Contractor Insurance Cost (2026): What General Contractors Pay

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Contracting is the second dearest trade on our tables, behind only roofing, 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.

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.

Contractor insurance cost by state

States with heavy construction litigation and large jury awards price liability higher; quieter states price it lower. The spread across the twenty-six states below is about two to one. States with their own guide are linked.

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.

A $500K policy is a false economy: it saves about $16 a month and 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 any trade except roofing

On our trade tables, contracting sits above cleaning, landscaping, auto repair and restaurants, and below only roofing. 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 saves about $16 a month and 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 70 percent more at one insurer than another.

Where these numbers come from

Every range on this page starts from the national monthly averages we use across the site: $45 for general liability, $59 for professional liability (E&O) and $83 for a business owner’s policy. Those are scaled by a trade risk class, a business-size multiplier, a state multiplier and a limit multiplier, which is the same arithmetic our small business insurance cost calculator runs, so the two agree. General contracting and handyman work sit in the same contractor and general trades risk class in that calculator, at a multiplier of 1.75, which is why these figures match our handyman insurance cost guide exactly. The low and high ends of each range reflect a 0.75 to 1.30 spread from the cheapest to the dearest carrier writing that risk. For the method behind the base figures, see our guide to how much small business insurance costs.

Hiscox and contracting businesses

Hiscox writes light contracting and trades, including sole traders and small crews, and quotes online in about five minutes. It advertises general liability from about $29 a month, professional liability (E&O) from $22.50 a month and a business owner’s policy from about $42 a month. Those 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 $59–$102 a month for general liability nationally, or $709–$1,228 a year. A business owner’s policy that adds property cover on tools and materials runs about $109–$189 a month, and professional liability about $77–$134. A one-person outfit sits nearer $47–$82, and the same general liability policy costs about $92–$159 in Florida or Louisiana against $45–$77 in Iowa or North Dakota. Hiscox advertises general liability from about $29 a month, quoted online in about five minutes.

Why is contractor insurance more expensive than other trades?

Contracting is rated higher than every other trade on our tables except roofing and high-risk construction. 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. Contracting sits at a 1.75 multiplier in our calculator against 1.00 for a business with no trade exposure at all.

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 starts around $47 a month for a one-person outfit and $59 for a crew of two to five, and Hiscox advertises general liability from about $29 a month. 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.

Do I have to buy through you?

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.

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.