Contracting is one of the dearest trades to insure. Insureon’s general contractor customers pay a median of $162 a month for general liability, against $45 across all its small business customers, which is a fair reflection of the work: crews at height, powered tools running all day, and finished work an owner will stand inside for thirty years. This guide puts numbers on general liability, E&O and a business owner’s policy, then covers the four policies a contractor actually needs, the certificate wording owners ask for, licensing, and why your insurer wants to know about your subcontractors.
How much does contractor insurance cost per month?
Three policies cover most of what a contractor is asked to show. General liability is the one named in every contract and on every certificate: it pays when your work injures someone or damages property that is not yours. A business owner’s policy adds property cover on tools, materials and the yard, usually for less than buying the two apart. Professional liability, or E&O, is asked of contractors who design as well as build.
| Coverage | Typical monthly | Typical annual | What it covers |
|---|---|---|---|
| General liability ($1M per occurrence) | $108–$216/mo | $1,296–$2,592/yr | Third-party injury and property damage. The coverage every owner, developer and upstream general contractor asks for by name. |
| Business owner’s policy (BOP) | $50–$100/mo | $600–$1,200/yr | General liability plus commercial property on tools, materials and premises, usually with business-interruption cover. |
| Professional liability (E&O) | $75–$150/mo | $900–$1,800/yr | Claims that your design, specification or advice fell short. Increasingly required on design-build contracts. |
| Hiscox advertised starting price | from $22.50/mo | from $270/yr | E&O from $22.50, general liability from about $29, a BOP from about $42. |
Estimates from Insureon’s published medians for general contractors at standard $1M/$2M limits, national, business of two to five people. Insureon publishes no BOP or professional liability figure for general contractors, so those rows use its national figures. Not quotes. Hiscox writes coverage in 49 states plus Washington DC (not Alaska).
See these costs for your own business size, revenue and state
General liability at $1M/$2M limits is the floor; everything else sits on top. Our guide to general liability vs professional liability vs BOP compares the three in detail, and the handyman insurance cost guide covers the lighter end of the same risk class.
Contractor insurance cost by business size
Insurers rate contracting on headcount, payroll and revenue.
| Business size | General liability monthly | General liability annual |
|---|---|---|
| Just me | $108–$162/mo | $1,296–$1,944/yr |
| 2–5 people | $108–$216/mo | $1,296–$2,592/yr |
| 6 or more people | $162–$216/mo | $1,944–$2,592/yr |
Estimates from Insureon’s published medians, not quotes. No source publishes prices by headcount, so we show the lower half of the range for a one-person business under $100k in revenue, the whole range for two to five people, and the upper half for six or more. Larger businesses often pay more than this, especially for workers’ comp.
Contractor insurance cost by state
States with heavy construction litigation and large jury awards price liability higher; quieter states price it lower. The ranges below start from Insureon’s published medians for general contractors and adjust them for each state’s published general liability median. States with their own guide are linked.
| State | General liability monthly | General liability annual |
|---|---|---|
| Florida | $132–$264/mo | $1,584–$3,168/yr |
| Louisiana | $118–$235/mo | $1,416–$2,820/yr |
| California | $101–$202/mo | $1,212–$2,424/yr |
| New York | $106–$211/mo | $1,272–$2,532/yr |
| Texas | $103–$206/mo | $1,236–$2,472/yr |
| Illinois | $96–$192/mo | $1,152–$2,304/yr |
| Colorado | $130–$259/mo | $1,560–$3,108/yr |
| Washington | $108–$216/mo | $1,296–$2,592/yr |
| New Jersey | $113–$226/mo | $1,356–$2,712/yr |
| Massachusetts | $106–$211/mo | $1,272–$2,532/yr |
| Georgia | $113–$226/mo | $1,356–$2,712/yr |
| Arizona | $108–$216/mo | $1,296–$2,592/yr |
| North Carolina | $101–$202/mo | $1,212–$2,424/yr |
| Nevada | $106–$211/mo | $1,272–$2,532/yr |
| Ohio | $101–$202/mo | $1,212–$2,424/yr |
| Pennsylvania | $127–$254/mo | $1,524–$3,048/yr |
| Michigan | $113–$226/mo | $1,356–$2,712/yr |
| Virginia | $101–$202/mo | $1,212–$2,424/yr |
| Tennessee | $101–$202/mo | $1,212–$2,424/yr |
| Alabama | $127–$254/mo | $1,524–$3,048/yr |
| Kansas | $106–$211/mo | $1,272–$2,532/yr |
| Oklahoma | $108–$216/mo | $1,296–$2,592/yr |
| Wisconsin | $118–$235/mo | $1,416–$2,820/yr |
| Kentucky | $113–$226/mo | $1,356–$2,712/yr |
| Iowa | $101–$202/mo | $1,212–$2,424/yr |
| North Dakota | $118–$235/mo | $1,416–$2,820/yr |
Estimates for general contractors of two to five people, from Insureon’s published medians adjusted by each state’s published figure. Not quotes.
