Whether you’re a freelance contractor or employ subcontractors, you will need general contractors insurance in order to protect yourself and your assets.

The cost of general liability insurance for contractors depend on a variety of factors. Common influences include:

Coverage Limits

Most general contractors insurance covers bodily injury, property damage, product liability and personal or advertising injury. These policies generally provide coverage of $1 million to $5 million. The more coverage you have, the more you will pay in insurance premiums. It’s important to consider your risks as a contractor to make sure you have the right amount of coverage. Lower limits to save money isn’t always the best option, as low limits leave you open to expensive lawsuits.

Location

The cost of general contractor's insurance varies state to state and even zip code to zip code. This is due to many factors that are out of the contractor’s control, such as the cost of living and history of claims in the area.

Claims History

Like with any other insurance policy, filing a claim on your contractors insurance policy may raise your rates. Once an insurance provider has to pay compensation, they raise rates in order to offset the risks of you filing another claim. Contactors that have a long history of claims may even have trouble finding a general contractors insurance policy.

Nature and Exposure of the Business

Contractors who are involved in many aspects of business—such as delivering, manufacturing and installing equipment or products—face a higher risk of general liability claims and thus pay more for general contractors insurance. The size of the business also matters. Contractors who have subcontractors, work on high profile projects or cover a large area of clients are likely to pay more for general contractors insurance.

Having more employees (in this case, subcontractors) will generally raise your rates due to the added risk of multiple employees.

Credit Score

Your credit score could affect the cost of your general contractors insurance. Low credit scores typically result in high insurance premiums.

Most contractors may pay around $42 a month for general contractors insurance, depending on the factors above. Some contractors may choose to combine certain coverages, such as with a business owners policy (BOP). A BOP allows you to combine general liability and commercial property insurance into a single adjustable insurance policy for your small business.

Also read: When Does a Freelancer Need Contractors Insurance?

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