Four Contractor Insurance Policies Every Construction Business Needs
About 4 percent of construction workers are injured or fall ill on the job each year. That number does not include property damage claims, vehicle accidents, or third-party lawsuits that have nothing to do with employee injuries. Construction generates liability from multiple directions at once.
Farmer Brown has covered contractors across all 50 states for nearly 30 years. Here are the four policies worth understanding before the next project starts.
Builders Risk insurance protects the structure while construction is underway
Builders Risk covers physical damage to a building and its materials during the construction period. Fire, wind, vandalism, and vehicle impact are standard covered causes of loss. The policy runs from the day construction begins until the project is complete.
A basic policy typically costs between 1 and 5 percent of total construction costs and covers the structure itself. Most policies extend at modest additional cost to include tools, scaffolding, and materials in transit. Farmer Brown quotes Builders Risk at 30 cents per $100,000 for new construction and 65 cents per $100,000 for rehabilitation projects.
General Liability insurance pays when your work injures someone or damages their property
General Liability covers bodily injury and property damage claims against the contractor, including legal defense costs, medical bills, and judgments. Most clients require it before allowing a contractor on site.
Pricing depends on the type of work, annual revenue, and claims history. A roofing contractor pays more than a plumber because the liability exposure is higher. Limits should reflect actual project exposure, not just whatever a client contract requires at minimum.
Workers Compensation covers employee injuries that General Liability does not
When an employee is injured or becomes ill on the job, Workers Compensation pays their medical bills and replaces lost wages. General Liability does not cover this. The two policies handle separate risks.
Most states require Workers Compensation as a condition of operating legally. Fines for going without it reach $100,000 in some states. Michigan allows criminal liability. Requirements also vary by workforce type. Seasonal and part-time workers fall outside coverage rules in certain states, so contractors using non-permanent labor need to verify their obligations before a claim surfaces.
Commercial Auto insurance covers vehicles that a personal policy will not
A personal auto policy stops covering a vehicle the moment it is used for business. One accident involving a company truck or an employee on a work errand can produce six figures in uncovered damages without a Commercial Auto policy in place.
Commercial Auto pays legal fees, medical bills, and repairs when a company vehicle causes an accident. Required minimums vary by state. Farmer Brown is licensed in all 50 states and confirms that every policy written meets local requirements.
Getting contractor insurance priced fast
The right limits for each policy depend on the type of work, the size of the operation, and where projects are being completed. Farmer Brown’s team works with contractors on same-day quotes and can have a certificate of insurance ready within hours of binding coverage. A quote is available online.