In this article, I will share everything you need to know about getting your handyman business insured so you can be confident that you’re getting the right coverage without paying too much.
I am not a licensed insurance broker and am not qualified to advise on insurance coverage. Here, I share opinions based on my experience and research. Additionally, some or all of the products featured here are from companies who compensate me. This may influence which products I write about and where and how the product appears on a page. However, this does not influence my evaluations. My opinions are my own.
Insurance can be complex.
In fact, there are at least five different types of insurance that insurance companies will try to sell you (more on these later).
However, most self-employed handymen will only want one kind of insurance: general liability insurance.
Handyman liability insurance will cover things like if you accidentally flood the basement or a customer trips on an extension cord and sues you. It protects you from being financially liable if you damage a customer’s home or if the customer gets injured while interacting with you or your equipment.
Getting liability coverage is a good idea because a tiny mistake could put you in severe financial trouble or force you to shut down your business for good.
Unless you are a licensed contractor or trying to become one, insurance is usually NOT required to provide handyman services. It’s just a way to limit the risk if you damage a customer’s home or belongings and to gain credability.
But do you need it?
The answer to this question is going to depend on several factors. If you answer yes to any of the following questions, it’s probably a good idea to go ahead and get it.
If you answer no to all the questions above, consider waiting to insure your business until you provide regular services or come across a client who requires it.
Some people will say better safe than sorry, but for many people who are just starting and working solo, the risk is low, and the money would be used more effectively toward other areas of growing a business.
However, I wouldn’t go too long or take on electrical or plumbing jobs without general liability handyman insurance. It’s important because it not only protects you, but also your customers in the event of an accident.
You can expect to pay between $480 to $1000 per year for a typical general handyman liability insurance plan ($40 – $83 per month). Your premium will depend on where you live, your services, sales volume, and your number of employees.
For example, if you offer power washing or roof repairs, you’ll likely have to pay a little extra since these services are more likely to lead to a claim.
The general liability insurance policy for my handyman business costs me about $49 per month, which is great because I used to pay $83 per month for similar coverage until I found a better option (more on that below).
The best way to ensure you aren’t paying too much is to get at least two quotes (see below for where to go). But as long as you are in the range I mentioned above, you’re doing just fine.
Regardless of what it costs to be licensed and bonded, this expense is passed on to the customer, adding about $1 per hour to your hourly rate if you work as a full-time handyman. Remember, insurance protects you and your customers if you make a mistake, which benefits your customers.
A typical handyman liability insurance plan for a self-employed handyman will have the following coverage:
While most handypersons and contractors will only need a general liability policy, there are five more types of handyman insurance to consider and review. So, if you plan to hire employees and scale your business, the insurance situation gets much more complicated.
You’ll need commercial auto insurance if you drive a business-owned vehicle. Also, it’s important to know that a typical personal auto insurance plan only covers you for personal use – NOT business use. Average prices for commercial auto insurance are a bit higher for handymen because we drive to the job site, so you can expect to pay anywhere from $150 to well over $200 per month.
Of course, you could use your personal vehicle (like most handymen) and upgrade your current auto insurance plan to cover you for commercial use.
Commercial property insurance is often necessary if you have a business located away from home or carry a lot of inventory. It would protect you from theft or property damage caused by fire, accidents, or natural disasters. It can also cover your tools and business equipment, but only when located on your property. It doesn’t usually cover your tools and equipment while driving around.
Most handymen wouldn’t need commercial property insurance because they work out of their homes and have little inventory or equipment. But obviously, it’s important to consider your unique situation. If you have a large dedicated workshop at home with tens of thousands of dollars in tools, it may make sense to get commercial property insurance.
Workers’ compensation insurance is required in most states if you have employees. It covers your employees (and you) if injured on the job. It will provide reimbursement for lost wages and medical expenses. Workers comp also protects you from lawsuits injured employees could file against you.
For self-employed handymen with no employees, worker’s comp is optional. However, some will still opt for coverage since it provides a financial cushion when they get injured and can’t work for a while.
Unfortunately, general liability coverage doesn’t cover your tools and equipment if they get stolen or prematurely damaged. Neither does commercial auto or property. So, if you pack around expensive tools and live in an area where they are likely to be stolen, then forking over an extra $12-$45 per month for tools and equipment insurance may be worth it.
