How Much Does Insurance Cost for a Handyman?     

As a handyman, you provide a vital service to customers, but you’re also exposed to significant risk. Insurance can help protect against these risks and build trust among customers. But if you’re just launching your business, you may be concerned about costs. How much does handyman insurance cost? Do you really need it?

Does a Handyman Need Business Insurance?

It’s your job to fix things as a handyman, but a lot can go wrong on a job. For example, if a customer’s property is damaged or there’s an injury, you could be facing liability claims that could bankrupt your business.

Insurance may come at a cost, but its protection makes it worth every penny. Although every state has its own rules, you generally don’t need insurance to operate a handyman business. But it’s in your best interest to have it.

The question is – how much of it do you need? Do you need a Business Owner’s Policy (BOP)?

What Type of Self Employed Handyman Insurance Coverage Do You Need?

As a handyman, you likely don’t need a BOP. A BOP includes many coverages that you may not need, such as:

• Business personal property insurance, which covers your company’s personal property and buildings.
  
• Business income insurance, which protects against lost income if you have to shut down temporarily because of a covered loss.
  
• Product liability, which protects against defective products.

Unless you’re operating out of a brick-and-mortar location or offering products, you likely don’t need these coverages.

But there is one crucial coverage that every handyman should have: liability.

Handyman Liability Insurance Requirements

Liability insurance is critical for every handyman. In fact, some states, cities or clients will require at least general liability coverage.

As a handyman, you’re entering customers’ homes and performing potentially dangerous work. Unfortunately, even the most meticulous and experienced handyman can still have an accident on the job or cause damage unintentionally.

While coverages may vary from one insurer to the next, generally, liability covers:

• Property Damage: Covers third-party property damage caused by your business. If you’re installing new blinds and shatter the customer’s window, your insurance will cover the cost of replacement or repair.
• Bodily Injury: Covers third-party injuries caused by your business operations. If a customer trips on one of your tools, your insurance will cover the cost of medical care and any legal settlement costs if it comes to that.
• Advertising or Personal Injury: Covers claims of slander, copyright infringement or libel against your business.

What are the Policy Limits for Handyman Liability?

While policy maximums will vary depending on the insurer, the most common liability policy limits are:

• $1 million liability coverage per claim
• $2 million limit per year
• $1,000 deductible

What this means is that if you file a claim, your plan will cover up to $1 million for that incident (provided it’s a covered incident). A policy like this one would have a $2 million-per-year limit.

When you work in the handyman field, damages can be high, but hopefully, your business doesn’t do more than $2 million in damage per year. If so, there’s additional insurance that you can purchase (more below).

Of course, your insurer will likely give you many options when it comes to policy limits and deductibles.

General liability will cover some of your biggest risks as a handyman, but if you really want to protect your business, there are other coverages you should consider.

Handyman Workers’ Compensation

If you have any employees, you will likely need workers’ compensation coverage. Texas is the only state that doesn’t require workers’ comp, but it’s still in your best interest to have it.

If one of your employees is injured on the job, this coverage will cover their medical care. Due to the risky nature of this business, workers’ comp is critical regardless of whether it’s required by law.

Handyman Commercial Auto Insurance

Handymen must travel to customers’ homes. You likely have a designated vehicle that you use for commercial purposes, and that vehicle won’t be covered by your personal auto insurance policy. You’ll need commercial auto coverage to ensure that you can travel to and from jobs.

Commercial auto insurance provides coverage for property damage and injuries in case of an accident. It also covers theft, weather-related damage and vandalism.

Tools and Equipment Coverage

Handymen use their own tools and equipment to get jobs done. If your tools are damaged, lost or stolen, you may not be able to continue working.

Tools and equipment insurance (known as inland marine insurance) will cover the cost of repairing or replacing covered equipment and tools, so you can continue serving customers.

Professional Liability

Professional liability is another type of liability coverage that can help protect against claims that your work is:

• Unsatisfactory
• Late
• Incomplete

This type of coverage is also known as errors and omissions insurance.

Surety Bond

Handymen can also get a surety bond, which is another great thing to have if you want to build trust and credibility with clients. What a surety bond does is reimburse clients if you’re unable to fulfill the terms of your contract or agreement.

Commercial Umbrella Coverage

While not absolutely necessary, many handymen purchase commercial umbrella coverage for a little more protection.

Umbrella insurance acts as a booster to other coverage in your insurance policy. If a claim exceeds your policy maximum, your umbrella policy can cover the gap to minimize or eliminate out-of-pocket costs.

Average Annual Cost For Handyman Insurance Coverage

The cost of your handyman insurance will depend on many factors, but you can expect to spend at least $550 for the year for the bare minimum liability coverage.

Let’s look at costs for each type of coverage for handymen.

General Liability Costs

The costs of general liability can vary, but generally, handymen can expect to pay:

• $800 per year (median cost) with a $500 deductible and $1 million/incident limit

Depending on the type of coverage you need, you may find that it’s easier and less expensive to bundle coverage into a BOP. If you don’t operate out of a commercial building, you may not need a BOP.

