Being a general contractor can be a dangerous job. You’re often working with hazardous equipment, and there’s always a risk of damage to property and people, no matter how small that risk is.
As a result, general liability insurance is required in most states, protecting clients and third parties from losses. If you’re a general contractor working out the expenses associated with being in business, you may be curious about how much general contractor liability insurance costs. You can find out how insurance companies calculate their prices below.
The Work Being Performed
You can learn more here about what general contractor insurance covers and who should have it, but one of the main factors considered when determining premiums is the type of work being performed.
You might be a small family business performing basic repairs in residential properties, or you might be a large contracting business with staff working on a commercial construction project. Your preferred insurance provider considers this information before calculating a figure to protect your clients and the general public.
Your Business’s Revenue
Generally, your business revenue is reflected in the size of the projects. Sometimes, the larger the project, the higher the risk of damage and injuries. Insurance companies often consider how much money your business is earning before they set your insurance premiums. The premium figure may also depend on the coverage level you choose, with $1 million and $2 million policies being among the most popular.
How Many Employees You Have
When you’re the only contractor working for your business, there’s only one person to make potential mistakes like breaking building materials or hitting someone with construction equipment. However, once you hire employees, the risk increases, as there are more people to make mistakes.
Make sure you know exactly how many employees you have before inquiring about general contractor insurance. You can then make sure everyone is covered for potentially expensive errors.
The Coverage You Request
Accidents involving people and their property can be costly, especially if they request payment in the hundreds of thousands of dollars or even millions. When you’re nervous about the possibility of being financially ruined by an accident, you may request policies with high coverage amounts. It’s important to remember that the more coverage you request, the more your general contractor liability insurance may cost.
Loss History
Just as you might spend more on your car insurance premiums if you’ve made claims in the past, you may expect the same set of circumstances if you’ve claimed losses in your business before. If you’ve made insurance claims in the past five years, your premiums may cost more than a general contractor who hasn’t made claims.
General contractors can file claims for a number of things, such as damage to a client’s property or a third party’s property, harm to your business’s reputation, advertising and marketing mistakes, bodily injuries to a client or third party, medical payments, and damage to properties you rent.
The cost of general contractor liability insurance varies from one business to the next. Before purchasing it for yourself, think about these points above so that you can have a general idea of how much to budget for your premiums each year.