Also known as Errors and Omissions (E&O) Insurance, professional liability insurance protects against negligence claims and is typically employed by consultants, attorneys, architects, and other professionals who give advice or provide licensed professional services. E&O Insurance doesn’t make sense for most handyman businesses, but it’s more valuable for some contractors who sell their expertise or manage other sub-contractors.
Some insurance for your handyman business is essential, but it’s easy to go overboard when insurance companies use scare tactics to encourage you to buy more.
Of course, you want to be covered against situations that could put you out of business or ruin you financially. But you only want what you need because insurance can eat into your profits. Plus, no matter how much insurance you buy, you can’t protect yourself from every situation.
Risk is inherent in life and business, and no amount of insurance will change that.
That’s why when I’m presented with an opportunity for insurance, I ask myself the following question…
“If something goes wrong (even if unlikely), will I be able to cover the damages without ruining my financial health or ending my business?”
If not, then insurance is a good idea. But if I can cover the damages myself, I know I’ll save money in the long run by limiting the amount of insurance I have. By having a cushion in my savings account, I can self-insure myself when more minor things happen.
For example, despite having tools stolen from my truck in the past, I still don’t believe in purchasing insurance to cover my tools. That’s because even if all of my tools were stolen from my truck (which would be hard to do), I could replace them for a few grand. Certainly not ideal, but it’s not going to ruin me financially. The hundreds of dollars per year I save by NOT buying insurance will more than compensate for this over time, even if my tools get stolen.
Additionally, insurance is a pain the ass to deal with. First, you have deductibles. Have one or two tools stolen? It probably won’t meet the deductible. Second, you must file a claim, which takes forever and can be a massive headache. So, let’s say all of your tools are stolen. It’s not like your insurance company will write you a check that day and help you shop. They are going to make you jump through hoops to get your money. People rarely consider these inconveniences when purchasing insurance.
But if you really mess something up? Like if you drilled a hole through a pipe and caused $500,000 in water damage? That would put most people out of business, so insurance makes sense.
That’s why a general liability policy makes sense for most pro handymen and contractors. Just don’t go overboard and invest all of your profits into insurance.
The best and easiest place to get a competitive quote is Next Insurance. All you have to do is answer a few questions online, and you’ll get a customized quote within seconds – no commitment necessary.
Next offers yearly insurance plans and is an excellent option if you are a part-time or full-time handyman and want a great rate on high-quality insurance. There are no contracts with Next, and you can cancel anytime.
You can purchase just a general liability policy or upgrade and get tools & equipment, commercial auto, commercial property, and even worker’s comp insurance if needed.
Next has the most competitive rates and does not require a year-long contract. You can cancel at any time with no additional fees or penalties.
Next is super easy to use. It takes minutes to get a quote, and you can start your insurance immediately. They also have an app that makes it easy to demonstrate proof of insurance or turn your policy on or off. And if you want to add additional insurance later, you can do that directly from the app.
Honestly, it’s too easy and good not to get a quote. That’s why I use Next for my handyman business, and I couldn’t be happier.
On-demand insurance is a relatively new concept. With Thimble, you can get insured for a month, a week, a day, or even just a few hours.
For example, let’s say you are just starting your business and aren’t ready to commit to a yearly insurance contract. You can sign up with Thimble (which is super easy, just click the link above) and turn your insurance on for however long you need it.
Or, let’s say you land a few power-washing jobs, but power-washing isn’t covered under your current general liability insurance plan. You can jump on Thimble’s website, set up insurance for just when you do those power-washing jobs, and you’re good to go.
There are multiple scenarios where on-demand insurance makes sense, so this is a cool option. However, convenience does come with significantly higher rates. I tested it out one day for a fence repair job where I was worried I might hit a water line while digging, and it cost me $65 for just that one day. That’s more than my monthly premium with Next.
But if you’re in a bind and need insurance fast, Thimble is a good option.
Online insurance providers like Next or Thimble are great options that make getting insurance a breeze. However, you could do things old school and find a local broker instead.
To do that, do a quick Google search for “contractor insurance” or even “handyman liability insurance,” and you should get at least a couple of local results. However, the best option would be to ask for a referral from a friend.
The main downside of going with an agent is it can be slightly more expensive. Another downside is that it takes longer since you must meet them in person, sign documents, and often wait for them to contact you. With online insurance being so good now, it’s difficult to make a strong argument for this way of doing things.
Here are two of the best and easiest places to get a quote specializing in handyman insurance.
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