How much does insurance cost for a home remodeling business?

Most remodeling contractors spend between $970 and $1,200 annually on comprehensive business insurance. General liability averages $87 per month ($1,039/year), workers' compensation runs about $254 per month ($3,054/year), and a Business Owner's Policy costs around $98 per month ($1,173/year). Your actual costs depend on factors like your revenue, number of employees, location, and the specific types of work you perform.

What's the difference between general liability and professional liability insurance?

General liability covers physical injuries and property damage—like if someone trips on your jobsite or your crew damages a client's hardwood floors. Professional liability (also called errors and omissions) covers financial losses from mistakes in your professional services—like recommending the wrong material or making a design error that requires expensive corrections. Most remodeling contractors need both types of coverage.

Do I need workers' comp insurance if I'm a solo contractor?

It's not legally required in most states if you have no employees, but it's still a smart investment. Personal health insurance often denies claims for work-related injuries, leaving you responsible for all medical bills and lost income. Many solo contractors buy workers' comp for themselves as affordable protection against jobsite injuries.

What insurance do I need to pull building permits?

Requirements vary by state and municipality, but most require proof of general liability insurance before issuing permits. States like California, Florida, and New York specifically mandate general liability for contractor licensing. Some jurisdictions also require workers' compensation proof if you have employees. Always check your local requirements before starting work.

How often should I review my contractor insurance policies?

Conduct a full insurance review at least once per year, ideally a few months before your policies renew. You should also review coverage whenever you experience major business changes like hiring employees, significantly increasing revenue, expanding your service offerings, or bidding on larger contracts. These changes can create coverage gaps or require higher limits.

Is a Business Owner's Policy (BOP) better than buying separate policies?

A BOP typically offers the best value for small to mid-sized remodeling businesses. It bundles general liability and commercial property insurance at a discounted rate, usually costing less than buying the policies separately. However, a BOP may not provide enough coverage if you're running a larger operation or need specialized protection, so discuss your specific needs with an insurance agent.

Home Remodeling Insurance Checklist

Running a home remodeling business means juggling dozens of responsibilities—from managing crews to keeping clients happy. But here's the thing most contractors learn the hard way: one lawsuit or jobsite accident can wipe out years of hard work if you don't have the right insurance in place. Whether you're a solo contractor just starting out or running a growing renovation company, this checklist will help you make sure you're properly protected.

The good news? Comprehensive insurance for remodeling contractors is more affordable than you might think. Most businesses spend between $970 and $1,200 per year on essential coverage. The bad news? Skip the wrong policy, and a single claim could cost you everything.

Essential Coverage: The Non-Negotiables

These are the insurance policies every home remodeling business absolutely needs. Think of them as the foundation—you can't build anything without them.

General Liability Insurance

This is your first line of defense. General liability covers you when someone gets hurt on your jobsite or you accidentally damage a client's property. A worker trips over your tools and breaks an arm? Covered. Your crew accidentally cracks a client's antique mirror while moving materials? Covered. The average claim runs around $75,000, but lawsuits can easily exceed $1 million—which is why 97% of contractors carry $1 million per occurrence and $2 million aggregate limits.

Expect to pay around $87 per month, or about $1,039 annually. Many states require proof of general liability before you can pull permits or sign commercial contracts, so this isn't optional.

Workers' Compensation Insurance

If you have employees, workers' comp isn't just recommended—it's legally required in most states. This coverage pays medical bills and lost wages when your workers get injured on the job. Construction is inherently risky, and personal health insurance often denies claims for work-related injuries. Even if you're a solo contractor, many choose to buy workers' comp for themselves as financial protection.

The cost averages $254 per month ($3,054 annually), but this varies based on your payroll size and the specific work your crew does. Higher-risk work like roofing costs more than interior painting.

Business Owner's Policy (BOP)

Here's a money-saving tip: instead of buying general liability and commercial property insurance separately, bundle them into a BOP and save. A BOP packages both coverages at a discount—typically around $98 per month or $1,173 annually. The property portion protects your business assets like your office space, stored materials, and equipment when they're at your business location.

Optional Coverage: Protection as You Grow

These policies aren't required by law, but they fill critical gaps in your protection. As your business grows, these "optional" coverages often become essential.

