Contractor liability insurance is a crucial safeguard for construction businesses, shielding them from potential claims related to bodily injuries or property damages they might cause. Without this protection, contractors would bear the financial burden of such claims, especially given the distinct risks they encounter, whether interfacing with clients or working directly at a client’s residence.
- Most Cost-Effective: Next Insurance
- Ideal for Bigger Small Businesses: The Hartford
- Top in Customer Satisfaction: Chubb Ltd
- Best Nationwide Coverage: Insureon
- Superior for High Claim Limits: Farmers
What Does Liability Insurance Cover for Contractors?
The Hartford’s general liability insurance is designed to address the financial implications of claims including bodily harm, property destruction, and personal injuries like defamation. Despite a contractor’s best efforts to operate flawlessly, unforeseen issues can arise, underscoring the importance of such coverage.
Who Needs Construction Insurance?
General liability insurance is versatile, catering to a range of construction-related professions. This insurance extends coverage to:
- Masonry experts
- Security firms
- Property developers
- Home renovation specialists
- Independent contractors.
Contractor Liability Insurance Cost
The cost of general liability insurance fluctuates based on several factors unique to each business. Insurers consider aspects such as:
- Business Type: Contracting businesses often face higher risks, potentially leading to increased rates.
- Experience: The duration your business has been operational can influence the cost.
- Employee Count: Larger staff sizes might elevate risk, impacting premiums.
- Location: High-crime areas might bump up the insurance costs.
- Policy Specifics: Details like coverage limits and deductibles play a role. Greater coverage and lower deductibles typically mean higher rates.
- Claims Record: A history free of claims often translates to reduced rates.
Top 3+ Contractor Liability Insurance Companies
Contractor liability insurance is crucial for professionals in the construction industry, safeguarding them from potential legal claims. Here, we’ll delve into the top three (plus a few more) insurance companies that stand out in providing this essential coverage.
Best for Affordable Premiums: Next Insurance
Why We Chose It
Next provides tailored insurance packages for general contractors, starting as low as $75 per month, complemented by advanced digital tools and complimentary additional insureds.
Pros & Cons
- Competitive premium rates
- Instant certificate of insurance access
- No charge for additional insureds
- Lower-than-expected complaints with NAIC
- Flexible coverage options
- 10% discount for bundled policies
- Limited state availability
- Liability coverage capped at $1 million per incident
- Builder’s risk coverage not offered
Next Insurance, hailed as the premier small business insurance company for 2023, tailors affordable packages for general contractors. Their comprehensive offerings encompass general liability, commercial property, tools, equipment, commercial auto, and workers’ compensation.
For added flexibility, they allow additions like professional liability and business interruption insurance. By bundling two or more policies, you can avail a 10% discount, and there are other savings up to 25%. However, they don’t provide builder’s risk insurance and their coverage isn’t universal across states.
Boasting an A- (Excellent) rating from AM Best and a commendably low complaint record with the NAIC over the past three years, Next Insurance stands out. They also offer a dynamic certificate of insurance, accessible 24/7 for real-time updates, catering to the ever-changing needs of the construction sector. Moreover, their user-friendly online quote and application system, coupled with live chat support, ensures a seamless customer experience.
Insurance packages tailored for general contractors begin at a competitive rate of $75 monthly
Best for Larger Small Businesses: The Hartf
Why We Chose It
The Hartford provides a flexible BOP ideal for general contractors, covering key needs like builder’s risk insurance. They also offer standard and online risk management services.
Pros & Cons
- Excellent financial rating from AM Best
- Fewer complaints than average with NAIC
- Comprehensive insurance options for contractors
- Provides risk management services
- Occurrence-based liability coverage
- Can’t buy coverage online
- Not offered in Alaska or Hawaii
- Low J.D. Power score.
The Hartford stands out for its expansive coverage options, making it particularly well-suited for larger small businesses. Their comprehensive business owner’s policy encompasses property, general liability, and business income insurance, and offers an array of customization possibilities, including options for workers’ comp and professional liability.
Additionally, they provide builder’s risk insurance. One of the noteworthy features of their liability coverage is its occurrence-based nature, ensuring that incidents that happen during the policy’s duration are covered, even if claims are made after the policy concludes. Their commendable A+ financial rating from AM Best further reinforces their reliability.
Over the recent years, The Hartford has also received fewer complaints with the NAIC relative to its market presence. However, while you can typically obtain an instant insurance certificate, their digital tools fall a bit short compared to some competitors.
Moreover, depending on the nature of your business and its specific needs, purchasing coverage online might not always be feasible.
The Hartford hasn’t shared specific starting premiums for general contractor insurance. However, they’ve provided average monthly costs for various policies: $261 for a business owner’s policy, $88 for general liability, and $70 for workers’ compensation. Remember, these rates might vary based on where your business is located, how many employees you have, and other unique factors.
Great for Customer Satisfaction: Chubb Ltd
Why We Chose It
Chubb is rated second by J.D. Power in small business insurance. Additionally, they’ve had fewer complaints with the NAIC in the past three years. Therefore, they’re our top choice for customer satisfaction for general contractors.
