Do I Need To Get Handyman Insurance?
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Handyman insurance offers coverage to handyman business owners for liability claims, broken or stolen equipment, workplace injuries and more. The type of coverage you need will depend on your business services, size and other factors. Handyman insurance can include general liability insurance, which will cover you against several types of liability claims. You can also purchase additional coverage, such as workers’ compensation insurance if you employ workers.
Keep reading to learn how handyman insurance works and whether you should buy it.
What Is Handyman Insurance?
Handyman insurance is coverage for business owners that run a handyman business. Depending on the policy, handyman insurance may offer the following types of coverage:
- General liability claims (e.g., client sues you for damaging their property)
- Accidents when driving your vehicle for commercial use
- Damaged or stolen tools and equipment
- Commercial building (if you own a physical office)
Handyman insurance can vary significantly since handyman businesses offer different types of services. Coverage needs may differ for a business that focuses on residential repairs to one that does painting and drywall installation.
Therefore, there is no singular product called a “handyman insurance policy.” Instead, handyman insurance is one or more types of insurance policies bundled based on the individual handyman business’s needs.
For example, if you have employees that operate vehicles for commercial use, then you may want to purchase the following coverages:
- General liability insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Tools and equipment coverage
Handyman Insurance May Not Be Required
If your business is relatively small and you do not have employees, then you may not need handyman insurance at all. You should always double-check your local regulations to see if your business is subject to certain insurance requirements, if any.
If you generate enough revenue or charge above a certain threshold for a service, you may be classified as a general contractor and not a general handyman. In California, for example, you need a valid contractor license if you charge over $500 for a job. Contractor licensing requirements often carry insurance and bonding requirements, as well.
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How Much Does Handyman Insurance Cost?
Handyman insurance costs will vary based on what coverages you buy. Below, we’ve summarized various types of commercial insurance and their respective costs. Average costs were acquired from Next Insurance.
Annual Average Cost
Protects your business from liability claims for bodily injury, property damage, personal injury (e.g., slander, libel) and more
Covers your employees’ medical bills and lost income if they suffer a workplace injury
Protects your business if you made a professional error
Pays for liability claims and damages to your vehicle while driving a vehicle for your business (commercial use of your car is not covered under personal auto insurance)
Protects your business property, such as equipment, office and computers, when damaged or lost due to a covered claim
Tools and Equipment
Insures your equipment when they’re damaged or stolen due to a covered claim
Protects your client when your handyman services do not meet expectations outlined in your contract
0.5% to 10% of required bond amount (varies by state)
Commercial general liability (CGL) insurance offers wide liability coverage ranging from bodily injury and property damage claims to slander and copyright infringement. Handyman liability insurance will also cover legal expenses, like attorney fees, if you are involved in a lawsuit.
You’re held liable for damaging property while on the job.
You accidentally knock over an expensive vase in your client’s home.
Somebody slips and falls due to a situation you created.
You’re pressure washing your client’s driveway and the client slips on the wet ground.
A customer suffers an injury while you are doing your work.
You accidentally drop a heavy power tool on your client’s foot.
Personal and advertising injury
You damaged a person’s or entity’s personal or intellectual rights.
You launch an ad criticizing your competitor and your competitor sues you for slander.
Professional liability insurance protects you if a client accuses you of incomplete work or not completing the job properly.
For example, say you were hired to install drywall and you completed the job. However, the client later sues you because you accidentally punched a nail through a wire when installing the drywall, which later caused a fire. This type of professional negligence may be covered under professional liability insurance.
Workers’ Compensation Insurance
Workers’ compensation insurance covers your employees’ medical expenses and lost wages if after they suffer a workplace injury. If you employ workers in your handyman business, then your state will likely require you to carry workers’ compensation insurance. Be sure to check your state and industry laws to ensure your business is legally compliant.
Smaller single-person businesses, such as sole proprietorships, do not require workers’ compensation insurance.
Commercial Auto Insurance
Commercial auto insurance extends coverage to vehicular accidents when you’re using your vehicle for business use, such as:
- Driving to a client’s location
- Driving to the store to purchase supplies
- Transporting supplies and equipment
If you drive your car for both personal and commercial use, your personal auto policy generally will not cover your car when you use it for handyman jobs. Without a commercial auto policy, you may face the full financial burden or repair and liability costs when you get into a car accident.
Similar to a personal policy, a commercial insurance policy may have the following coverages:
- Liability: Pays for claims when you are the at-fault driver in a car accident and responsible for other people's injuries or property damages.
- Collision: Pays for your property damages even when you are the at-fault driver in a car accident. Single-car accidents, like a vehicle rollover or crashing into a tree, are covered, too.
- Comprehensive: Pays for non-car-collision claims, like theft, vandalism, or fire damage.
Commercial property is a broad policy that covers all types of property used for your handyman business, such as:
- Equipment and machinery
- Your building (if you own one)
Commercial property insurance can be useful if you own a physical office. Similar to renters or homeowners insurance, your commercial property will be covered if they’re lost under a covered claim, such as a building fire, a burst water pipe, windstorm or theft.
