Home Improvement Contractor - Licensed Contractors
HELP! Can some one explain to me Contractor's Insurance?
This is for a commercial/residential Painter, maybe 1 employee and he is just starting out. I think he just needs it for liability purposes. One agent was talking about it was based on payroll of 1000. She said need to put down 25% down and and 9 payments remain on the balance. She spoke so fast that we couldn't understand it. Can someone explain how Contractor's insurance works? Would help out a whole lot. Thanks. How much liability should be insured?
Public Comments
- it's so if the contractor burns your house down...in a nutshell
- Most commerical insurance is based on payroll. When it is, owners are normally rated at $17,800 per yer. If the rate (and I'm making this us so don't count on it) is $50 per thousand of payroll, the liability cost would be $890. ($50 x 17.8) Employees are rated at actual payroll. So if he had 1 employee who made $25,000 per year, the cost to add that employee would be $50 x 25 or $1,250. As far as how much insurance is needed--if your state has requirements then they must be met for him to do work there. If not, I would recommend a minimum of $500,000. In our example, if he didn't have any employees and didn't add any other coverage such as property coverage for his tools, etc. the total premium would be $850 so he would have to put 25% ($212.50) down and then the rest would be divided into 9 payments.
