How Is General Liability Insurance Calculated for Contractors?

What are General Liability premiums, and how is General Liability insurance c

How Is General Liability Insurance Calculated for Contractors?

If you’re working as a contractor, you must protect your business with the right insurance policy. Specifically, you need commercial general liability insurance for contractors – but how much does it cost? Here’s a look at how general liability insurance works and how to determine how much your policy may cost you.  

What Is General Liability Insurance for Contractors?

General liability insurance for contractors is a type of insurance policy aimed at tradespeople, contracting companies, and construction workers. It covers certain business risks, such as: 

  • Advertising injury: Advertising injuries include libel, copyright issues, and misleading statements made by employees.
  • Completed operation issues: Completed operation issues arise once the job is finished. For example, if you fix a client’s gutter and it breaks a few months later, an insurance policy can cover the costs of repairing the damage.  
  • Personal injury: Injuries to the person e.g. bodily harm and associated medical costs are covered by general liability insurance. 
  • Property damage: Property damage is, for example, accidental damage to a client’s property while you’re on the job. 

You can add on more coverage, such as equipment coverage, at an extra cost. 

Which Contractors Need General Liability Insurance?

Every contractor benefits from having general liability insurance, especially if they’re an independent contractor. Here are some examples of who should have this type of coverage:

  • Carpenter 
  • Electrician 
  • Handyman 
  • Landscaper  
  • Painter 
  • Plumber 
  • Roofer 
  • Welder 

If you work in construction, you may be legally required to have general liability insurance in place before you start working. Some clients may also expect to see proof of insurance coverage before they’ll award you contracts, so it’s worth shopping around for a quote. 

How Is General Liability Insurance Calculated for Contractors?

Two contractors on building site discussing general liability insurance construction

Various factors determine how much a general liability policy costs – no two policies are exactly the same. However, here’s a rundown of the factors most likely to affect the cost of your general liability insurance.

Level of Coverage

Your premiums depend on the level of coverage you require. For example, if you opt for more comprehensive coverage but lower deductibles, your policy may be more expensive than someone with higher deductibles and less coverage. 

The team at InsurePro can help you decide how much coverage you need and the level of deductibles you’re comfortable with.

Business Size and Premises

The size of your business, and where it’s located, may influence your insurance premiums. As an example, if your business is located in an area with higher crime rates, you could pay more than a contractor working somewhere with lower reported crime levels. 

Type of Business

The general liability insurance cost for contractors varies depending on the type of work they do. For example, contractors performing riskier jobs, such as construction, may pay more than contractors doing “lower” risk jobs like painting or locksmithing.  

Claims History

Insurance premiums are all about risk. Contractors with no insurance claims history are deemed lower risk than contractors who have made claims in the past. So, if you’ve made a claim on your business insurance policy before, insurers might charge you higher premiums than someone with no claims history.   

Professional Experience

If you’ve been in business a long time, insurers may deem you a lower risk because you have more experience. The result? Lower risk means lower premiums. That said, even if you don’t have much experience, there are many factors that influence the cost of your monthly or annual payments.

Number of Employees

The more employees you have, the higher the chances of having an accident or facing a lawsuit. So, the general liability insurance cost for contractors can vary depending on how many people work for you.  

How Much Is General Liability Insurance for Contractors?

The cost of general liability insurance for contractors varies widely. It all depends on, for example, the level of coverage you need and your claims history. On average, though, you can expect to spend around $90 per month or $1090 per year on general liability coverage, according to HowMuch. 

If you’re wondering whether general liability insurance is based on revenue, the answer is “sometimes.” Your annual revenue is yet another factor that insurers may consider when they’re calculating your insurance premiums. 

Choosing Commercial General Liability Insurance for Contractors

Choosing general liability insurance can feel like a daunting task. At InsurePro, we’re committed to keeping the process simple. Our experienced team will shop around to find the best deal for your needs – and it only takes a few minutes to complete our form and get a free quote. 

Get the best insurance for you!