Handyman Insurance: Types, Costs & Where to Find

Handyman insurance refers to the liability and property coverage for unlicensed tradesmen. A handyman, at the very least, should have general liability, workers’ compensation, and equipment coverage in the event tools are lost or stolen. Sole proprietors with no employees should expect to pay approximately $1,500 annually for liability and equipment coverage.

Finding the right handyman liability insurance 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. CoverWallet can get you approved for up to $1 million in general liability handyman insurance in as quick as 10 minutes.

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Handyman Insurance Providers

Finding the right insurance provider that can get you handyman insurance quickly and without breaking the bank is essential to your business. The providers we’ve listed have designated business classes specifically for handymen. This means you are protected for the same risks as contractors but don’t have to pay the high premiums associated with a contractor’s increased exposure.

Here are five top providers for handyman liability insurance.

CoverWallet

CoverWallet is the best choice for a handyman who has a complicated situation, such as having an artisan contractor’s license while performing handyman work on the side. The license complicates their coverage needs, but CoverWallet allows them to shop for coverage from many carriers so they can find just the right policies for their situation.

CoverWallet is an online broker that has national carriers as partners, giving it quick access to insurers that can help small business owners. Handymen can obtain general liability, business property, and business interruption insurance, and workers’ compensation, among other policies through CoverWallet.

The Hartford

The Hartford is the right insurance carrier for independent contractors who want to be hired onto bigger construction projects as subcontractors. Handymen can obtain coverage within 10 minutes and can increase coverage and request certificates of insurance (COI) online in a few minutes. This helps when bidding on bigger jobs needing hired hands.

As a top-rated national insurance carrier, The Hartford covers business owners everywhere in all lines of liability, business property, and workers’ compensation. Many small business owners also qualify for the carrier’s business owner’s policy (BOP) that combines general liability and commercial property for less.

Hiscox

Hiscox is a great option for independent handymen who do odd jobs for homeowners valued under $500. Because Hiscox focuses on home-based businesses, it’s an ideal fit for handymen home workshops who head out to various jobs throughout the week. Hiscox offers straight liability policies but, for a few more dollars a month more, can protect business equipment protection for a reasonable price.

Hiscox offers all lines of insurance, including general liability, property coverage, commercial auto, and professional liability. Hiscox believes that insurance should protect you, not bankrupt you.

State Farm

State Farm is the right choice for unlicensed handymen who work in high-end homes where an accident could lead to a costly claim. With business owner’s policies starting at $250 annually, State Farm isn’t just a trusted name. It is competitive for the up-and-down revenue stream of a local handyman.

Additionally, State Farm’s ability to rate personal autos used for business help reduce coverage gaps for handymen driving to and from client locations. Keeping personal and business lines of insurance with one local agent helps prevent gaps in insurance that could result in denied claims. Most handyman work trucks get rated under personal auto for business use, which can save you money.

Progressive Commercial

Progressive Commercial Insurance is the right choice for a handyman who has a commercial-rated truck or van used as a mobile workplace with tools and supplies stored within it. Progressive Commercial offers competitive business auto rates with the option for inland marine coverage attached to the policy to protect a handyman’s tools and supplies from theft or damage while in transit in one policy.

A handyman using a personal truck or van for work and staying local with small jobs is best suited to work with Progressive Commercial. Between the personal and commercial auto insurance lines, a handyman doesn’t need to overpay for his work vehicle. If a handyman decides to grow his business with skilled trades, Progressive Commercial has solutions for licensed tradesmen and contractors.

When to Use a Broker

There technically isn’t any such thing as “handyman insurance.” Instead, handymen need a series of commercial insurance policies that are rated for their line of work. To purchase coverage, handymen have two options: go directly to a carrier or find a broker to shop policies on your behalf.

Carriers typically have agents who work only with them while brokers can work with multiple carriers. Handyman businesses may benefit when they keep everything with one carrier, but there are times when getting policies from different carriers saves money or improves coverage.

CoverWallet is an online broker that works with highly rated carriers. Complete an online application and find the best carrier with the best price for your handyman liability insurance needs within minutes.

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Common Types of Handyman Insurance

The type of work handymen perform puts them in a higher risk class than many other professions, so finding the right handyman insurance can be difficult. Having small business insurance not only protects you but allows you to bid for more work as a subcontractor or with clients who require liability insurance for handyman jobs.

