How Much Does Handyman Insurance Cost? (2022)
Photo: istockphoto.com National Average: $65 per month A handyman is a jack-of-all-trades who can perform…
- National Average: $65 per month
A handyman is a jack-of-all-trades who can perform a wide variety of work around the home. Like any type of business, contractors require insurance to help cover their liability, their tools and equipment, their work vehicles, and more. But just how much does handyman insurance cost?
According to Insureon, the average cost of handyman insurance is around $65 per month, or $800 per year for a policy with a $1 million limit and a $500 deductible. This type of handyman insurance policy helps protect contractors against damages to third parties that they are found liable for causing. The exact cost of handyman insurance depends on the type and amount of coverage required, the insurance provider, and the number of employees the business has. This guide will cover these and other factors in more detail, as well as describe the types of coverage available for handyman contractors, suggest ways business owners can save on their premiums, and provide useful questions for customers to ask while researching the best handyman insurance companies.
Factors in Calculating Handyman Insurance Cost
How much is handyman insurance? Business owners who are shopping for handyman insurance will want to consider the main factors that determine the cost of this type of coverage. The main factors include the type and amount of coverage needed, the insurance provider, the discounts available to the customer, the business’s geographic location, the number of employees on staff, the policyholder’s claims history, and the choice between replacement cost coverage and actual cash value coverage.
Handyman business insurance cost depends on the type of coverage the business owner needs. There are several types of handyman insurance that business owners can sign up for. The type of insurance needed will vary among business owners and will depend on the type of work they do and the size of their business. Most contractors will want general liability insurance at a minimum. Other coverage options include workers’ compensation, tools and equipment, commercial property, commercial auto, and various other coverage types. Each type is discussed in more detail below.
Just like any type of insurance, the amount of coverage chosen will affect the overall cost. When it comes to general liability insurance for a handyman, customers can typically get coverage ranging from $300,000 to $1 million. A $1 million policy will have a larger monthly premium than a $300,000 policy. The same goes for other types of handyman insurance. An experienced contractor with a large amount of expensive tools will pay more for equipment coverage than a contractor who is just starting out and only has a few basic tools. For handyman services that have commercial vehicles, coverage will cost more for a high-end work truck than it will for a very basic work vehicle. Customers can work with their insurance provider to determine how much coverage they need.
Handyman insurance cost can vary depending on the insurance provider a contractor chooses. That’s why it’s generally advised for customers to get quotes from several insurance providers, no matter what type of insurance they’re looking to purchase. Contractors will want to request quotes on the same day from different providers and use the same information, such as coverage type and amount, for each quote; this will make the quotes they receive easier to compare since the coverage they offer will be very similar.
Contractors can check with their insurance provider to see if they are eligible for any discounts that can help them save money on their monthly premiums. Customers who take out several different policies with the same provider may be eligible for a bundling discount. Some companies may offer additional discounts for customers who choose automatic payments and electronic billing, or who remain claims-free.
The cost of handyman insurance can vary depending on geographic location for several reasons. First, different states and municipalities have different regulations about the type and amount of insurance coverage contractors are required to carry. The more coverage required, the higher the cost will be for the contractor. Second, the cost of living can vary dramatically from one place to another. A handyman whose business operates in a low-cost, rural area may need less coverage than one whose business operates in a major metropolitan area with a high cost of living.
Number of Employees
If a handyman has employees, they’ll likely need to purchase workers’ compensation insurance. A workers’ compensation policy provides benefits to employees at a percentage of their weekly earnings, though the percentage can vary depending on the state’s regulations. In general, the more employees a business owner has, and the more money those employees earn, the more the policyholder will pay for workers’ compensation coverage.
Similarly to other types of insurance, handyman insurance cost can vary depending on the policyholder’s claims history. A customer who has few or no claims on their history will likely pay less for coverage than a customer who has made numerous claims on their insurance policies in the past.
Replacement Cost vs. Actual Cash Value Coverage
Handyman business owners who have commercial property or tools and equipment insurance will want to determine whether to purchase replacement cost coverage or actual cash value coverage. A replacement cost policy will reimburse the policyholder for the cost to repair or replace the building or equipment at today’s costs, less the deductible. An actual cash value policy will instead reimburse the customer for the depreciated cost to repair or replace the damaged structure or belongings, less the deductible. While actual cash value coverage will likely pay out less for a claim, the up-front costs for this type of policy are typically lower since the payout with an actual cash value policy would be less for the insurance provider.
Types of Handyman Insurance
There are several types of self-employed handyman insurance coverage that a business owner may need depending on the nature and size of their business. Most contractors will need to get general liability insurance at a minimum, but they might also want to consider several other types of coverage.
Many states, cities, or clients require contractors to carry general liability insurance. This type of coverage helps protect the policyholder in the event of third-party injuries or property damage for which they are found legally liable, as well as copyright infringement, libel, and slander. For example, if a client trips over the contractor’s ladder and sustains an injury, general liability insurance can help pay for any resulting medical and legal bills. Handyman liability insurance costs $65 per month on average.
