General liability is the baseline requirement for any contractor who wants to work on a commercial job site. Most clients will not sign a contract without a certificate of insurance in hand first.
Farmer Brown Insurance, an independent brokerage that has placed general contractors insurance across all 50 states since 1996, puts the starting minimum for most general contractors at $1,600 per year. That figure applies to contractors under $150,000 in annual revenue doing standard residential and light commercial work.
What general contractors typically pay
Revenue drives the premium more than anything else. Contractors billing under $500,000 per year generally land between $1,600 and $3,000 annually. Those doing $500,000 to $1 million pay closer to $3,000 to $5,000. Above $1 million, most carriers price at roughly 0.75% of total revenue.
Specialty work moves the number up. Demolition, structural work, and anything involving height exposure carry higher rates than standard framing or finish work. A contractor doing both general and specialty work gets rated on the higher category.
Claims history changes everything
A contractor with two or three liability claims in the past five years pays a different rate than one with a clean record. Sometimes twice as much. Some carriers will not write the policy at all past a certain claims threshold, which shrinks the available market and pushes the price up further.
This is where an independent broker earns its keep. When one carrier declines or prices high due to claims history, a broker with access to multiple markets can find one that will still write the risk at a reasonable rate.
Workers compensation is separate
General liability does not cover the contractor’s own employees. That is workers compensation. Most states require it for any contractor with employees on payroll, and many commercial clients require proof of both policies before work begins, regardless of what state law says.
Workers comp is priced on payroll, not revenue. The classification of each worker matters. A roofing laborer carries a different rate per $100 of payroll than a site supervisor or office worker.
What carriers look at on the application
Three things determine the initial quote: annual revenue, the primary type of work performed, and the states where jobs are located. States with higher litigation rates produce higher premiums. A general contractor working primarily in Florida or New York pays more than one doing the same volume of work in Tennessee or Idaho.
Payroll accuracy at renewal matters too. Carriers audit at expiration. A contractor who reports low payroll upfront often faces a large audit bill at the end of the policy term when actual figures are reviewed.
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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