Contractor’s Tools and Equipment Insurance
Equipment insurance coverage comes in handy when your equipment gets damaged or stolen. From carpentry and landscaping to electric and plumbing, equipment costs will vary widely by business. The right tools are the bread and butter of any handyman business and they may be costly to replace if you’re not insured.
Equipment insurance will typically cover the following items:
- Equipment, machinery and tools
- Employee uniforms
- Borrowed equipment
- Equipment you lease, rent or loan to others
- Stolen equipment
Your equipment may be covered if you purchase the broader commercial property policy (see above). Or, you can ask your insurer if you can insure specific pieces of equipment.
Keep in mind that equipment wear and tear is generally not covered. If your equipment breaks down because of repeated use over time, then you will be responsible for the costs.
Surety Bond Costs for a Construction Business or Contractors
A surety bond, a three-party contract between you, the client and the surety bond company, ensures you complete the job according to the signed contract. Surety bonds are similar to insurance except they are designed to protect your client from you delivering subpar work.
Performance bonds are common types of surety bonds, which ensure you complete the handyman project as outlined in the contract. Otherwise, the client will be reimbursed by the surety company for shoddy workmanship, incomplete work or some other contractual shortcoming.
Surety bonds may not be required if you're a small business and don't meet a minimum annual revenue threshold. If your business is large enough, you may need to meet bonding and licensing requirements specific to general contractors. Be sure to review your local regulations.
The cost of a surety bond is typically 1% to 15% of the bonding amount required by law. For example, if the bonding requirement was $10,000 and a surety company charges 5%, then the cost would be $500. Bonding terms typically last one to three years and you will need to pay another premium to renew your term.
Where To Buy Handyman Insurance
Handyman insurance policies are available from several national insurance carriers, such as:
- The Hartford
- Liberty Mutual
Keep in mind that there is no specific policy for handyman businesses. Instead, you will need to customize your policy to fit your business needs. For example, one handyman business may only need general liability insurance while another needs workers’ compensation insurance because they have employees.
How To Insure Your Handyman Business
Follow these simple steps to purchase handyman insurance for your business:
Assess Your Business
Insurance companies generally do not sell “handyman insurance policies” so you will need to shop for the specific coverages your business needs. At minimum, you will want to consider general liability insurance in case you damage a client’s property, cause an injury or make a mistake (e.g., installing carpeting or drywall improperly).
Also, consider your business size. If you have employees, then you will likely be required to buy workers’ compensation to cover your employees if they suffer a workplace injury.
Finally, consider what tools and equipment are needed for the services your handyman business offers. You may need to purchase commercial auto insurance because your personal auto policy will not cover a car for business use. Insuring your equipment may also be a good idea if they are costly to repair or replace.
Have Your Information Ready
When shopping for quotes, you will need to supply insurance companies general information about your business. Insurers will typically request the following information and more:
- Industry and types of services: Certain services are more dangerous than others. For example, roofing work increases the risk and likelihood of workplace injury.
- Location: Insurance costs can vary based on region.
- Number of employees: Having more employees generally results in higher premiums.
- Claims history: A history full of claims suggests higher risks and will likely result in higher premiums.
Other types of commercial insurance policies will require additional information. Commercial auto policies will require your vehicle year, make and model and annual mileage. Commercial equipment insurers may ask you to list the type of equipment you use, whether you own, finance or lease it and the types of services you offer.
Insurance rates will vary widely by company so you will want to compare quotes from multiple insurance carriers to get the best price. Some insurance companies will allow you to generate a quote online or you may need to call an insurance agent.
Using an insurance marketplace, like SmartFinancial, can help business owners save time on shopping for commercial insurance. Instead of contacting insurance companies one by one, one online questionnaire will allow you to compare multiple carriers and find the best price.
Keep Your Certificate of Insurance Ready
Once you find an insurance carrier who offers the coverage you need that also fits your budget, purchase the policy. Once the purchase is complete, your insurance carrier will send you a certificate of insurance (COI). Your insurer may send your COI in the mail or it may be downloaded electronically. Your COI proves that your business is insured.
Carrying insurance can be an indicator of professionalism. Customers may ask for your COI because they want to work with a professional handyman business.
Certain contracts may even require that your business be insured. If your business grows and you’re submitting bids for government-funded projects, for example, then you may need to show your COI.
Reassess Your Insurance Needs
Once you buy commercial insurance you’ll likely want to maintain it throughout the life of your business. However, your business can change and so can your insurance needs. With the help of an agent you can make changes as your business shifts.
For example, general liability insurance may have been fine when your business was a sole proprietorship. However, increased demand for your services required you to hire employees and buy more equipment. Now, you may need to buy workers’ compensation insurance, equipment insurance and increase your CGL limits.
Don’t think you need to stick with the same insurance company, either. Insurance rates are always changing, and you may be overpaying for commercial insurance. Similar to buying your policy the first time around, shop around for the lowest prices when it’s time to renew your coverage. You may find another policy with the same coverage at a lower price or added coverage at a better value.
Get Personalized Commercial Insurance Quotes Here
Shopping for commercial insurance? Skip the tedious process of collecting quotes one-by-one and let SmartFinancial do the work for you. Based on your answers to a few questions, we analyze coverages and rates from national and local carriers to get you the best price. Just enter your zip code below or call 855.214.2291 to receive your free commercial insurance quotes.