Handyman Insurance Policies

Since there are no insurance requirements for handymen, they must consider their overall risks and decide which handyman insurance policies to purchase. General liability, workers’ comp, business equipment, and commercial auto are among the most common types of insurance policies for handymen.

A business owner’s policy is often the first, most cost-effective solution for a handyman to get the right type of coverage for his biggest risks.

Business Owner’s Policy

A business owner’s policy is a prepackaged insurance policy that combines general liability, business property, and lost revenues through business interruption coverage into one policy. By packaging the policy, the handyman can have his insurance policies conveniently in one policy with fewer coverage gaps while the insurance company can offer coverage for a better price with one underwriting process and administrative fee.

General Liability Insurance for Handyman

General liability insurance covers third-party claims where a person is hurt or property is damaged as a result of the handyman doing his job. As a handyman, you should be concerned about the safety and protection of your clients’ property, health, and pets. Handymen can find liability insurance policies with coverage limits of $300,000 and lower rates.

General liability insurance covers a wide range of potential claims, 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
• Injury from advertising

The biggest potential risk to a handyman is a costly injury or property damage claim resulting from his business. Uninsured claims result in lawsuits and judgments that linger over credit scores, bank accounts, and income for years. General liability is a cost-effective solution to protect against this.

Handyman Workers’ Comp Insurance

Workers’ compensation insurance covers medical bills employees incur from accidents at work. Even if you’re a one-man handyman business, you should consider workers’ compensation insurance for financial protection in case you’re injured and can’t work. Getting a policy for yourself means your medical bills are paid up to personal coverage limits. It can also pay for your lost wages, required prescriptions, or rehabilitation.

If you periodically hire help, you may need a “ghost policy,” which has minimum premiums for occasional hires. Premiums start around $500 annually, depending on the number of employees and construction risk types.

Commercial Auto Insurance

Commercial auto insurance covers company-owned vehicles in accidents or incidents of theft. You can get covered for up to $1 million per claim for $1,300 per month, $2,000 annually, with a deductible of $500 to $1,000. Costs are contingent on vehicle year, make, and model, as well as the driving history of any named drivers. Items stored in the vehicle are not covered by auto insurance and must be covered by equipment protection such as inland marine.

Not every handyman needs commercial auto insurance. If your work truck is not registered as a commercial vehicle, your personal auto insurance for the truck is sufficient as long as it is designated “for business pursuits” with the insurance carrier. It is important to note that a personal vehicle not designated, “for business pursuits,” may get claims denied if involved in an accident while driving to and from handyman jobs and supply runs.

Handyman Business Property Insurance

Business property insurance covers the tools stored on a job site. Insurance companies underwriting a handyman typically include inland marine insurance on the business property to make sure that tools and materials in transit are covered. As a handyman, your tools are necessary to make a living. Equipment protection insurance pays you to fix or replace tools damaged or lost due to theft or vandalism. Normal wear and tear are excluded.

Assume you insure $20,000 worth of tools that are then stolen from your truck, you pay the $500 deductible, and the insurance company gives you a check for the remaining value so you can replace them. Some companies will replace higher-end items rather than issue a claim check.

Builder’s Risk

Builder’s risk coverage is a form of inland marine insurance that covers equipment or materials as they’re transported or stored at a job location. Theft, vandalism, and weather losses without insurance require you to replace the lost supplies and materials. Builder’s risk coverage will cost you between $500 to $1,300 annually. Coverage varies widely per carrier.

Because most states have limits to the amount a handyman can charge for a job, ranging between $500 and $2,000, without a license, most risk is not worth getting covered by expensive builder’s risk policies. Most handymen will mitigate the risk by obtaining supplies as needed for specific jobs.

Umbrella Liability Insurance

An umbrella policy extends the coverage per claim of existing liability policies. For a handyman, an umbrella policy can extend your general liability, workers’ compensation, and commercial vehicle liability all at the same time. This saves you the premium costs of increasing coverage of each of the other policies, though minimum coverage requirements exist.

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 due to increased risks, an umbrella policy generally provides an additional $1 million of coverage per claim.

Handyman Bond

A handyman bond refers to a surety bond that some local counties require for a handyman’s license. For $50 to $250, most handymen can obtain a $5,000 to $10,000 bond through an insurance company, which pays your client should they submit a claim against you for poorly performed or unfinished work.

Surety bonds are an insurance product but are not traditional insurance. The way the bond works is the handyman pays the premium and, if a claim arises, the insurance company pays it. The insurance company then seeks repayment from the handyman. The bond is merely there to simplify the process of a third party getting a claim processed quickly but leaves the financial responsibility on the handyman.