Pros & Cons
- Ranked 2nd by J.D. Power for small commercial insurance.
- Fewer complaints than average.
- Exceptional A++ financial rating from AM Best.
- Provides professional liability specific to construction.
- Some policies available on an occurrence basis.
- Bigger small businesses need to consult an agent for a quote.
- Lacks discounts or upfront price estimates.
Chubb excels in customer satisfaction, reflected in its fewer-than-expected NAIC complaints and a high J.D. Power 2022 ranking. Furthermore, it boasts the highest financial rating from AM Best, showcasing a strong capability to honor claims. Chubb tailors its coverage for the construction sector; for instance, their professional liability includes coverage for pollution and doesn’t exclude lead or asbestos.
They also offer general liability insurance on an occurrence basis and other essential coverages like workers’ compensation and builder’s risk insurance. However, while businesses earning under $2 million yearly can get online quotes from Chubb’s small business portal, larger entities or those needing specific coverage might have to consult a Chubb-affiliated independent agent to secure a policy.
Chubb doesn’t provide specific price estimates for their insurance policies.
Best Nationwide Coverage: Insureon
Why We Chose It
Insureon is a broker specializing in small business insurance, offering an online platform to compare policies across all states. They provide state-specific resources and a diverse range of coverage options for businesses.
Pros & Cons
- Provides a broad range of coverage options for general contractors.
- Operates in all states.
- Helps compare premiums to ensure competitive pricing.
- Offers digital insurance certificates.
- Might lead to receiving emails from insurance firms and marketing partners.
- Not a direct insurance provider.
Insureon operates as a nationwide insurance broker, sourcing online quotes for general contractor policies from various insurance partners, some of which are highlighted in this article. They cater to the diverse needs of general contractors, offering coverage types ranging from general and professional liability to commercial property, workers’ compensation, commercial auto, and builder’s risk insurance. Their online-based quote process is convenient, and many businesses can instantly obtain an insurance certificate post-purchase.
It’s essential to note that Insureon isn’t a direct policy provider. Thus, when weighing different quotes, you’ll need to delve into the financial strength and customer satisfaction scores for each corresponding insurance company. A minor caveat: utilizing Insureon might land you on the mailing lists of marketing campaigns from insurance firms and Insureon’s promotional partners. Yet, leveraging their platform can significantly streamline and expedite your insurance comparison journey.
Varies by insurance company
Superior for High Claim Limits: Farmers
Why We Choose It
Farmers stands out for general contractors seeking enhanced protection. It offers the highest maximum claim limits compared to other providers we evaluated. Plus, Farmers has an umbrella policy tailored for small businesses.
Pros & Cons
- Provides coverage up to $5 million per liability claim.
- Features umbrella insurance.
- Offers a variety of coverages suited for contractors.
- Grants free access to safety resources.
- Lags in J.D. Power ranking for customer satisfaction.
- Absence of online quote functionality.
- Has received more complaints than average with the NAIC.
- Does not offer professional liability coverage.
Farmers provides a range of coverages suitable for general contractors, covering aspects like business property, general liability, tools, equipment, auto, and workers’ compensation. Notably, they offer a significant claims limit of up to $5 million on liability policies and extend an umbrella coverage that goes up to $10 million. Additionally, Farmers grants policyholders complimentary access to MySafetyPoint, a hub filled with resources for loss control. On the flip side, if you’re looking for professional liability insurance, you’ll need to seek it elsewhere since Farmers doesn’t provide this coverage.
In terms of customer satisfaction, there are some concerns. Farmers ranks near the bottom in the J.D. Power 2022 Small Commercial Insurance Study and has garnered more complaints than usual with the NAIC in recent years. Lastly, while their online form gives a start to the quote process, finalizing and purchasing a policy necessitates collaboration with an agent.
Farmers hasn’t provided specific price estimates for their business insurance policies.
Frequently Asked Questions
Is Insurance Required by Law for General Contractors
While general contractors aren’t usually mandated by law to have liability insurance, some clients might ask for it before signing a construction contract. Additionally, certain local building codes might necessitate builder’s risk insurance. Moreover, if you employ others, most states will require you to have workers’ compensation insurance. And if your business has a vehicle, you’ll typically need commercial auto insurance as per state laws.
How Does Contractor Liability Insurance Protect Your Business?
Contractors can face lawsuits for different reasons, such as unintentional damage at a job site, design mistakes causing financial losses, or someone getting injured nearby. Contractor liability insurance shields you by covering legal costs and potential settlements. Without proper insurance, a single lawsuit might jeopardize your entire business.
What Are the Common Exclusions in a Contractor Insurance Policy?
In contractor general liability insurance, there are often exclusions. Common ones are:
- Building homes
- Earth-related works
- Jobs done by subcontractors
- Roofing tasks
- Work at certain heights.
Who Should Get a Contractor Liability Policy?
Every business, including those in the construction sector, requires liability insurance. So, whether you’re into siding, solar installations, electrical work, handyman tasks, or general contracting, a contractor liability policy is essential. And if you possess commercial property, a business owner’s policy can combine both liability and property coverage for you.