General Contractor insurance – what kind and at what cost

Whenever you budget the expenses of your business, General Contractor insurance must be included in the list because you can’t always know exactly what could happen in the future.

With the protection provided by liability insurance and all the other types of insurance we will tell you about, you can protect your business and yourself in case something unexpected happens.

Like any business owner, for your General Contractor enterprise, you must consider how much financial risk you are taking on.

If your General Contractor business runs without proper insurance, you are taking a tremendous chance not just of losing some money but of a total wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the consequences of their actions. 

In this article, we are giving very general guidelines for startup businesses to outline what the main kinds of insurance that you need are, and where we can, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your General Contractor business?

What this means, for any General Contractor business owner, is that if some customer claims that your business caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your General Contractor business is not protected by laws in the same way as states are, where edicts can place a “cap” on the maximum level of liability.

In some states, like Texas, there are specific monetary levels that limit the amount a judge can award in any case against the state.

In a court case, it’s purely the right of the jury to award whatever amount they deem appropriate, even sometimes giving a plaintiff more than they have claimed.

When you are running your General Contractor operations, you can’t avoid responsibility for the results of your actions.

Even more importantly, unless you have spent beforehand the money necessary to have your business running as a limited liability company, all of that liability belongs to you as an individual.

What does General Contractor insurance protect you from?

For your General Contractor business, the most important sorts of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.

In addition there are some legal kinds of insurance that various states require.

In the next few paragraphs, we will explain the most important points any General Contractor business owner should know when negotiating the insurance needed.

The main types of insurance for your General Contractor businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any General Contractor business is dealing directly with other people, and that means you generally have the danger that some accident can happen to them themselves or else something of theirs can be spoiled.

In such a case, they can require compensation.

General liability insurance policy for your General Contractor business protects you against claims coming from injury to customers or damage to their property.

It protects your General Contractor business from the claims themselves and also to any associated court costs and legal fees of the lawsuits.

In many cases, it will even help you to qualify for extra business from city and state organizations, where contracts insist on proper liability insurance.

The usual level of general liability insurance for your General Contractor business would be with a cap of $1 million for a single event and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your General Contractor insurance operations.

Professional liability insurance for your General Contractor business

In the event where a customer alleges some negligence, errors, or omissions in how you conducted your General Contractor business for them, you can quickly face a monetary claim.

Even if the case against you is ruled in your favor, the cost of defense can be high, and the impact on your reputation can be damaging.

Most small General Contractor business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.

See the table in the cost of General Contractor insurance section below for average prices of professional liability insurance for your General Contractor operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that the results didn’t meet your description of function, or that your guidance was basically incorrect.

You need to understand the explicit laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held culpable for damages caused by products claimed to be defective.

To cover yourself against any possible lawsuit, you need Product liability insurance for General Contractor

Only you can determine exactly how much insurance you should get.

Best advice is to talk to experienced insurance agents, brokers or company representatives for help.

Commercial insurance

Commercial vehicle insurance for your General Contractor business

Be careful! – almost all policies for private vehicle insurance do not cover any occurrence like theft or accidental damage when the van is being used for business purposes.

The right way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.

Commercial car policies insure the value of any vehicle in case of accident, malicious damage, fire, or theft.

Also, in case of any accident, the car itself, the content and any legal bills, medical expenses, and property damage is insured if your truck is involved in a crash.

Most states, other than Virginia and New Hampshire, insist on this type of insurance.

The wanted value of the insurance depends on the depreciated value of the vehicle, and your declared level of cover of contents. 

Tools and Equipment insurance

Since your General Contractor business needs specialized and costly equipment, you will realize how much it can cost to replace it in case of any damage, loss, or theft.

The equipment may be subject to malicious damage, deliberate fire, theft, other such unforeseen acts.

Also, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can eliminate your whole business in one stroke.

Unless you can afford to immediately replace such specific gear quickly out of your own pocket, you should have full-level equipment insurance so that you can immediately buy any equipment needed to keep your General Contractor business running.