Commercial Auto Insurance

Your personal auto policy won't cover accidents when you're hauling tools and materials to jobsites. If you use your vehicle for business purposes regularly, you need commercial auto insurance. This covers vehicle damage, injuries, and liability when you or your employees are driving for work. Average cost runs about $173 per month or $2,075 annually.

Tools and Equipment Insurance

Also called inland marine insurance, this covers your tools and equipment wherever they are—in your truck, on a jobsite, or in storage. Tool theft is incredibly common in construction, and replacing a full set of professional-grade equipment can cost thousands. For just $14 per month ($169 annually), you can protect your gear from theft, damage, and loss.

Professional Liability Insurance (Errors & Omissions)

Sometimes called E&O insurance, this protects you if a client claims you made a costly mistake, missed a deadline, or gave bad advice that cost them money. Maybe you recommended a specific material that didn't perform as expected, or a design error led to expensive rework. Professional liability covers your legal defense and settlements. Contractors pay an average of $74 per month or $886 annually for this coverage.

Umbrella/Excess Liability Insurance

In 2026, jury awards and legal settlements are climbing. An umbrella policy kicks in when your other liability policies hit their limits, providing an extra layer of protection—typically $1 million to $5 million or more. This is especially important if you're taking on high-value projects or working in litigious markets.

Builders Risk Insurance

This project-specific coverage protects buildings under construction from damage due to fire, theft, vandalism, or weather. If you're bidding on government contracts or working with large commercial clients, they'll often require builders risk coverage. With material costs fluctuating in 2026 due to supply chain issues and tariffs, having coverage that protects replacement costs is more important than ever.

When to Add or Upgrade Coverage

Your insurance needs aren't static. Here are the key moments when you should add coverage or increase your limits:

When you hire your first employee. Workers' comp becomes legally required, and your general liability premiums will likely increase since more workers mean more risk exposure.

When your revenue grows significantly. Higher annual revenue increases your risk exposure and should be reflected in your policy limits. If you started with $1 million in coverage when you were doing $200,000 in annual revenue, you'll need more protection at $500,000 or $1 million in revenue.

When you start taking larger contracts. Big commercial projects or government work often require specific coverage types and higher limits. Review contract requirements carefully before bidding.

When you expand your services. Adding a new specialty—like electrical work, plumbing, or structural modifications—changes your risk profile and may require additional coverage or endorsements.

When you invest in expensive equipment. If you purchase a $15,000 piece of equipment, make sure your tools and equipment coverage reflects the increased value.

Annual Review Checklist

Set a reminder to review your insurance every year, ideally a few months before your policies renew. This gives you time to shop around and make changes without rushing. Here's what to check:

Update your business information. Verify your contact details, business address, number of employees, annual revenue, and square footage. These factors directly affect your premiums, and outdated information can lead to denied claims.

Conduct a coverage gap analysis. Look for areas where you're underinsured or paying for coverage you don't need. Maybe you've paid off your equipment loan and no longer need certain endorsements, or perhaps you've started using more subcontractors and need additional protection.

Review your deductibles and limits. As your business becomes more established and profitable, you might choose higher deductibles to lower premiums. Or if you're taking on riskier projects, you might need to increase your liability limits.

Assess new risks. The construction industry evolves constantly. In 2026, consider whether you need cyber liability coverage if you're storing client data digitally, or whether supply chain disruptions and material cost volatility warrant updates to your builders risk coverage.

Shop your policies. Insurance rates vary widely between providers. Getting quotes from multiple insurers can save you hundreds or thousands annually. Agencies that conduct proactive reviews retain 80% of customers versus only 65% without reviews—good insurers want to keep your business and will work to offer competitive rates.

Getting Started with the Right Coverage

The construction industry saw over 212,000 legal filings in 2022, and that number isn't going down. Every one of those claims could have bankrupted an uninsured or underinsured contractor. The right insurance doesn't just protect your business—it protects your livelihood, your employees, and everything you've built.

Start with the essentials—general liability and workers' comp—then add coverage as your business grows. Work with an insurance agent who specializes in contractors and understands the unique risks of the remodeling business. They can help you find the right balance between comprehensive protection and affordable premiums.

Remember: insurance isn't an expense, it's an investment in your business's future. The peace of mind that comes from knowing you're protected? That's priceless.