Workers’ Compensation Costs

Workers’ compensation costs most handy people around $315 per month, or just under $3,800 annually. Of course, costs can vary drastically. Your state likely requires that if you have employees, you have a workers’ compensation policy to cover work-related injuries resulting in:

• Lost wages
• Medical bills

Inland Marine Insurance Costs

If you’re hired as a handyman on a big job, inland marine insurance is a must-have, too. This type of insurance will cost you $250 per year, or somewhere around this amount for $10,000 in coverage.

Inland marine insurance covers the following on the job site or in transit to the site:

• Goods
• Materials
• Equipment

For example, when your tools move from one job to the next, inland marine insurance will protect them.

Commercial Auto Insurance

As a handyman, you have vehicles that are filled with tools and materials that help you complete jobs. You can expect a $550,000 policy limit to cost you:

• $150 per month (median cost), or $1,825 per year

Commercial auto insurance covers damage to property, medical costs, vandalism, theft and weather damage, too.

Surety Bond Cost

Clients rely on you to finish jobs you’re contracted to do. However, if you don’t fulfill the terms in the contract, the surety bond will reimburse the client. You can expect the bond to cost you:

• $8 per month, or just under $100 annually

However, the prices listed above are for surety bonds of up to $10,000. You may pay an even higher amount for larger work. For example, if you focus on expensive remodels, the $10,000 limit is unlikely to cover client reimbursement.

Umbrella Coverage Cost

Gaps in insurance seem to always exist, or you may feel that some of the policies you have can be strengthened, and in this case, umbrella insurance is a good option. Umbrella insurance is a “booster,” and it will cost you:

• $500 – $2,500 per year

Umbrella insurance ensures that if a claim against you exceeds your policy limits, you’re protected and won’t have to pay out-of-pocket.

4 Factors That Affect Handyman Insurance Pricing

Varying insurance costs are frustrating for handymen to understand, but there are multiple factors that insurers consider when pricing a policy. The main factors that go into handyman insurance costs include:

1. Limits. Your coverage limits will impact your overall monthly and annual costs. The higher your limits, the better protection you have. But you’ll pay significantly higher premiums.
   
2. Location. The location of your business also matters. For example, if you live and work in a rural area, you’ll have lower costs than someone in an urban area. When you work in an urban location, risks are higher, and your insurance will reflect these risks with higher premiums.
   
3. Term. How long do you need insurance? The term of your policy will impact premiums. If you’re on a short-term policy, you may end up paying more for premiums because the risk is higher for the insurer.
   
4. Size. Do you have employees that work with you? If so, how many employees are working under you? Each employee adds to the overall risk of the insurer and will cause your policy prices to rise, too.

Handyman insurance costs must be factored into your overhead, and you should try to find ways to minimize these costs. One method is trying to bundle policies under one insurer to save money in the long-term.

And finding the right handyman insurance policy from the start can help you obtain the insurance you need from an insurer that is reputable and reliable.

How to Find the Right Handyman Insurance Policy

Insurance companies are ready and waiting to write your policy, but with so many options to choose from, it’s difficult to find an insurer with your best interests in mind. Choosing the right handyman insurance policy shouldn’t be done by opting for the insurer with the lowest cost.

Instead, you need to be tactical and know what to look for in an insurer.

A few tips that can help you find the right policy for you are:

• Contact the insurer directly. Reach out to the insurer to discuss your needs and the options they have available for you. If you already have a policy, you may want to consider reaching out to your current insurer to see if they have the insurance your business needs.
  
• Marketplaces. An online marketplace is a great option if you don’t work with an insurer yet or the insurer doesn’t offer the coverage you need. Through these marketplaces, you can compare quotes from multiple providers at once.
  
• Brokers. A broker will listen to your needs, offer personalized recommendations and help you find policies to protect your business.

All of these methods also have drawbacks. For example, brokers may charge a fee, while marketplaces have limited results because they may only include some insurance companies and not others in their results.

We recommend that you do a few things to find the right policy for you and your business:

• Compare the coverage and exclusions of each policy to learn what insurer is offering the best coverage.
  
• Ask if there are any add-on options for the insurance and how you can obtain these extras if necessary.
  
• Asking what policy limit options are available. For example, you may need a $2 million limit, but if you don’t, a $500,000 or $1 million limit may suffice and will cost you less.
  
• If there’s a deductible, how much is it? If you bundle multiple policies together, will the insurer reduce your premiums?
  
• Read through reviews to learn about the experience that other policyholders may have had with the insurance company when they needed to file a claim.

Handyman insurance costs are overhead for your business, but it’s a necessity to protect your business from liabilities. Additionally, the right insurance also offers protection to your workforce and clients.

While the policy costs above are a great starting point to understand what your business may pay in monthly premiums, it’s best to get quotes from insurers, compare limits and costs and then find the best policy for you.