covers any liability for medical bills you or your employees suffer due to accidents on the job. It’s an important policy to have even if you’re a one-man handyman business because you need to financially protect yourself in case you’re injured and can’t work for a long period of time. Premiums can range from $500 – $5,000 annually, depending on the number of employees you have and how risky your projects are.
After your deductible, workers comp will pay for all of your medical bills up to $1 million per claim, or whatever your personal coverage limits are. It can pay you for time in the hospital, medicines to help you recover, or for special treatment you need to rehab your body. Workers comp can also help pay for missed wages during an employee’s recovery.
Recommended Handyman Insurance
Handymen don’t typically need multiple different coverage types for their business. Unless you’ve built a sizable business with 4+ employees or perform large jobs like complete home remodels, you’ll likely be fine with the required insurance coverages above. However, for large handyman businesses with more than a few employees, there are some other coverages that you might need to be fully protected.
The main types of recommended, but not required, handyman insurance coverages are:
Commercial Auto
If you’re using any vehicles for the projects you work on, commercial auto coverage is highly recommended. This policy protects any mishaps or damage to your vehicle due to the work you perform or the materials you transport. If you’re constantly moving wood in your truck, for example, you could be at risk of it severely damaging the bed, which could be covered with the right commercial auto policy.
You’ll typically get covered for up to $1 million per claim for $1,300 – $2,000 annually, with a $500 – $1,000 deductible. Your actual costs will depend on how many vehicles you own for the business, what you transport in those vehicles, and the driving history of everyone driving the vehicles.
Builder’s Risk or Inland Marine Insurance
Builder’s risk coverage is a form of inland marine insurance which covers products, equipment, or materials as they’re transported over land. If something happens to the materials being transported to the job site, you’ll end up spending the profit you were going to make on the project resupplying the materials. Builder’s risk coverage will cost you between $500 – $1,300 annually and the total coverage per claim varies by insurance carrier.
Builder’s risk solves this problem by ensuring the products will be usable when they arrive at the job site. For example, if you spend $3,000 on sheetrock at the local hardware store to finish a basement, you’ll want to protect it with a builder’s risk coverage in case it gets damaged. On average, sheetrock costs $50 per 32-square foot panel, making it expensive to replace if it comes out of your profit for the job.
Equipment Insurance
As a handyman, your tools are necessary to make a living. Depending on the work you perform, you could have a significant amount of money tied up into expensive tools needed to complete your jobs. Equipment insurance can help protect your tools from accidental damage or theft, but not from normal wear and tear. There isn’t typically a maximum amount per claim on these payouts, but they’ll only replace a similar model to the one that is damaged and there is a $500 deductible.
For example, if you’re a landscaper, your riding lawn mower is likely extremely important to your business. If you fail to lock the large mower into place on your trailer, it could fall out during transit and get damaged. Equipment insurance would cover the cost of the replacement mower so your business doesn’t miss a beat, instead of you forking out $2-3K for a new one.
Umbrella Insurance
An umbrella policy extends the coverage per claim of existing policies. For a handyman, an umbrella policy can extend your general liability, workers compensation, and commercial vehicle coverages all at the same time. This policy is less popular for a handyman than general contractors because any insurance claims you’re going to have aren’t likely to be more than the $1 million your general liability policy covers.
If you find that you need to extend your coverage, an umbrella policy will generally provide an additional $1 million of coverage per claim for each policy covered in your BOP. You’ll pay $800 – $2,000 annually for this extension, and the deductible varies by insurance carrier but is typically less than $1,000.
Handyman Insurance Costs
Your main cost of insurance is your annual premium. You’ll typically pay one set price annually for all of the coverages combined in your BOP if you get covered for everything through one insurance provider. Payments are split up over 12 monthly payments and your premiums per coverage could be anywhere from $350 to $5,000 annually.
Premium costs are going to depend on the risk associated with the jobs you perform. According to Steve Baldwin, Owner of Baldwin Insurance Agency:
“Insurance is rated based on class code. A class code is a description of work performed, which makes insurance for a handyman much different than work performed as a general contractor or other related jobs driven by a large business. A handyman likely performs multiple small jobs doing maintenance or installing screen doors, installing an outside light fixture, or building a deck. These will have much lower premium costs than a business that builds new homes.”
