Insurance feels like a pure expense until the day it’s the only thing standing between one bad job and losing your house. Here’s what each policy actually covers, roughly what it costs, and the order to buy.
1. General liability — buy this first
Covers: property damage and bodily injury you cause to others — the ladder through the bay window, the water line you nicked, the homeowner who trips over your cord.
Doesn’t cover: your own injuries, your tools, your truck, or bad workmanship itself (it covers the damage bad workmanship causes, not redoing the work).
Typical cost: roughly $50–$200/month for a solo operator, varying by trade (roofers pay far more than painters) and revenue.
The standard ask: $1M per occurrence / $2M aggregate. GCs and commercial clients will require a certificate of insurance (COI) at this level before you’re allowed on site.
2. License bond — if your state requires it
A bond isn’t insurance for you — it protects your customer if you violate licensing law or abandon a job. Most states that license contractors require one ($10,000–$25,000 bond amounts are common). You pay a small premium — often $100–$500/year depending on credit.
3. Workers’ compensation — the moment you hire
Covers: medical costs and lost wages when an employee is injured on the job.
Required in almost every state once you have your first employee — and in some states (like California for roofers) even for owner-only businesses. Going without it while employing people is the fastest way to catastrophic fines.
Watch out for: 1099 “subcontractors” who don’t carry their own comp. In an audit or injury claim, they’re often deemed your employees — and you inherit the liability. Collect COIs from every sub, every year.
4. Commercial auto
Your personal auto policy almost certainly excludes business use. If you’re driving to jobs with tools and materials, an accident can be denied outright. Commercial auto typically runs $150–$300/month per truck and covers what your personal policy won’t.
5. Inland marine (tools & equipment)
Covers your tools in the truck, on the jobsite, and in storage — theft from vehicles is the most common claim in the trades. Often added to your GL policy for a small premium. If you carry $10k+ of tools, it pays for itself the first time a truck gets broken into.
What you can skip at the start
- Professional liability (E&O) — matters for design-build; skip if you build to others’ plans.
- Umbrella policy — worth it later, when you have assets and bigger contracts.
- Cyber liability — not yet.
Buying it right
- Use an independent agent who specializes in trades — they know which carriers actually like your trade class, and it costs you nothing extra.
- Be accurate about your trade mix. Saying “handyman” when you do roofing means denied claims.
- Ask about pay-as-you-go workers’ comp tied to actual payroll — it kills the painful year-end audit true-up.
- Re-shop every 2–3 years.
The realistic starting budget
For a solo, low-to-medium-risk trade: $150–$400/month for GL + tools + commercial auto. Price it into your rates — it’s part of your fully-loaded cost, not something profit absorbs.
This week: get two GL quotes (one independent agent, one online carrier), and ask your state board what bond amount your license requires. You can be covered within 48 hours.