We also publish state guides for Idaho, Indiana, Montana and West Virginia, and all fifty states for every trade are in our guide to average business insurance cost by state.
Contractor insurance cost by limit
Limits are the second lever after location: the first figure is the most the policy pays for any one incident, the second the most it pays across a policy year. $1M/$2M is the standard because it is what construction contracts ask for.
| Limits (per occurrence / aggregate) | General liability monthly | General liability annual |
|---|---|---|
| $500K / $1M | No published figure | No published figure |
| $1M / $2M (standard) | $108–$216/mo | $1,296–$2,592/yr |
| $2M / $4M | About the same as $1M/$2M | About the same as $1M/$2M |
| $1M plus a $1M umbrella | No published figure | No published figure |
Insureon publishes its medians at the standard $1M per claim / $2M total limit, which most client contracts ask for. Its customers who choose $2M/$4M pay a median of $46 a month nationally against $45 at $1M/$2M, so doubling the limit adds little. No source we use publishes prices for other limits, so ask the insurer to price the options before you choose.
A $500K policy is a false economy: no source publishes its price, and it fails the first contract that specifies a million. Price the umbrella line early, because commercial owners and public bodies routinely specify $2 million or more, and an umbrella over $1M is usually the cheaper route there. Our guide to the cost of $1 million liability insurance goes further.
Why contractors rate higher than most trades
In Insureon’s published medians, general contractors pay more for general liability than cleaning, landscaping, auto repair or restaurant customers: $162 a month, against $48, $51, $54 and $141. Four things drive that. Crews work at height and in trenches, where injuries are severe rather than minor. Tools cut, spark and lift all day, on sites that also hold other trades. The work alters the building, so a mistake in framing, flashing or waterproofing is structural rather than cosmetic. Above all, the claims have a long tail: water ingress, movement and fire show up years after the final invoice, and the sum in dispute is a repair to a building rather than an object.
The four policies a contractor actually needs
General liability is the one on the certificate. It pays for injury to other people and damage to property that is not yours, arising out of your operations, and it does not pay to redo your own defective workmanship.
Workers’ compensation covers injury to your own employees, which general liability specifically excludes. It becomes a legal requirement in almost every state the moment you hire, with Texas the well-known exception. It is priced on payroll and class code rather than revenue, with rates set state by state, which is why it sits outside the tables above, and for a crew it is often the largest insurance line of the year.
Commercial auto covers the trucks and any trailer hitched to them. A personal auto policy generally excludes business use, so the pickup that carries a crew and materials needs its own policy.
Tools and equipment cover, usually written as inland marine or contractor’s equipment, insures your own gear wherever it is: on the truck, in the lock-up, on somebody else’s site. A business owner’s policy tends to cover property at your premises, which is not where contracting tools live, and theft from site is the loss contractors suffer.
One more sits alongside those four. Professional liability matters as soon as you do design-build or specify rather than follow a drawing: general liability answers for the damage, professional liability for the decision.
What owners and upstream contractors ask for on a certificate
A certificate of insurance is a one-page summary from your insurer, and on construction work it carries more strings than in any other trade. Four requests come up repeatedly.
Per occurrence limits, usually $1 million per occurrence and $2 million aggregate, cap what the policy pays for one incident and across the year. Additional insured puts the owner or the contractor above you onto your policy for claims arising out of your work. A waiver of subrogation stops your insurer, after paying a claim, from recovering the money from that client. Primary and non-contributory wording says your policy pays first and theirs is not called on. Ask your insurer for all four by name, give them the client’s exact legal entity name, and the certificate goes through first time.
Licensing and bonds
Contractor licensing is run by the states, and the classes of work that need a licence differ from one to the next. Most boards ask for two things before they issue or renew: proof of general liability insurance and a surety bond, with workers’ compensation proof once you have employees. A bond is not insurance: it guarantees your performance, and if it pays out you repay the surety.
Requirements, classes and bond amounts change, and cities often add registration of their own. Look up your own state contractor licensing board before you price a job or a policy. Our state guides for Idaho, Indiana, Michigan, Montana, North Dakota and West Virginia are a starting point.
Subcontractors, and why your insurer asks
Every contracting application asks whether you use subcontractors, what share of the work they do, and whether you collect certificates from them. If a sub causes damage and carries no insurance, the claim lands on your policy, so an uninsured sub is your exposure rather than theirs. Insurers charge more where subcontracted costs are high and certificates are not collected, and some exclude uninsured subcontractor work outright.