It is impossible to advise how much equipment insurance you need – it’s really dependent on how much you have invested in your General Contractor business’ equipment.

Commercial Property insurance

Any General Contractor business that owns or rents space in a building must have a commercial property insurance policy.

If you own the space, you may already have a substantial capital investment, in addition to a big liability if there’s a mortgage.

Any physical building location should carry insurance coverage for the value of the premises and contents against unexpected occurrences like fire and storms, and against deliberate damages like theft and vandalism.

If your General Contractor business works in areas of high risk, like Florida or Georgia, extra coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Rhode Island, where unlimited cold snaps can cause damage to outer coverings of General Contractor business premises, there is a need for more additional cover than in warmer climes.

Whereas the level of cover depends completely on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of General Contractor insurance section below to give some estimate of the average prices per million dollars of property insurance for your General Contractor business.

Temporary insurance by month, week or day for your General Contractor business

Is your General Contractor business working part-time or casually, or is the level of business seasonal?

Using short-term insurance makes perfect sense. Business insurance by the month, day, or week – temporary insurance for General Contractor – are special policies where you can cover a designated period when you want to be covered.

By only paying for that period of cover, you will save by having lower premiums but still having identical risk cover.

The key feature of short-term insurance is that you purchase the cover for a defined period – a specific date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of larger business activity, get the existing cover raised.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your General Contractor business

You have the choice to combine a few of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP merges commercial property and public liability insurance by amalgamating these coverages into one insurance policy, which can save you money.

BOP insurance will protect you if any claims of injury or property damage are made.

It is frequently the right choice for small and medium-sized General Contractor businesses, such as yours.

There are a few limits that will dictate whether BOP is suitable for your own business.

BOPs will not cover your professional liability or commercial vehicle risks.

Also, the size of your business will determine whether you are allowed to take out BOP cover.

The normal business that is allowed to take a BOP policy must have fewer than one hundred employees, and not more than five million dollars in annual turnover.

As well, you must separately take out the required worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your General Contractor business employees

In many states, it is mandatory to have workers compensation insurance when your General Contractor business has one or more employees.

Workers compensation insurance covers the enterprise against any costs that arise if any hired hand experiences an injury or becomes sick as a result of work.

The benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s requirements in this regard can leave you as the employer obliged to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only allow coverage from the government-run monopoly state funds.

In these states, you cannot obtain your workers compensation obligations from private insurance corporations.

Workers compensation rates are computed based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must consult the relevant authorities in your state.

Average costs of these types of insurance

Although every General Contractor insurance level is unique, there are enough examples of usual quotes from insurance companies for us to give approximate guidelines, including what are the cheapest rates offered.

Of course, you should always check with an insurance representative what’s relevant for your business.

The list below is of annual premiums we have gathered for the main types of insurance your General Contractor businesses needs.

Cost of insurance for your General Contractor operations depends on many different factors.

We have reckoned these figures for small self-employed General Contractor businesses.

In larger states like California, premiums are generally about 20%-30% higher than national averages, whereas in smaller states like New Mexico, they will be about 20%-30% lower.

The location and size and type of your General Contractor business can have a big effect on the cost of different policies.

You should consult with professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by enquiring about insurance companies near where your business is located.

Another good source of information is the local Better Business Bureau in your town.

FAQ

What is small business insurance for General Contractor operations?

This is an umbrella term used to describe basic insurance policies designed to protect General Contractor business owners from risks like bodily injury, property damage, claims of negligence.

Does my General Contractor business have to have insurance?

Some of the kinds of insurance are not mandatory for you to open your business, but they can protect you from risks in your business operations.

Certain other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small General Contractor business insurance policy cover?

Liability insurance provides insurance against lawsuits or claims filed by a customer for bodily injury, property damage, or negligence.

The specific cover will vary based on your own operations.

See the table in the costing section above for average prices of the best policies for General Contractor insurance.

How much will General Contractor business insurance cost?

As well as the size of the business, some other factors, such as location and claims history, are used to determine your policy’s cost.

You should talk to professional insurance agents and brokers, or insurance company representatives.

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