The Insurance requirements for Contractors can be very complicated. This page is designed to provide a clear and concise description about the types of Insurance and Bonds you will need in order to protect your Business and satisfy the requirements of your clients and the municipalities where you will work.
For details on specific trades visit: Electricians, HVAC, Plumbers and Landscaping
After reviewing, contact our agency and we will work with you to design the right coverage with a very competitive premium for your Contracting Business:
|The Insurance You Will Need
1. Liability Insurance for Contractors:
Unfortunately all businesses are subject to lawsuits. No matter how careful you are or how well trained your employees are, accidents can still happen. General Liability Insurance will protect your company from accidents that result in property damage, bodily injury and more.
What are commonly required Liability limits:
- If you are a Commercial Contractor, you will likely be required to have a minimum of:
- $1,000,000 Each Occurrence Limit (the most the company will pay per claim) and
- $2,000,000 General Aggregate, (the most the company will pay per policy term)
How much is Contractors Liability Insurance:
The Premium charged by the Insurance Company is typically determined by your estimated annual payroll for your Contractors during the policy term and subject to the actual (since you can only estimate your payroll at the beginning of the policy term) payroll at the end of the policy term.
If you are just starting your Business and you will be the sole Contracting employee, a good Liability premium estimate for a number of trades (e.g. Electricians, Plumbers, HVAC, Lawncare, etc.) would be between $500-$800 per year and this would apply for limits up to a $1,000,000 per occurrence.
As the Owner/Officer of the Business, your estimated payroll is not required. The Insurance Companies use a flat payroll amount for Officers. This applies regardless of your actual payroll or your Trade.
The General Liability Policy has to issue correctly for Your Business:
General Liability (GL) coverage is not uniform. If you ask 2 Contractors, even in similar trades, how many pages their General Liability Policies have, you can almost guarantee you will get two different answers.
As the saying goes the "Devil is in the Details" – with GL policies the Devil lies in the several Exclusion and Limitation endorsements that are often added (and should be removed) to a Contractor’s GL Policy – not to mention the Additional Coverage endorsements that should be added.
The addition of any one of these Exclusion or Limitation endorsements or the absence of an Additional Coverage endorsement can prove devastating for a Contractor at the time of loss.
There has to be a solid understanding of your Operations in order to make certain the policy issues correctly and your Business is properly protected. This can not be accomplished with an online policy.
Contact us today:
2. Workers Compensation for Contractors
Most Contactors, are required to have Workers’ Compensation in Missouri with even with just one employee (Non-contracting employers are required with 5 or more employees).
Business Owners that do not have Contractors Work Comp coverage may be subject to a significant financial penalty from the State. However, even more importantly, any Missouri Employer without Work Comp coverage is subject to Civil Suits brought against them by their injured employees.
It only makes sense to have Contractors Workers Compensation coverage to protect your employees and your business.
Contact us today to secure the proper Workers Comp Coverage for your Business:
Ph. 636-519-0059 or
3. Business Auto Insurance
One of the most common claims for Contractors are auto accidents. Your operation requires the use of good sized vehicles, with significant amount of added weight in project material and tools and a lot of weekly miles.
Claims latter in the day are more common as good hardworking technicians may be fatigued and more susceptible to distraction.
Due to the very sizeable Bodily Injury Claims that can result from Auto accidents, a Combined Single Limit* of no less than $1,000,000 to protect your business is strongly recommended. The difference in premium between $1mil and $500,000 is typically not that significant.
*Combined Single Limit = The limit of protection for Bodily Injury and Property Damage Claims.
4. Bonds for Contractors
Contractors License and Permit Bonds:
A license and permit bond guarantees that your business will operate in compliance with the building codes established by State, County, City, etc. The bond is a requirement to receive your Contracting License from a Municipality.
Using Electrical Contractors as an example:
- Both St. Charles County and St. Louis County, MO require Electrical Contractors to have a $10,000 License and Permit Bond
- A good annual premium estimate is about $100 per Bond
Union Contracting Employers:
If you are a new Business and a Union Electrician you will be required, by the Union, to have a Wage and Benefits Bond (aka Wage and Welfare Bond).
This Bond is a guarantee that required wages will be paid to all employees and benefits (agreed to in the Collective Bargaining Agreement) will be paid to the Union.
If a MO Union Employer does not compensate employees or pay agreed benefits to the Union, the Union can seek recovery from the Bond Carrier.
A common required bond limit is $5,000 per employee with an approximate cost range of $25 - $50 per $1,000 of coverage (e.g. a $10,000 Bond will be roughly $250 - $500) for Employers with good credit.
Wage and Welfare Bonds are considered higher risk as they account for more claims relative to other types of Bonds. Accordingly, if an Employer has poor credit, this Bond could prove challenging to obtain.
Your Clients and Municipalities will want proof that your Business is Insured:
The Municipalities ,where you are licensed to operate, will require you to provide proof of Insurance.
Many Clients (especially Commercial Clients) will also require you to provide proof of Insurance before you are allowed to start a project (and maybe again before they will pay you for your work).
To do this, you will simply call or email us and let us know who requires proof of Insurance and we will send your Certificate of Insurance to your client and copy you.
The following video illustrates a sample Certificate of Insurance (COI) and what your client will be looking for on the COI.
Whether you are just staring your business or have been operating for years, contact our office today to get the right Protection for your Business:
What Clients Say
Our company has benefited greatly by working with Dan and his agency. As a small business owner, I find myself being pulled in many directions...
-Roxanna - Unified1 Data Systems
|St. Charles County Electricians
For information regarding how to apply for your St. Charles County Electrical License and the Insurance and Bond requirements, please visit:
SCCMO Electrical License Requirements
|Additional Coverage Considerations
Additional Contractors Insurance Requirements:
The following page provides details on other Lines of Coverage you may want to consider for your Business or may be required to have contractually to start a project.
Additional Insurance For Contractors