General Contractors Insurance – Cost and Types Of Policies

Whenever you budget the expenses of your business, General Contractors 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 general insurance and all the other sorts of insurance we will tell you about, you can protect your business and yourself in case something unforeseen happens.

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

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

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

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

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

What this means, for any General Contractors 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 Contractors business is not harbored 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 Montana, there are specific monetary levels that limit the amount a court can award in any case against the state.

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

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

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

What does General Contractors insurance protect you from?

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

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

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

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

Liability insurance

General liability insurance

Any General Contractors business is dealing directly with members of the public, and that means you usually have the danger that some accident can happen to them bodily or else something of theirs can be spoiled.

In such a case, they can demand compensation.

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

It protects your General Contractors business from the claims themselves and in addition to any resulting court costs and legal fees of the lawsuits.

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

The average level of general liability insurance for your General Contractors business would be with a cap of $1 million for a single submission 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 Contractors insurance operations.

Professional liability insurance for your General Contractors business

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

Even if the lawsuit 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 Contractors 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 Contractors insurance section below for average prices of professional liability insurance for your General Contractors 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 what you delivered didn’t meet your description of function, or that your advice was basically incorrect.

You need to know the specific laws of product liability in your own state.

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

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

Only you can estimate exactly how much insurance you must have.

Best advice is to consult with experienced insurance agents, brokers or company representatives for support.

Commercial insurance

Commercial vehicle insurance for your General Contractors business

Beware! – 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 best way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a direct commercial vehicle insurance package.

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

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

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

The required value of the insurance is calculated on the depreciated value of the vehicle, and your declared level of cover of contents. 

Tools and Equipment insurance

Since your General Contractors business needs unique and dedicated equipment, you know 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 unexpected acts.

In addition, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can wipe-out your whole business in one stroke.

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

It is difficult to advise how much equipment insurance you need – it’s basically dependent on how much you have invested in your General Contractors business’ equipment.

Commercial Property insurance

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

If you own the property, you may already have a substantial capital investment, as well as a big liability if there’s a mortgage.

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

If your General Contractors business operates in areas of high risk, like Florida or South Carolina, additional coverage may be needed for earthquakes and hurricanes or tornadoes.

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

Because 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 Contractors insurance section below to give some estimate of the average prices per million dollars of property insurance for your General Contractors business.

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

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

Using short-term insurance makes good sense. Business insurance by the month, day, or week – temporary insurance for General Contractors – 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 less premiums but still having identical risk cover.

The important feature of short-term insurance is that you pay for the cover for a defined period – a designated 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 better business activity, get the existing cover improved.

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

Business Owners Policy (BOP) for your General Contractors business

You have the chance 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 combines commercial property and public liability insurance by packaging 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 mostly the right choice for small and medium-sized General Contractors businesses, such as yours.

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

BOPs cannot cover your professional liability or commercial vehicle risks.

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

The typical business that can take out a BOP policy must have no more than one hundred employees, and maximum five million dollars in annual sales.

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

Workers Compensation insurance for your General Contractors business employees

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

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

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

Failure to meet a state’s regulations 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 can’t take out your workers compensation obligations from private insurance corporations.

Workers compensation charges are worked out 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 Contractors insurance level is unique, there are enough examples of standard quotes from insurance companies for us to give rough guidelines, including what are the cheapest rates offered.

Of course, you should always check with a broker what’s relevant for your business.

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

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

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

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

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

You should talk to 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 suburb.

FAQ

What is small business insurance for General Contractors operations?

This is a wide term used to describe common insurance policies designed to protect General Contractors business owners from risks like bodily injury, property damage, claims of negligence.

Does my General Contractors business have to have insurance?

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

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

What does a small General Contractors business insurance policy cover?

Liability insurance provides coverage against lawsuits or claims filed by a third-party for bodily injury, property damage, or negligence.

The precise cover will vary based on your own operations.

See the table in the costing section above for average prices of the most common policies for General Contractors insurance.

How much will General Contractors business insurance cost?

On top of the size of the business, several 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.

You can search for more information insurance for General Contractors, in the search box below, and follow the relevant links.

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