“Insurance is rated based on class code. A class code is a description of work performed, which makes insurance for a handyman much different than work performed as a general contractor or other related jobs driven by a large business. A handyman likely performs multiple small jobs doing maintenance or installing screen doors, installing an outside light fixture, or building a deck. These will have much lower premium costs than a business that builds new homes.”In addition to your annual premium, you could also have out of pocket costs for deductibles or for other costs that are above your per claim limit, which is typically $1 million per claim per policy. These costs will vary from one policy to the next. For example, if there’s damage to a home because of your negligence, then different policies could pay out different amounts, which could then cause you to pay more out of pocket.
Average Annual Handyman Insurance Costs by Coverage
| Coverage | ||
|---|---|---|
| General Liability | ||
| Worker’s Comp | ||
| Commercial Auto | ||
| Builder’s Risk or Inland Marine | ||
| Equipment Insurance | ||
| Umbrella Insurance |
If your coverage has a deductible you must pay that amount out of your pocket on any claims before your coverage begins. General liability coverage and many of the others in this table will cover ~$1 million per claim with an aggregate of $2 million annually. Worker’s compensation is going to vary by policy on how much it will cover per claim.
Example of Handyman Insurance Costs
A local handyman that fixes broken appliances and does minor construction work will need general liability and worker’s compensation. He may also want to get commercial auto since he transports sheetrock and large pieces of wood in the bed of his truck. At a minimum our handyman will be paying about $2,150 in combined annual premiums ($350 + $500 + $1,300).
Additionally, there will be deductible costs of $1,000 for general liability or $500 for commercial auto claims. If a claim is made for $1 million due to damaging a property during a job, the handyman will just pay the $1,000 deductible on top of his annual premium for a total of $3,150 for the year. Any additional claims that year won’t require the $1,000 deductible payment.
So, if the same handyman has another accident that’s covered under his general liability policy, he won’t have to pay anything else out of pocket and he’ll still get covered. If, however, he then has a commercial auto accident and makes a claim for $5,000 of damages, he’ll have to pay the $500 deductible on his commercial auto coverage because it’s separate.
If you’re taking on a job today and need affordable insurance quickly, then we recommend Next Insurance. You can apply directly from your phone, while on the job site, and get covered in minutes for up to $1 million in general liability coverage per claim, and it could cost as little as $40 per month.
Where to Get Handyman Insurance
There technically isn’t any such thing as “handyman insurance.” Instead, the coverages you need are general liability policies offered for any commercial profession. You typically have two options when looking for handyman insurance. You can either go with a traditional broker who will find a big insurance company to get you covered for all of your needs, or you can partner with a separate insurance company for each coverage.
A traditional broker will likely have contacts and partnerships with many large insurance companies from around the country. Any generalist broker should be able to help you find general liability and workers compensation coverage in a bundled BOP. However, while costs could be more expensive than if you found each individual coverage separately, you’re paying for the convenience of having one monthly payment and one insurance company to deal with.
It can therefore be very beneficial to work with different insurance companies for each coverage you need. Not only could it lower your annual premiums, but it can also streamline the process. As a handyman that lives on getting paid for each job, an insurance solution that gets out of the way and services you quickly is the most recommended option. The downside is that you have to deal with multiple insurance companies and make multiple monthly payments.
Next Insurance is an online insurance firm that specializes in offering general liability coverage for handyman businesses. They’re familiar with the work you do and understand how to best process any potential claims you have. Plus they can get you approved for up to $1 million in general liability coverage in as quick as 10 minutes and you can apply directly from your phone.
How Handyman Insurance Works
If you damage the home of your client you’ll likely be on the hook for the cost to fix it. When you have handyman insurance, you’ll make a claim to your insurance company for the amount of the damages. The insurance company then will investigate the claim and pay out damages they believe you’re liable for.
For example, if you cause damage to a home’s water pipes while trying to install sheetrock, you’re liable for the cost to fix those pipes. Let’s say the cost to fix the pipes ends up being $50,000. You file a claim with your insurance, and they will investigate the problem. At this point they will likely do one of three things:
- Approve your claim and pay the $50K to the homeowner. You’ll have to pay your out of pocket deductible of $1,000, but they’ll cover the remaining $49K.
- Negotiate the payout to the homeowner, if they believe the costs shouldn’t be that high.