Handyman Insurance Costs

Your main cost of insurance is your annual premium. If you obtain a business owner’s policy, you combine your liability and equipment coverage into one policy and one premium payment, which is paid monthly. Electing higher coverage limits and adding recommended policies could lead to annual costs ranging from $350 to $5,000.

Premium costs are going to depend on the risk associated with the jobs you perform. According to Steve Baldwin, owner of Baldwin Insurance Agency:

“Handyman 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 claims that are above your per claim limit, which is typically $1 million for general liability. These additional costs vary from one policy to the next. For example, if there’s damage to a home because of your negligence, one policy could pay more with less out-of-pocket costs than another, which could then cause you to pay more out of pocket. Shopping policies with the same coverage options is imperative.

Sample Handyman Insurance Costs by Coverage

Deductibles can be raised or lowered, in many cases, to adjust premium costs. Deductibles are the handyman’s portion of the claim. General and other liability coverage often cover $1 million per claim with an aggregate of $2 million annually. Handyman workers’ comp is going to vary by policy on how much it covers per claim. Some states require a small deductible payment.

Example of Handyman Insurance Costs

Let’s say a local handyman who fixes broken appliances and does odd jobs opts for a BOP, a workers’ compensation ghost policy, and commercial auto insurance. At a base premium, he pays about $2,150 in combined annual premiums ($350 + $500 + $1,300).

Additionally, he elects a deductible of $500 for business property via inland marine insurance and commercial auto claims. If he hits another car leaving the building supply store and causes $200,000 in injuries and damage to the other driver and her vehicle, the handyman pays the $500 deductible to repair his truck and another $500 for any property damaged. The insurance company covers the rest.

Depending on the policy terms, there may be a deductible for other claims in the same year. For example, if the handyman later has his truck stolen with all his tools, he’ll have to pay the $500 deductible on his commercial auto coverage and another $500 for the business property if his BOP includes inland marine. Most deductibles on policies are “per incident” and are required every time a claim is paid.

How Handyman Insurance Policies Work

If you are doing business and someone gets hurt or something gets damaged, you are on the hook for it. Handyman liability insurance transfers that responsibility to the insurance company. When something goes wrong, you make a claim to your insurance company. Your insurer investigates the claim and pays damages they believe you’re liable for.

For example, say you are fixing a minor leak under a client’s kitchen sink. Something happens, and water starts to spurt everywhere. In minutes the kitchen, dining room, and part of the living room are flooded with an inch of water. Walls, floors, carpets, and cabinets are damaged along with the dining room table and chairs estimated at $50,000 in damages.

When you file a claim on your insurance, your insurer will investigate and do one of three things:

1. Approve your claim and pay the $50,000 to the homeowner, minus your deductible.
2. Negotiate the payout to the homeowner if they believe the costs shouldn’t be that high.
3. Deny the claim if they don’t believe you are at fault.

Many jobs never ask to see your certificate of liability insurance for proof of coverage because your clients will be individuals asking you to perform work inside their home. Being proactive about protecting yourself from any potential liability gives you an edge when commercial clients or general contractors hire you.

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 claims are only paid if they are filed during the policy term, which means you have to make a claim before you end your coverage. Usually, there is a 60-day window after you end your coverage where you can file a claim. After that, your coverage ends 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 your coverage is in effect. So, even if you cancel your coverage, a claim could be filed and paid for an event that happened during the time you were paying your premiums.

The option of claims made versus per occurrence varies on the type of work, state laws, and insurance carrier. Not every handyman will have this option when applying for coverage.

How to Balance Cost and Coverage for Handyman Insurance

Determining the amount of insurance involves balancing the amount of coverage you want with how much it will cost you. You want to consider the size of the jobs you do and the types of homes or business you work for. If you work in multimillion-dollar mansions, you’ll want higher coverage than you would if working on small tract homes because potential claims can be more.

In addition to the potential third-party claims, consider the cost if you own equipment and vehicle. For some, insuring every tool isn’t worth the cost of insurance. Many items may be redundant in the toolbox. Insure the necessities to keep costs down but allow you to get back to work sooner than later in the event of a loss.

Business Owner’s Policies Save on Handyman Insurance Costs

Many handyman insurance providers offer a business owner’s policy. This is a hybrid policy that combines handyman liability insurance with equipment protection and business protection. The result is more coverage for fewer premium costs. Most BOPs have general liability, business property and equipment, and loss of income as starting coverage options.

