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Contractors General Liability Insurance Prices
No matter how careful you are, accidents happen. Plan for the unexpected by protecting yourself with a general liability insurance policy. For a relatively small annual premium, general liability insurance protects your assets if you are sued for personal injury or property damage. A general liability policy covers the cost of damages or settlement fees as well as attorney fees.
General liability insurance is particularly important for contractors. Any company that works with heavy or dangerous equipment has a greater risk of injury. And even small mistakes can turn into costly lawsuits.
Contractors' General Liability Insurance Average Costs
Contractors pay more for general liability insurance than many other types of businesses due to the risky nature of the work. (Faulty plumbing or electrical work could lead to damages or a child could wander onto the construction site and be injured). However, general liability insurance is still affordable.
Most contractors pay from $700 to $1,200 per year for general liability insurance. The payments are usually structured as a down payment of several hundred dollars and monthly payments spread out over nine or ten months.
Several factors will influence your rate. The size of the policy is one of the biggest factors - the most common policies offer $500,000, $1 million or $2 million worth of coverage. The more coverage you need, the more expensive the premium will be. Rates also vary from state to state, because courts in some states are known for awarding higher damages in personal injury and property damages cases. An insurance company will also look at your company's track record in determining a rate. If you've had accidents or faced lawsuits in the past, expect to pay more.
How General Liability Insurance Works
General liability insurance is not a luxury for construction firms, plumbers, electricians and the like. Many times, contractors are required to show proof of insurance before beginning work on a job site. Some customers will ask to see proof before allowing you to work on their home.
If you're sued, general liability insurance will cover the cost of your damages or settlement fees and attorney fees up to the policy maximum. So, if you buy a $1 million policy and the settlement is $1.5 million, you'll be on the hook for the remaining $500,000. If you're concerned about that happening, you might want to purchase a separate umbrella policy to cover the remainder.