When it comes to running a contracting business, having the proper insurance coverage is crucial. It not only protects your clients and employees but also safeguards your business from unexpected financial losses. The average cost of contractor insurance varies based on factors such as the nature of the work, the size of your business, and the coverage limits you choose.
General Liability Insurance
General liability insurance is the most common type of insurance for contractors. It covers third-party injuries, damage to property, and any legal disputes that may arise. The cost of general liability insurance for contractors is determined by various factors, including the nature of the work, the location, and the size of the business. On average, contractor general liability insurance can cost between $500 and $2,000 per year.
Workers’ Compensation Insurance
If you have employees, workers’ compensation insurance is mandatory in most states. This insurance covers medical expenses and lost wages for employees who suffer work-related injuries or illnesses. The cost of workers’ compensation insurance for contractors is calculated based on the number of employees, the type of work, and the location of the business. On average, contractor workers’ compensation insurance can cost between $1,000 and $10,000 per year.
Commercial Auto Insurance
If you own a vehicle that is used for business purposes, you need commercial auto insurance. This insurance covers damages and injuries that may result from accidents involving your company vehicle. The cost of commercial auto insurance for contractors depends on the type of vehicle, the number of vehicles, and the driver’s record. On average, contractor commercial auto insurance can cost between $1,000 and $3,000 per year.
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, covers legal and defense costs associated with claims of professional negligence. If your work involves providing advice, consultation, or design services, you should consider having professional liability insurance. The cost of professional liability insurance for contractors varies depending on the nature of the work and the coverage limits you choose. On average, contractor professional liability insurance can cost between $1,000 and $5,000 per year.
In conclusion, the total cost of contractor insurance depends on the types of coverage your business needs, the size of your business, and the level of coverage limits you select. By comparing quotes from various insurance providers, contractors can find affordable insurance coverage that meets their specific needs. Remember, the cost of insurance is far cheaper than the cost of unexpected financial losses due to an uncovered claim. Therefore, insurance should be considered an essential investment for contractors looking to protect their business and employees.