Who Needs Handyman Insurance

Every handyman should have handyman insurance. The risk when working in other’s homes leaves a handyman exposed to lawsuits and claims. Insurance isn’t typically required for handymen but claims against him can be financially devastating. Getting coverage also makes a handyman a better contractor to hire.

Here are four reasons every handyman needs handyman insurance:

1. Clients are likely to get hurt on tools.
2. Accidents happen to people’s property during work.
3. Tools are expensive to replace.
4. It’s impossible to be at a worksite all the time.

While getting a handyman bond provides some coverage for third-party losses, larger claims, and first-party claims, such as stolen or damaged tools. Moreover, a handyman may not be able to get work―thus get paid―until he has business insurance. Insurance also helps handyman get back to generating revenues sooner than later after a covered event.

Benefits of Handyman Insurance

Regardless of whether you do handyman work as an individual or you have 10 employees performing jobs around town, you’ll find getting handyman insurance the smart thing to do. The benefits of being covered outweigh the potential costs of making a mistake without insurance, and they outweigh the premiums you’ll pay easily.

1. Protects Your Business From Mistakes Others 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.

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 coverage policy options 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 small business unless you can provide proof of proper insurance coverage. Having policies 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.

“A handyman with insurance may seem like an oxymoron to some. Some may even argue that a handyman can’t get insurance because it isn’t a real business. But the fact is that a handyman can get insurance and should have insurance just like any other business to protect themselves and their customers.”
―Flash Shelton, Founder, United Handyman Association

Shelton continued: “Just because the average customer doesn’t think about the what-ifs doesn’t mean they don’t appreciate lower liability. When deciding between a handyman who has insurance and one that does not, they are sure to choose the safer route. They may even ask the other handyman why he doesn’t.”

Handyman Insurance Application Tips

Many independent contractors feel they are unable to afford the insurance that they need. Completing the handyman insurance application properly helps you get the right coverage for the best possible price.

1. Determine Replacement Cost of Tools and Equipment

Inventory your tools and equipment as well as the regular number of expendables you keep, such as screws, nails, and caulking. This gives you the actual value of all your business property. If the premium is too high to cover everything, take a second look to determine what the most important items are.

You may have multiples of the same tools that don’t need coverage if you have to save on costs. However, keep in mind the minimum coverage amount the insurance policy has. If an insurer requires $20,000 in business property coverage, you won’t save money by dropping your property value to $10,000.

2. Consider Who Your Clients Are

You may want higher coverage options for liability insurance, depending on who your clients are. Working in million-dollar homes has more risk of bigger losses and even potential lawsuits. Keep this in mind as you choose your liability coverage.

You should also note that general contractors and high-end clients often want to see a certificate of insurance indicating you have at least $1 million in coverage. Remember this when completing your handyman insurance application.

3. Check State Licensing Requirements

Some states, such as Maryland, require a handyman to have a license to perform services of any amount while others, such as California and Hawaii, have threshold requirements for handyman licenses. California requires licensing if any job exceeds $500 while Hawaii’s threshold is $1,000. If you are required to obtain a license, there is a good chance you will also need proof of a bond or insurance for the licensing board.

Frequently Asked Questions (FAQs) About Handyman Insurance

A handyman can potentially fall into many different contractor subclasses when it comes to insurance.

Should a handyman be licensed and insured?

Insurance isn’t required if you aren’t licensed, but it is a good idea. A handyman performing small jobs under the minimum financial thresholds set by the state doesn’t need to be licensed unless they are performing specific trade work. Often, electrical and plumbing work requires licensing. However, insurance protects the handyman, whether licensed or not, from potential claims.

How much does a handyman license cost?

Handymen often have an exemption from getting licensed as a contractor or tradesman. Every handyman should file for a business license in his state or county, which might cost anywhere from $20 to $400, depending on where he resides and works.

What is the purpose of a COI?

A COI is a way for business owners to prove they have liability coverage to a contracting employer or client. It often names the requesting party as a certificate holder on the policy. It shows how much you have liability coverage and can extend coverage to the requesting third party.

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. Handyman insurance is there to take control of claims and accusations against you so you can continue doing your job. The right insurance company serves as a partner to make sure you have the maximum coverage at a reasonable price.

CoverWallet offers a fast way for you to get the required $1 million per claim general liability policy you need for as little as $35 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.

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