Getting insurance for your remodeling business is essential.
Remodeling contractors are faced with many different types of risks, including claims of personal injury, property damage, and professional negligence.
For example, a customer could claim that your remodeling business caused damage to their home, resulting in a costly lawsuit.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Remodeling Business
General liability insurance is — generally speaking — one of the most important insurance policies for remodeling contractors.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Several other types of business insurance are likely to be needed by your remodeling business, including:
- Workers' compensation insurance: Provides financial assistance to employees who are injured on the job.
- Professional liability insurance: Protects you from claims of negligence or errors in performing the contractor's duties.
- Builder's risk coverage: Covers any damage or loss sustained during construction, including theft or vandalism of materials and equipment.
When it comes to where your remodeling business can acquire insurance from, there are two main options:
- Brick and mortar agencies: These firms, such as The Hartford and Nationwide, tend to operate out of physical storefronts and use insurance agencies. This naturally leads to higher insurance premiums due to the greater operational costs this approach incurs.
- Online insurers: Contrastingly, by operating entirely online, firms such as Tivly and Next are able to take advantage of lower operational costs in order to charge their customers far lower premiums.
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Cost of General Liability Insurance
The average remodeling company in America spends between $500-$1,500 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a remodeling business to other professional industries using the graph below:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Common Situations That General Liability Insurance May Cover for a Remodeling Business
Example 1: As you’re showing a customer the progress made on their remodeling project, they trip over some tools and fall, sustaining multiple injuries. General liability insurance would likely cover the cost of medical care.
Example 2: While preparing a quote to redo a building’s kitchen, one of your employees makes a disparaging remark about the original builder’s work. The comment gets back to the original builder, who files a defamation lawsuit. General liability insurance would likely cover the suit.
Example 3: A malfunctioning piece of equipment causes a fire, which spreads throughout the building your company is working on. General liability insurance would probably cover the property damage.
Other Types of Coverage Remodeling Businesses Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Commercial Property Insurance
Commercial property insurance will help cover the cost of damage to company-owned buildings, equipment and supplies caused by events like a fire or vandalism. Your remodeling company will need this coverage if it owns a showroom or office, and you’ll still want coverage for equipment even if your company doesn’t own a building.
The equipment that remodelers use is often specialized and expensive. Make sure your company’s property insurance protects against the full value of your company’s equipment.
Commercial property insurance comes as part of a business owner’s policy (BOP).
Professional Liability Insurance
Professionals who apply knowledge or skill in their work may be held responsible for any mistakes they make. Professional liability insurance usually covers lawsuits arising from errors in work.
When selecting professional liability policy, look for one that’s tailored to your company’s particular type of remodeling work. Policies frequently have specialized protections, and you’ll want the protections that are most relevant to your company’s work.
Professional liability insurance comes as part of package policies and on its own.
Workers’ Compensation Insurance
Your remodeling company will have to carry workers’ compensation insurance if it has employees. This insurance covers work-related injuries, which are common in the remodeling and construction industries. States generally require businesses that have employees to carry the coverage.
While your company must cover employees with workers compensation, independent contractors and subcontractors usually don’t legally have to be covered by your company’s policy.
Commercial Umbrella Insurance
When liability lawsuits are greater than the limits of underlying policies, commercial umbrella insurance provides additional protection. If you’re concerned about potentially expensive liability suits and claims, this insurance can provide robust protection at a highly affordable price.
Commercial umbrella insurance comes as part of package policies and on its own.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your remodeling business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Remodeling Business Insurance FAQ
Can I buy business insurance online for my remodeling business?
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a remodeling business?
Yes, your remodeling business will face numerous risks from the first day of its operation that will necessitate business insurance before its launch.
Not only does it protect your current assets (tools, workspace, etc.), it also provides your business with greater credibility, and complies with legal obligations to carry certain policies (e.g., commercial auto and workers’ compensation insurance).
Will insurance protect my remodeling business from everything?
Not necessarily. Certain exceptions may be written directly into your remodeling business insurance policy, and some perils may be entirely uninsurable.
Do I need business insurance if I already have an LLC?
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.