A remodeler in Waynesboro doing $340,000 a year pays about $2,550 for general liability coverage. A roofer with the same revenue pays closer to $3,400. Neither number is random. Contractor insurance runs on a handful of published rates, and owners who know them can check any quote in their head before signing it.
Farmer Brown Insurance, a commercial brokerage writing contractor coverage in all 50 states since 1996, says most pricing surprises in Virginia trace back to three numbers: the liability rate tied to revenue, the state employee threshold for workers compensation, and the real cost of a license bond.
General liability tracks revenue, not headcount
Contractor general liability insurance runs about 0.75 percent of annual revenue for a general contractor, with a floor near $1,600 a year. Higher-risk trades pay more. Roofing runs about 1 percent of revenue with a floor around $2,800, the steepest rate most carriers will write.
The standard policy carries $1 million per occurrence and $2 million aggregate, which is what commercial project owners in the Valley ask to see on a certificate. Some owners try to trim cost by dropping to $500,000 limits. The savings come to less than $100 a year. Not worth it.
One habit keeps this number honest: review the policy against real revenue every renewal. A contractor who grew from $300,000 to $600,000 and never updated the policy is insured for the smaller business and will settle the difference at audit.
Workers compensation starts earlier than most owners think
Virginia requires workers compensation insurance once a business regularly employs more than two people, and the Virginia Workers’ Compensation Commission counts part-time, seasonal and temporary workers toward that threshold. A crew of two with one weekend helper is already over the line.
The detail that catches contractors is the subcontractor rule. When a contractor hires subs to help complete a contract, the subs’ employees count toward the threshold too, even when the subs carry their own coverage. And carriers can charge premium at audit for any uninsured sub on the job. The protection is simple and free: collect a certificate of insurance from every sub before work starts and keep it on file for the audit.
Premiums are priced per $100 of payroll by trade classification, so accurate payroll records are money. Two claim habits pay off as well. Injuries reported within 24 hours cost significantly less to close than injuries reported late. And claims that stay medical-only, where the worker keeps earning on light duty, are discounted 70 percent in most states before they touch the experience rating that sets future premiums.
The license bond costs about $100
Localities commonly require contractors to post surety bonds of $5,000 to $25,000 before issuing permits or licenses, with $10,000 the most common figure. New contractors sometimes read those numbers as cash they must park somewhere. They are not. The bond is a guarantee, and the contractor pays only a small premium for it, usually about $100.
Credit drives the process. A contractor with a score above 700 and no bankruptcy in the past seven years can typically get bonded the same day. Owners working in several localities should expect to post one bond per municipality, so a remodeler pulling permits in three towns budgets for three bonds, not one.
Taken together, the three numbers put a Valley contractor in control of the conversation. Liability should sit near its published rate for the trade. Workers compensation obligations start at the third worker on the job, counting everyone. And the bond a locality requires costs a fraction of its face value. A contractor who walks into a quote knowing all three finds out quickly whether the person across the desk knows them too.
This content is provided for informational purposes only and is not a substitute for professional advice. AFP editorial staff were not involved in the creation of this content.
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