How much does business insurance cost for general contractors?

General contractors spend an average of $142 per month, or $1,700 per year, for general liability insurance. Though usually not required by law, a general liability policy may be needed in order to sign a lease, get licensed in their state, or work with some clients.

General liability coverage protects your small business from common third-party risks, such as customer property damage or bodily injury. It also pays for lawsuits related to copyright infringement and defamation, including slander and libel.

For example, if a competitor claims that a subcontractor at your general contracting company made disparaging comments about them online and decides to sue, a general liability policy would pay for any legal costs.

Below is the average general liability insurance policy for general contractors who buy from TechInsurance:

Premium: $142 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

If your business is small and low-risk, TechInsurance's licensed agents usually recommend a business owner’s policy (BOP). A BOP bundles general liability insurance with commercial property insurance at a lower cost than buying these policies separately.

The cost of general liability insurance is based on several factors, including the types of services offered, policy limits, size and location of your business, and any subcontractors or additional insured endorsements you may have.

On average, general contracting businesses pay $121 per month, or $1,455 per year, for a business owner's policy (BOP).

A BOP combines your general liability and commercial property insurance coverage together at a discount. It protects your small business against both property and liability risks, such as stolen business property or client bodily injury.

This is the average business owner's policy for general contractors who buy from TechInsurance:

Premium: $121 per month
Policy limits: $1 million per occurrence; $2 million aggregate
Deductible: $1,000

General contracting companies that qualify for a BOP usually are small in size (less than 100 employees) and low-risk. Learn more about business owner's policy eligibility requirements.

The cost of a business owner's policy depends on factors such as the policy limits you choose, the size of your business, your location, and the value of your commercial property.

General contractors spend an average of $318 per month, or $3,811 annually, for workers' compensation insurance. To comply with state requirements and avoid penalties, general contracting businesses with one or more employees typically are required to purchase this policy.

Workers' comp coverage pays for medical expenses and disability benefits when you or an employee suffers a work-related injury or illness. For example, if an employee has an accident with a nail gun and injures themselves, a workers' comp policy would pay for their medical bills and lost income while they recover.

Workers' compensation coverage also usually includes employer's liability insurance, which pays for defense costs and other legal fees in the event of a lawsuit related to workplace injuries.

Even though workers' comp may not be required for sole proprietors or independent contractors, it is highly recommended since most health insurance plans can deny claims for injuries that occur at your jobsite.

It is important to note that some states require sole proprietors and independent contractors in the construction industry to obtain coverage even if they work alone.

The cost of workers' comp is based on numerous factors, including the number of employees you have and their occupational risks.

General contracting companies pay an average of $14 per month, or $169 yearly, for contractor’s tools and equipment insurance.

A type of inland marine insurance, contractor's tools and equipment coverage pays for the repair or replacement of lost, stolen, or damaged tools and business equipment. This policy is designed to protect gear that is on-the-go, covering equipment that is less than five years old and valued at under $10,000.

This is the average policy for general contractors who buy from TechInsurance:

Premium: $14 per month
Policy limit: $5,000

The cost of contractor's tools and equipment coverage depends on the value of your tools and equipment, how regularly items are transported, and your industry risks.

On average, construction businesses and contractors pay $65 per month, or $785 per year, for professional liability insurance.

Also called errors and omissions insurance (E&O), professional liability insurance pays for legal costs related to a mistake, missed deadline, or other accusation of professional negligence. This includes attorney's fees and other legal expenses if a client decides to sue over unsatisfactory work.

This is the average insurance policy for construction professionals who purchase from TechInsurance:

Premium: $65 per month
Policy limits: $1 million per occurrence; $1 million aggregate
Deductible: $1,250

The cost of professional liability insurance is determined by several factors, including the coverage limits and deductible you choose, the size of your business, the type of work you do, and your claims history.

General contractors pay an average of $143 per month, or $1,721 yearly, for commercial umbrella insurance. This policy helps boost the coverage limits of your underlying general liability, commercial auto, or employer's liability insurance.

When the underlying policy reaches its limit on an insurance claim, an umbrella policy activates to help provide any additional coverage that is needed. It usually boosts your liability limits in $1 million increments.

The cost of commercial umbrella insurance depends mostly on the amount of coverage you buy.

General contractors pay an average of $134 per month, or $1,608 annually, for builder's risk insurance.

Also known as course of construction insurance, builder's risk coverage helps pay for damaged construction materials and structures in progress. This could be due to fire, vandalism, and non-severe weather.

The cost of builder's risk insurance depends on the total completed value of the structure, and other construction project factors like materials and labor.

General contractors spend an average of $180 per month, or $2,157 per year, for commercial auto insurance. Almost every state requires this type of insurance if your general contracting business owns any company vehicles.

If your business vehicles are involved in an accident, a commercial auto policy would help cover property damage costs and any medical expenses. This coverage also helps pay for costs related to vandalism, weather damage, and theft.

To protect personal, rented, and leased vehicles used for business purposes, you'd need hired and non-owned auto insurance (HNOA) instead.

The cost of commercial car insurance depends on many factors, including your employees' driving records, policy limits, the number of vehicles you own and their value, and your coverage options.

The average cost of a surety bond is $10 per month, or $125 annually, for general contracting businesses.

Surety bonds protect your clients by reimbursing them in the event that your business is unable to fulfill the terms of a contract or agreement. For this reason, you may be required to obtain a surety bond in order to sign a client contract or get licensed in your state.

The cost of a surety bond is a certain percentage of the total bond amount. Unlike most insurance policies, this amount must be paid back to the company that issued the bond.