The role of the general contractor in construction cannot be understated. They oversee projects, manage subcontractors, and generally keep everything moving smoothly from initiation to completion.
With such duties comes a significant amount of risk, which is why it’s so critical for these professionals to have their own general contractor insurance. But, when managing all your different costs is so crucial to the success and growth of your businesses, where does the cost of insurance fit in? How much does general contractor insurance cost?
How much does it cost to buy general contractor insurance?
There’s no one true answer to this question. To find the approximate amount your general contractor insurance will cost, it’s better to ask an agent to find you quotes and compare between your different options. Policies for smaller businesses can cost as little as $1,000/year, whereas policies for larger businesses with specific risks may exceed $5,000/year or more.
The cost of general contractor insurance is not a one-size-fits-all figure. Various elements, or “factors,” contribute to the overall premium, each reflecting the unique aspects of the contractor’s business and the risks involved. Here are some of the factors insurers use to price general contractor insurance:
Business size
The size of a contractor’s business significantly impacts insurance costs. Larger companies with more employees, higher revenues, and extensive operations typically face higher premiums due to the increased risk exposure. Conversely, smaller businesses with fewer employees and lower revenue can often secure coverage at a lower cost.
Nature of contracts
The types of projects undertaken by a contractor play a crucial role in determining insurance premiums. High-risk projects, such as large-scale commercial constructions or those involving hazardous materials, generally attract higher insurance costs. In contrast, smaller, less risky residential projects may result in lower premiums.
Coverage types
The specific types of coverage included in the insurance policy affect the overall cost. General liability, workers’ compensation, and professional liability are common coverages for general contractors. The broader and more comprehensive the coverage, the higher the premium.
Location of operations
Geographical location is another important factor. Contractors operating in areas with higher construction activity or regions prone to natural disasters (such as earthquakes or hurricanes) may face higher insurance premiums. Local regulations and the legal environment also influence costs.
Claims history
A contractor’s claims history is a key determinant of insurance costs. Contractors with a history of multiple claims or significant losses are seen as higher risk by insurers, leading to higher premiums. Maintaining a clean claims record can help reduce insurance costs over time.
Business experience
Experience and a solid safety record can positively impact insurance costs. Contractors with many years in the business and a demonstrated commitment to safety are often rewarded with lower premiums. Implementing strong safety protocols and training programs can help improve a contractor’s risk profile.
How do I get more affordable general contractor insurance?
One of the best things to do for your business as a reputable contractor is to look for affordable general contractor insurance that doesn’t compromise on necessary coverage (or fall short of whatever contractual/state requirements that are expected of you!) Doing so is easier when you have an agent in your corner helping you out. While we do recommend giving one of our agents a call to discuss your needs one-on-one, we also have a few steps listed below on suggestions for more affordable general contractor insurance coverage:
Maintain a good claims history
A clean claims history is an asset when seeking affordable insurance. Contractors with fewer claims are viewed as lower risk by insurers, often resulting in lower premiums. Implementing robust risk management practices and safety protocols can help minimize incidents and maintain a favorable claims record.
Increase deductibles on coverages
Opting for higher deductibles on applicable coverages can lower premium costs. While this means paying more out-of-pocket in the event of a claim, it reduces the insurer’s risk, which is reflected in lower premiums. Contractors should assess their ability to cover higher deductibles, possibly with the assistance of an agent, before choosing this option.
Review and update coverages regularly
Regularly reviewing and updating insurance policies ensures that contractors are not overpaying for outdated or unnecessary coverage. As business circumstances change, adjusting coverage to reflect current needs can lead to cost savings.
Shop around and compare quotes
One of the most effective ways to find affordable insurance is to shop around and compare quotes from multiple insurers. Different insurance companies have varying pricing models and coverage options, so obtaining several quotes allows contractors to identify the best value for their specific needs. An agent can do this with you/on your behalf.
Give us a call
General contractor insurance is a not a one-size-fits-all, so it’s important as someone looking to continue their business for years to come to find a good fit. To find great coverage at a great price, work with AHI Group. Our commercial agents are experts in finding excellent coverage solutions for contractors. Give us a call or request a quote on our website.