- Deny the claim if they don’t believe you were at fault.
The nice thing about having handyman insurance in this example is that you don’t have to be heavily involved in this process. Instead of worrying about $50K in potential liability hanging over your head, your insurance company will take care of the problem. This lets you focus on your business and the next project.
Many jobs you perform may not even ask you for proof of insurance (in the form of a certificate of liability insurance) because your clients will be individuals asking you to perform work inside their home. They likely won’t often know what insurance you’re required to carry for the job, or what their potential liability is. This makes it even more important to be proactive about protecting yourself from any potential liability.
Whether you work by yourself, have a couple of employees, or hire a lot of subcontractors to complete big jobs, handyman insurance will help protect your business. You don’t want to put yourself into a situation where one mistake on the job could cost you your business or your personal assets.
Claims Made vs Occurrence Based Insurance
There are two different types of insurance policies. The first is a “claims made policy” and the second is an “occurrence based policy”, which is typically the best option for a handyman business. The biggest difference between the two is when you can submit claims on your policy, and how that impacts your coverage.
A claims made policy means that payment for a claim is only triggered on the date a claim is made, which means you have to make a claim before you end your coverage. There is a 60-day window after you end your coverage where you can file a claim, but then your coverage will end for all claims unless you pay an extra premium to extend it.
An occurrence policy is a traditional insurance policy that is very common in the handyman industry. Under this policy, you have coverage as long as the incident happened during the time period of your coverage. So even if you cancel your coverage a claim could be filed for an event that happened during the time you were paying your premiums.
How to Balance Cost and Coverage
Determining how much coverage you should get is going to involve balancing the amount of coverage you want with how much it will cost you. In most cases, large businesses want to maximize the amount of coverage they have by getting everything they can. Most handymen businesses like yours won’t need to maximize coverage because you have a small business and you might only be operating a one man shop.
Balancing the costs of insurance coverage as a one man shop is easy. All you need is general liability insurance and maybe workers compensation. Paying other insurance premiums is likely a waste of money since the first two will likely cover any potential claim you’re going to receive.
Larger businesses will want to calculate the coverage they need based on your worth as either a business or an individual, depending on how the business is structured. In this case, you’ll want to calculate your net worth by subtracting your liabilities from your assets and then choose coverage limits that are higher than that total.
Benefits of Handyman Insurance
Regardless of whether you do handyman work as an individual on the weekends or you have a 10 employee business performing jobs around town, you’ll find handyman insurance necessary. The benefits of being covered are great due to the potential costs of making a mistake without insurance, and they easily outweigh the premiums you’ll pay.
Handyman insurance has 3 main benefits:
1. Protects Your Business From Mistakes You Make
Working on people’s homes is important work that your clients are going to hold you accountable for. If you make a mistake, you’ll be forced to pay for the cost of fixing it yourself. Having insurance protects you from these mishaps so you don’t have to lose all of your income on the job to fix those mistakes. It also protects your business and personal assets from the liability occurring because of these mishaps.
2. Protects You From Mistakes Subcontractors Make
If you’re working on jobs large enough to hire outside subcontractors, you’ll want to protect yourself from their work. If they mess up on the job it could cost you financially. Having the proper insurance coverages in place protects you from any mistakes they make while they’re working on your behalf.
3. Helps You Qualify For Larger Projects
Some larger projects won’t accept a bid from you as an individual, or a small business unless you can provide proof of proper insurance coverages. Having these in place for your business can give you a leg up for those jobs and increase the likelihood of improving your total revenue by winning more of these opportunities.
Bottom Line
It’s important to have enough insurance coverage for your handyman business so you’re not crippled by one mistake on the job. This insurance works best when you don’t have to spend much time to get coverage or process claims. Many insurance processes become complicated and time consuming which can be damaging to your small business.
Next Insurance offers a fast way for you to get the required $1 million per claim general liability policy you need for as little as $40 per month. They specialize in helping the handyman industry, and they can get you covered quickly. You can fill out an online application from your phone and be covered in as quick as 10 minutes.
Nancy Duvall
Next Insurance is not available in Florida. Any other companies?
Hi Nancy!
You can try numerous different insurance companies to see which one might be best for you. We recommend The Hartford because they specialize in helping small niche businesses, including many throughout the construction industry. Good luck!
Best,
Jeff