While general liability coverage protects the policyholder in the event of third-party injuries or property damage, professional liability insurance protects policyholders against lawsuits from clients regarding incomplete, late, or unsatisfactory work. While any legitimate handyman will likely do their best to complete all jobs well and in the agreed-upon time frame, there is always the possibility that a client will disagree with the contractor and seek damages. Professional liability insurance can prevent the business owner from having to pay out of pocket to settle these types of lawsuits. Business owners can expect to pay around $85 per month for professional liability insurance.
Workers’ compensation insurance is often a state requirement for any business that has employees. This type of coverage helps cover lost wages and medical bills for any work-related injuries or illnesses. For example, if a handyman employee falls off a ladder while at work and is required to take time off work to recover, a workers’ compensation policy would help cover that employee’s lost wages at a percentage of their regular earnings, as well as cover their medical bills related to that injury. Workers’ compensation coverage will cost business owners around $315 per month.
Business Owners Policy (BOP)
A business owners policy, or BOP, is a type of general liability insurance that also offers coverage for commercial buildings and personal property. Contractors may choose this type of coverage for their handyman business instead of taking out separate policies to cover liability and property. BOP costs are based on the amount and type of coverage, but they typically run around $81 per month on average.
Tools and Equipment
Every handyman has some variety of tools and equipment, without which they may be unable to do their jobs. That’s why it’s important for handyman business owners to have some type of tools and equipment coverage that will help pay to repair or replace lost, stolen, or damaged equipment. The cost of this coverage will depend on the amount and type of equipment the policyholder has; a handyman with a few basic tools will pay less than one that has a vast array of high-end equipment. Coverage for a business owner’s tools and equipment costs an average of $15 per month.
Handyman business owners may need commercial property insurance if they have a physical business location, such as an office. This type of coverage will help pay to repair damage caused to the property by a covered event, such as a storm or power surge. Commercial property insurance can also cover equipment and inventory, so it may be a good option even for business owners who operate out of their home. Commercial property insurance will cost policyholders around $30 per month.
Any handyman business that owns commercial vehicles will need to have a commercial auto policy in place. This type of insurance covers damages and injuries that occur during the operation of the business-owned vehicle. It can also protect against damage caused by weather-related events, vandalism, and theft. This type of coverage costs $150 per month on average.
Umbrella insurance is designed to provide additional liability coverage above the policyholder’s existing liability limit. For example, if a handyman has a general liability policy that provides $1 million in coverage, they might choose to purchase a commercial umbrella policy to provide an additional $1 million in coverage. While a contractor might not think they need that much liability coverage, costs can add up quickly if they find themselves embroiled in a lawsuit, and commercial umbrella insurance can provide the extra coverage they may need to avoid paying legal costs out of pocket. Commercial umbrella coverage costs an average of $40 per month.
Surety bonds help protect the policyholder if they are unable to complete work as outlined in a contract. A surety bond will reimburse the client any money they put down at the contract signing and will cost contractors an average of $8 per month.
Loss of Income
Loss of income insurance helps protect a contractor if they are injured and unable to work. This type of coverage provides the policyholder with a benefit designed to supplement any lost income while they are incapacitated. This is an important consideration for a self-employed handyman because if they are unable to work due to an injury, they may have no other option for income and need the benefit to help pay for their everyday living expenses.
Business interruption coverage is similar to loss of income insurance except it’s designed for handyman businesses with employees that will need to cover wages, taxes, and other expenses even if their business is temporarily unable to operate. If a policyholder makes a business interruption claim, their coverage will generally pay out a portion of or the full amount of the business’s average revenue.
All employers hope that their employees will be honest and have integrity, but bad eggs can sometimes slip through even the most stringent hiring practices. Employee dishonesty insurance helps protect the policyholder if an employee steals from them or commits fraud.
Not all contractors need to carry insurance month to month. Some insurance providers offer on-demand handyman insurance that contractors can take out for shorter periods of time, such as a day, a week, a month, and possibly even just a few hours. Even contractors who have general liability coverage can benefit from on-demand insurance for specific jobs that aren’t covered by their regular insurance. On-demand insurance costs can vary, but in general business owners can expect to pay around $5 per hour.
Do I Need Handyman Insurance?
Does a handyman need insurance? While handyman insurance is generally a good idea for any contractor, in some cases it’s required. Even if not required, insurance coverage is still recommended for any business owner who wants to be considered among the best handyman services. What follows are some indications that a business owner will want to look into handyman insurance coverage.
Many states require licensed contractors to carry general liability insurance at a minimum. However, it is not always a requirement for a handyman to be a licensed contractor, so many contractors may not actually be required by law to carry insurance. Even if there isn’t a state requirement for insurance coverage, a contractor will want to strongly consider purchasing general liability insurance to protect themselves in the event they cause damage or injury to a client while on a job.
