Do contractors need workers compensation?

Yes, in almost every state, contractors with employees must carry workers compensation. Construction is one of the highest-risk industries for WC. Rates run $6 to $15 per $100 of payroll for most construction trades. Non-compliance carries severe penalties including personal liability for all injury costs.

Updated 17 April 2026

Contractor Insurance Cost 2026: What GCs, Handymen, and Trades Pay

Q: How much does contractor insurance cost per month?

Contractor insurance costs vary by trade. Handymen pay $80 to $150 per month for GL. General contractors pay $250 to $500 per month. Roofers pay $300 to $600+ per month. A full coverage package (GL + tools + commercial auto + workers comp) for a 5-person GC crew typically costs $500 to $900 per month total.

Contractors pay more for insurance than almost any other small business category. GL alone averages $256/month. A full coverage stack for a small crew runs $500 to $900/month. Here is what you are actually paying for and why.

GL median

$256/mo

Per Insureon 2026

Full package

$607/mo

GL + tools + auto + WC (5-person)

WC rate (GC)

$6-10/$100

Per payroll dollar

Handyman GL

$80-150/mo

Low-hazard trade

Why Contractors Pay More

Three factors push contractor insurance costs well above most other industries:

Physical exposure: Contractors work in client properties with valuable assets, operate heavy equipment, and create conditions for slip/fall and property damage claims daily.
Subcontractor pass-through: GL policies for GCs often need to include subcontractor liability. Carriers charge more for policies that cover work done by uninsured subs.
Workers comp severity: Construction injury claims are 2.3x the national average in severity. A single fall from elevation can cost $200,000+ in medical and disability benefits.

Cost by Trade: 2026 Median Monthly Rates

Trade	GL Median/mo	WC Rate/$100	Full Package/mo
Handyman	$95	$3.50-6.00	$180-320
Carpenter	$120	$4.50-7.50	$240-420
Painter (residential)	$130	$3.80-6.50	$260-440
Landscaper	$256	$4.00-7.00	$350-600
HVAC Technician	$195	$3.50-6.00	$320-540
Plumber	$220	$3.50-6.50	$380-620
Electrician	$215	$3.50-6.00	$370-610
General Contractor	$310	$6.00-10.00	$500-900
Roofer	$390	$8.00-15.00	$650-1,200

Full package = GL + inland marine (tools/equipment) + commercial auto (1 truck) + workers comp (5-person crew at $350k payroll). Roofer estimates assume residential reroofing; commercial roofing is higher.

Coverage Stack for Contractors

Most contractors need four or five policies working together:

General Liability

$95-390/mo

Required by virtually every project contract and commercial client. $1M/$2M minimum.

Workers Compensation

$3.50-15.00/$100 payroll

Mandatory with employees in all states. Highest cost item for most crews.

Commercial Auto

$175-350/vehicle/mo

Work trucks, vans, and trailers. Personal auto excludes business use.

Tools and Equipment

$50-150/mo

Inland marine policy covering tools and equipment at job sites and in transit.

Contractor's Pollution Liability

$100-400/mo

Required for excavation, asbestos removal, lead paint work. Often overlooked.

Subcontractor Requirements

If you hire subcontractors, your GL policy typically requires them to carry their own GL with you named as an additional insured. Uninsured subcontractors expose your policy to their liabilities and can increase your premium by 20 to 40 percent. Always get certificates of insurance before a sub sets foot on your job site.

How to Lower Contractor Insurance Costs

Require all subs to carry their own GL and WC with you named as additional insured.
Implement a documented safety program. OSHA-compliant programs earn 5 to 15 percent WC credits.
Keep your e-mod below 1.0 by investing in injury prevention. A clean 3-year record saves 15 to 25 percent on WC alone.
Bundle GL, commercial auto, and tools with one carrier for multi-policy discounts.
Review your classification code. Many GCs are miscoded at the more expensive roofing or masonry rates rather than the correct carpentry or general construction rate.

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Frequently Asked Questions

How much does contractor insurance cost per month?

Contractor insurance varies significantly by trade. Handymen pay $80 to $150 per month for GL. General contractors pay $250 to $500 per month for GL. A complete coverage stack (GL + tools + commercial auto + workers comp) for a 5-person GC crew typically runs $500 to $900 per month total.

Do I need workers comp as a solo contractor?

If you have no employees and work as a sole proprietor, most states do not require workers comp for yourself. However, if you take on employees or misclassify subcontractors, WC becomes mandatory. Many general contractors also require subs to carry WC regardless of employee count.

What is inland marine insurance for contractors?

Inland marine (tools and equipment) covers your tools, machinery, and materials while in transit or at job sites. A standard BOP or GL policy does not cover tools stolen from your truck or damaged at a job site. Inland marine runs $50 to $150 per month and is essential for any contractor with valuable tools.

Does my GL cover work I do wrong?

No. GL covers bodily injury and property damage to third parties. If your workmanship is defective and must be redone, the rework cost itself is typically not covered. Some policies offer 'completed operations coverage' as an endorsement, which covers damage arising from completed work, but it does not cover redoing your own work.

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