The routine is short. Collect a current certificate from every sub before they start, ask to be named additional insured on their policy, and hold a written agreement saying who is responsible for what. That lowers your renewal premium and is the only thing that helps at claim time.
How to get the cheapest honest quote
- Get the trade classification right. Light remodelling rated as heavy construction overpays all year.
- Report accurate revenue and payroll. Policies are audited at renewal, so understating now produces a bill later.
- Collect subcontractor certificates. The cheapest single way to move a contracting premium down.
- Quote $1M/$2M limits from the start. The $500K policy may cost a little less, and it fails the first contract that reads it.
- Price the umbrella beside the primary. Where contracts specify $2 million, an umbrella over $1M is usually the cheaper route.
- Choose a deductible you could actually pay. A higher deductible lowers the premium; one you cannot cover turns a small claim into a cash problem.
- Bundle into a BOP if you hold tools and materials. Liability and property together usually beat the two apart.
- Keep the record clean, pay annually, compare two or three carriers. A claim-free renewal is the best case for a lower rate, instalments carry a fee, and the same coverage can cost noticeably more at one insurer than another.
Where these numbers come from
The figures at the top of this page and in the main cost table come from the same data as our cost estimator, so the two always agree. The starting point is the median premium that Insureon, an online insurance agency, publishes for its small business customers (see its general contractors cost page). We adjust it for the state using Insureon’s state medians, and show the band that Insureon’s own price distribution says most businesses fall in. Every figure is an estimate, not a quote. The full method and source list is on the estimator page.
Hiscox and contracting businesses
Hiscox writes light contracting and trades, including sole traders and small crews, and quotes general liability, professional liability and business owner’s policies online. Its advertised starting prices, shown in the cost table above, are entry prices for the lowest-risk trades, so a contractor should expect to land above them. Hiscox does not write heavy construction or roofing, so a large structural contractor or a roofer will need a specialist market instead; describe your actual mix of work at quote time to find out which side of the line you sit on.
Frequently asked questions
How much does contractor insurance cost per month?
A two to five person contracting business pays about $108–$216 a month for general liability nationally, or $1,296–$2,592 a year. A business owner’s policy that adds property cover on tools and materials runs about $50–$100 a month, and professional liability about $75–$150. A one-person outfit sits nearer $108–$162, and a small crew’s general liability policy costs about $132–$264 in Florida against $96–$192 in Illinois.
Why is contractor insurance more expensive than other trades?
Contracting is one of the dearest trades to insure: Insureon’s general contractor customers pay a median of $162 a month for general liability, against $45 across all its small business customers. The reasons are structural: crews work at height, use powered and cutting tools all day, alter load-bearing and weather-tight parts of a building, and hand the finished work to an owner who will live in it for decades. Claims arrive years later as water ingress, movement or fire, and they are large when they arrive.
Do I need insurance to get a contractor licence?
In most states, yes. Contractor licensing is run state by state, and most licensing boards ask for proof of general liability insurance and a surety bond before they issue or renew, with workers’ compensation proof once you have employees. The classes of work that need a licence, the limits attached to each class and the bond amounts all differ by state and change. Look up your own state contractor licensing board and read the current requirement rather than relying on a figure quoted anywhere else.
What does a certificate of insurance need to say?
Most owners and upstream general contractors ask for four things. A per occurrence limit, usually $1 million with a $2 million aggregate. Additional insured status, so their own name is covered for claims arising out of your work. A waiver of subrogation, so your insurer cannot turn round and sue them after paying a claim. Primary and non-contributory wording, which says your policy pays first and theirs is not called on. Ask your insurer for all four by name when you request the certificate, and give them the client’s exact legal entity name.
What is the cheapest contractor insurance?
For most small contractors it is a general liability policy at $1M/$2M limits from a carrier that rates your actual trade mix rather than defaulting you to heavy construction. Nationally that runs about $108–$162 a month for a one-person outfit and $108–$216 for a crew of two to five. The cheapest honest quote comes from accurate revenue and payroll figures, collecting certificates from every subcontractor you use, paying annually and comparing two or three carriers, not from buying limits your contracts will reject.
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No. This site publishes cost guides and earns a commission if you get a quote through a partner link. We are not an insurer or a broker, we do not sell your details, and a quote costs you nothing and commits you to nothing.
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Disclaimer: Informational only, not insurance advice or a substitute for a licensed agent. Contractor licensing, bonding and workers’ compensation rules change by state and city; confirm current requirements with your state contractor board before relying on them. Coverage descriptions are summaries; policy terms govern. Availability and pricing vary by state and business, and prices are illustrative. Hiscox is available in 49 states and DC, not Alaska.