Some clients may refuse to hire a handyman or other contractor who does not carry insurance. This is likely for contractors who perform work for businesses or bank-owned properties; however, many homeowners prefer to work with insured contractors as well. Hiring a handyman who has insurance coverage is beneficial to a homeowner as they won’t be left paying out of pocket for medical bills if the contractor injures themselves on their property during a project. Having general liability insurance can also help the best handyman services stand out among the competition.
Even if handyman insurance isn’t a state or client requirement, it’s still advisable for a contractor to take out a handyman insurance policy in order to protect their business. Insurance offers coverage to protect policyholders if they cause injury or damage to a third party or if they are faced with a lawsuit from a dissatisfied client. Without insurance protection, the contractor would be required to pay for these expenses out of pocket, which could result in them losing their business entirely.
How to Save Money on Handyman Insurance Cost
Although handyman insurance is often required (and recommended even if not required), paying for insurance can be one additional expense that business owners would prefer to go without. Many contractors will look for cheap general liability insurance for handyman businesses, but there are other ways to save money on the cost of handyman insurance, including the following options.
- Look into bundling. You may be able to bundle a business insurance policy with your personal policies, such as homeowners or auto insurance, under the same provider. Insurance providers regularly offer bundling discounts for customers who have several policies with them.
- Ask about discounts. In addition to bundling, you may qualify for additional discounts, such as those offered for making automatic payments or receiving bills electronically.
- Take care of your tools and equipment. Tools and equipment can be very expensive to replace if they are stolen. Keep them locked in a truck or a tool box and out of sight of thieves and you’ll lower your risk of needing to make a claim, since making a claim will push up your premiums and can even cause your insurance company to cancel your policy.
- Keep a clean driving record. Your commercial auto insurance policy will be more expensive if you or your employees have poor driving records. When hiring new employees, check their driving record to make sure they don’t have a history of unsafe driving behavior that could increase your premiums.
- Prioritize safety. If your work environment is unsafe, there’s a greater chance you’ll need to file a claim on your general liability policy. A tidy and well-organized work space means there’s less chance of an injury or other accident that you could be held liable for.
- Compare quotes. It’s important to get several handyman insurance quotes from at least three different insurance providers to make sure the one you choose fits both your needs and your budget.
Questions to Ask About Handyman Insurance
When shopping for a handyman insurance policy, there are several things contractors will want to find out from their short-listed companies. The following questions can help business owners find the best handyman insurance for their specific needs.
- What level of coverage do I need for my handyman business?
- What exactly does general liability insurance cover?
- What are your coverage limits for handyman insurance policies?
- Do you offer any discounts on insurance premiums?
- Do your policies offer actual cash value or replacement cost coverage?
- What does the claims process look like?
- Do I need workers’ comp if I don’t have any employees?
- How can I protect my tools and equipment?
- What kind of insurance do I need for my work truck?
- How can I protect projects during construction?
- How much experience do you have working with contractors in the construction business?
Choosing an insurance company for handyman insurance can be a confusing process, and many customers have questions about how coverage works. The answers to the following frequently asked questions can help contractors feel more confident while researching companies, requesting quotes, and choosing the right policy for their business.
Q. Is the cost of handyman insurance based on the services provided?
Yes, handyman insurance costs can be based on the types of services the contractor provides. If a handyman is frequently working on roofs or with electricity, they’ll likely need more coverage than a handyman who focuses mostly on cosmetic repairs such as house painting.
Q. Can I get a discount on my handyman insurance premium if I have multiple employees insured under the same policy?
In general, the number of employees a business has won’t have an effect on their insurance premiums. However, it’s worth a policyholder asking their insurance provider about potential discounts so they can make sure they’re getting the best rates possible for their coverage.
Q. Do I have to carry a certain amount of coverage for my handyman business?
The answer to this question depends on several factors. First, some states require licensed contractors to carry general liability insurance, and the amount of required coverage can vary depending on the scope and location of the business. Second, some clients may require a contractor to carry a certain amount of liability coverage before signing a contract. Business owners can consult an insurance agent in their location to find out more about state and local regulations regarding handyman businesses.
Q. Are there any additional fees associated with getting handyman insurance?
Some types of handyman insurance coverage may come with additional fees. It’s a good idea for contractors to consult their insurance agent to determine what, if any, fees they will need to pay in addition to their insurance premiums.
Q. Does my business size affect the cost of my handyman insurance?
Yes. A small handyman business run by a single contractor will need less coverage than a large business that has several employees on the payroll, a physical office location, and multiple work vehicles. The more coverage a policyholder has, the more it will cost.
Q. Will having a clean claims history lower my handyman insurance costs?
Yes; in general, most types of insurance will have lower premiums for customers who have a clean claims history. Handyman business owners can work on improving their safety practices to reduce the likelihood of needing to file a claim.