Why is insurance a must for handyman businesses?
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6 policies every handyman should consider
General liability insurance
A general liability policy protects against legal and medical costs related to client property damage and injuries. It's often required by state laws and contracts.
- Medical bills from client bodily injuries
- Damaged customer property
- Advertising injury and copyright lawsuits
Business owner's policy
A BOP bundles commercial property insurance and general liability coverage at a discount. It's often the most cost-effective type of business insurance for a handyman.
- Client slip-and-fall injuries
- Accidental damage to a client's property
- Theft and vandalism
Workers' comp insurance
Most state laws require businesses with employees to carry workers' compensation insurance to cover workplace injuries. In some states, even sole proprietors who work in construction must carry this policy.
- Medical expenses from work injuries
- Disability benefits
- Lawsuits from workplace accidents
Commercial auto insurance
A handyman with business vehicles must carry a commercial auto policy to comply with state laws. It helps pay for financial losses in an accident, including legal costs and property repairs.
- Auto accident injuries
- Auto accident property damage
- Theft of a construction vehicle
Contractor's tools and equipment
A type of inland marine insurance, this policy protects your construction tools and equipment wherever you bring them. That includes items in transit, stored off-site, or used at a jobsite.
- Saws, drills, and other tools
- Hard hats and other safety equipment
- Excavators and forklifts
Professional liability insurance
Professional liability insurance covers legal fees related to a mistake, missed deadline, or other accusation of professional negligence. It's also called errors and omissions insurance (E&O).
- Project delays and budget overruns
- Wrong materials and other mistakes
- Breach of contract
Handyman insurance costs
Here's a quick look at the average costs of common handyman insurance policies purchased by TechInsurance customers:
General liability: $67 per month
Business owner's policy (BOP): $93 per month
Workers' compensation: $138 per month
Factors that can influence your premiums include:
- Types of handyman services offered
- Number of employees you have, including subcontractors
- Types of insurance purchased
- Policy limits, deductibles, and other coverage options (e.g., additional insureds)
- Claims history
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Common questions about insurance for handyman businesses
What other insurance policies do handyman businesses need?
Depending on the type of handyman services you provide, you may have additional insurance requirements and will need more types of coverages.
Additional handyman insurance coverages to consider include:
- Builder's risk insurance: Also called course of construction insurance, this policy helps pay for damage to a structure in progress and construction materials.
- Inland marine insurance: Commercial property insurance only covers items at your business address, so you may need inland marine insurance for items in transit or at a jobsite. This equipment coverage includes contractor's tools and equipment insurance and installation floater insurance for materials awaiting installation.
- Commercial umbrella insurance: When your underlying general liability, commercial auto, or employer's liability policy reaches the coverage limit on an insurance claim, an umbrella policy activates to provide additional coverage.
Do handyman businesses need a license or permit?
The short answer is no. Generally speaking, there is no "handyman license" that needs to be obtained before you can start work. However, depending on the type of handyman work you do and the laws in your state, you may be required to get a general contractor's license.
For example:
- You may need a license to do certain types of work, such as plumbing, roofing, or electrical work. These requirements differ by state.
- You might need a permit for a specific project. If you're doing simple odd jobs like painting a room or completing a small deck repair, you likely won't need a permit. However, for more extensive work, like building a structure of a certain height or converting one type of room into another, you will most likely need a construction permit. Again this depends on your state laws.
How is a handyman different from a general contractor?
Even though both handymen and general contractors perform similar construction work, like repair and maintenance, there are differences between the two. The biggest being in their licensure and insurance requirements, as well as the types of projects they handle.
In order to start a business and get client contracts, general contractors usually need a certain amount of education and work experience. Specific licensing and insurance coverages are also likely required. On the other hand, a handyman can complete client work with just about only their working knowledge and the right tools and equipment.
General contractors tend to work on larger, more extensive construction projects. This may include major renovations or specialty projects, like electrical work.
On the other hand, a handyperson is usually a jack-of-all-trades and completes more basic, smaller-scale projects that aren't as extensive. For example, a handyman may be asked to fix a leaking faucet or perform a basic carpentry task.
