Running a handyman business means juggling dozens of tasks every week—from fixing leaky faucets to installing cabinets to repairing drywall. But here's what trips up most new handymen: figuring out which insurance coverage you actually need versus what's just nice to have. The truth is, the right insurance isn't just about protecting your business from lawsuits. It's about getting hired in the first place. Most property managers and commercial clients won't let you start work without proof of coverage, and many states require specific policies before they'll issue your business license.
This checklist breaks down exactly what coverage you need, when to add optional protections, and what to review each year as your business grows. Think of it as your roadmap to staying protected without overpaying for coverage you don't need yet.
Essential Coverage: What Every Handyman Needs
Let's start with the non-negotiables—the coverage types that you'll need from day one of operating your handyman business.
General Liability Insurance
General liability insurance is the foundation of your insurance package. It covers the most common risks handymen face: accidentally damaging a client's property or someone getting injured while you're working. If you scratch a hardwood floor while moving a ladder, crack a tile during installation, or a homeowner trips over your toolbox and breaks their wrist, this policy steps in to cover medical bills, repair costs, and legal expenses if you get sued.
Most handymen need policy limits of $1 million per occurrence and $2 million aggregate. This costs an average of $67 per month or about $809 annually in 2026. The good news? This is usually the only coverage that clients and property managers absolutely require before letting you on site, so having a certificate of insurance ready to send can be the difference between landing a job and losing it to a competitor.
Workers' Compensation Insurance
If you have employees—even just one part-time helper—workers' compensation insurance is almost certainly required by law in your state. Texas and Oklahoma are the only exceptions where coverage remains optional for very small employers, though about 90% of Texas handymen still carry it to limit their liability. Workers' comp covers medical expenses and lost wages if an employee gets hurt on the job, whether they fall off a ladder, strain their back lifting materials, or cut themselves with a power tool.
The cost varies based on your payroll, but handymen pay an average of $138 per month or $1,661 annually. In states like California, the penalties for skipping this coverage are severe—up to $10,000 per employee in fines, plus you're personally liable for all medical costs if someone gets injured. Even if you're a solo operator now, plan to add this coverage before you hire your first employee.
Commercial Auto Insurance
If you use your vehicle for business—driving to job sites, hauling tools and materials, picking up supplies—you need commercial auto insurance. Your personal car insurance won't cover accidents that happen while you're using your vehicle for business purposes. Commercial auto covers vehicle damage, medical expenses, and liability if you cause an accident while driving for work. Most states legally require this coverage if you're using a vehicle for business operations.
Optional Coverage: When to Add Protection
Beyond the essentials, there are several coverage types that make sense to add as your business grows or if you face specific risks.
Tools and Equipment Insurance
Also called inland marine insurance, this coverage protects your tools and equipment wherever you take them—whether they're stolen from a job site, damaged in transit, or destroyed in your workshop. For most handymen who've invested thousands of dollars in power tools, ladders, and specialty equipment, this coverage is a smart add. It costs an average of just $14-34 per month, but it can save you from having to replace your entire toolkit out of pocket if your truck gets broken into.
Add this coverage when your tool inventory is worth more than you could comfortably replace from savings. For many handymen, that threshold is around $3,000-5,000 in equipment value.
Professional Liability Insurance
Professional liability insurance, sometimes called errors and omissions insurance, covers claims that arise from mistakes in your work. If you install a ceiling fan that later falls because of faulty installation, or your electrical repair causes a short that damages a client's electronics, professional liability steps in. This differs from general liability, which covers accidents that happen while you're working—professional liability covers problems that show up after you've finished the job.
Consider adding this coverage if you do specialized work like electrical, plumbing, or HVAC repairs—areas where mistakes can cause significant damage. It's also smart if you're working on higher-value projects where a mistake could result in expensive claims.
Business Owner's Policy (BOP)
A BOP bundles general liability insurance with commercial property insurance and business interruption coverage. If you have a physical workshop or office space, a BOP protects your building contents and covers lost income if you can't work due to a covered event like a fire or storm. BOPs cost an average of $93 per month, and they often save you money compared to buying each coverage separately. This makes sense to add once you have a dedicated business location with significant property to protect.
When to Add Each Coverage Type
Timing matters when it comes to insurance coverage. Here's a practical timeline for when to add each type as your business evolves.
Day One of Business Operations
Get general liability insurance before you take your first paying job. Most clients won't let you start without a certificate of insurance, and you can get same-day coverage from many providers. Store digital copies of your COI on your phone—property managers often request proof on the spot, and having it ready can mean the difference between starting work today or losing the job to someone else.
Before Hiring Your First Employee
Purchase workers' compensation insurance before your employee's first day on the job. In most states, this is legally required, and the penalties for operating without it are severe. Don't wait until after you've hired someone to figure this out—get quotes and secure coverage as part of your hiring process.
When Your Tool Inventory Hits $3,000-5,000
Add tools and equipment insurance once you've invested enough in your toolkit that replacing everything would be financially painful. For most handymen, this threshold is around $3,000-5,000. At $14-34 per month, the premium is a small price to pay for peace of mind when you're hauling thousands of dollars worth of equipment to different job sites every week.
Annual Review Checklist
Set a reminder to review your insurance coverage every year. Your business changes, and your coverage needs to keep pace. Here's what to check during your annual review:
Review your policy limits to ensure they still match your business size. If your revenue has grown significantly, you may need higher coverage limits. A $1 million policy might have felt adequate when you were doing $50,000 in annual revenue, but if you're now doing $200,000, consider increasing your limits to $2 million per occurrence.
Update your tools and equipment coverage to reflect what you actually own. If you've bought new power tools, a cargo trailer, or specialized equipment, notify your insurer so these items are covered. Conversely, if you've sold or replaced items, update your inventory list to avoid overpaying for coverage you don't need.
Confirm your employee count and payroll figures are accurate for workers' comp. Your premium is based on your payroll, so if you've hired more people or given raises, your insurer needs to know. Getting this wrong can result in a surprise bill at audit time or, worse, coverage gaps if you're underinsured.
Review the services you offer to make sure they're all covered. If you've expanded into new types of work—like adding HVAC repairs or electrical services—check that your policy covers these activities. Some specialized services may require additional coverage or endorsements.
Shop around for better rates, but don't sacrifice coverage quality for small savings. Insurance markets change, and you might find better pricing or coverage options. Just make sure you're comparing apples to apples—a cheaper policy with lower limits or more exclusions isn't always a better deal.
Getting Started with Handyman Insurance
The best time to get insurance is before you need it. Many providers offer instant quotes online and can provide same-day coverage for general liability insurance. Start by getting quotes from at least three insurers, comparing not just the price but the coverage limits, deductibles, and exclusions. Ask specifically about coverage for the types of work you do most often—not all policies treat every handyman service the same way.
Once you have coverage, request certificates of insurance immediately and save digital copies. Keep them on your phone and in your email so you can send them to clients the moment they ask. The handymen who win jobs aren't always the cheapest or the most skilled—they're often the ones who can show up ready to work with all their paperwork in order. Having the right insurance coverage isn't just about protection. It's about running a professional business that clients trust.
