Handyman Insurance: Definition, Coverages, and Cost
The job of a handyman carries significant risks, which is why they should consider purchasing a handyman insurance policy. One of the fundamental parts of such a policy is general liability coverage, which will protect them from substantial financial challenges that result from unforeseen events.
Handyman insurance usually consists of several coverages that policyholders can add or remove, depending on their needs. For example, sole proprietors with no employees won’t need a workers’ comp, but if they use a vehicle for business purposes, they’ll need to add separate commercial vehicle insurance.
What is Handyman Insurance Coverage?
Handyman insurance is a specific policy that protects workers from financial loss due to perils, property damage, or car accidents.
To craft a policy that meets their needs in the best way, handymen should consider their overall risks and get the coverages that will kick in when a potential accident happens.
Who Needs Handyman Insurance Policy?
Although it’s not legally required, handyman insurance is something every handyman should have. Performing works in someone else’s home is risky, primarily because you can end up sued by your clients.
Uninsured claims can be pricey, and handymen that have no policy usually don’t seem credible and trustworthy.
What Does Handyman Insurance Cover?
The most common coverages found in the handyman insurance are:
- Business Owner’s Policy (BOP) is a comprehensive policy that combines general liability with commercial property in one plan. It’s quite a cost-effective solution, and it’s worth recommending.
- General liability insurance for handyman covers legal costs when you’re held liable for a particular accident or damage.
- Workers’ comp is essential for all the tradesmen who have employees. Namely, it will provide medical and wage compensation if a worker gets injured while on duty.
- Commercial auto insurance is critical for handymen that use their car for business purposes. This type of coverage will protect them from the costs due to accidents or property damage.
- The business property covers tools and equipment a handyman uses for work-related purposes.
- Builder’s risk is a coverage that protects materials, tools, and equipment left at job sites.
- Umbrella liability insurance provides additional coverage for general or auto claims, making sure it covers the costs that exceed your policy limit.
- Surety bond expedites small third-party claims, but it still leaves financial responsibility on a handyman.
Overall, an insurance policy will depend on the type of work a handyman does. The coverages mentioned above are the most common handyman insurance choices, but there is always an option to add an extra plan to protect other aspects of your business.
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Business Owner’s Policy (BOP)
A business owner’s policy (BOP) combines general liability, business property, and even lost revenues into one plan, which is a practical and cost-effective solution.
A BOP can be combined with other policies essential for a handyman’s work – that way, you’ll not only reduce the total cost but also decrease the chance of coverage gaps.
Handyman General Liability Insurance
Liability insurance for handyman protects against third-party claims in which a handyman is held liable. The most common situations covered by general liability insurance include:
- Damage to properties you work in
- A work done by subcontractors
- Incomplete work you promised to do
- Medical bills from accidents for you or someone else around the worksite
- Injury from advertising.
The best way to prevent third-party claims is to become concerned about the safety of your client’s health and property, including their pets and precious items. The consequences of uninsured claims can be quite severe, affecting a handyman’s annual revenue, credit scores, and bank accounts.
Workers’ Compensation Insurance for Handyman
Worker’s compensation policy is a critical aspect of any commercial insurance since it covers medical bills and lost wages due to work-related accidents.
It’s created primarily for handymen that have employees, but you should consider it even if you are a sole proprietor. Namely, it can pay for your medical expenses, prescriptions, rehabilitation, and lost wages up to your personal coverage limits.
Commonly, tradesmen occasionally hire someone to help – in that case, hey should purchase so-called “ghost policy,” which starts at about $500 a year. It’s useful for periodical hires, and its cost depends on the number of workers and construction risk types.
Commercial Vehicle Insurance
If the vehicle you’re driving for commercial purposes is designated as such, you need individual commercial auto insurance, which will protect you from potentially high costs of accidents or theft.
You won’t need a commercial auto policy if your vehicle is not registered under the category of commercial vehicles. However, you should know that your claim may be denied if you get involved in an accident while performing handyman jobs, driving your personal car or truck.
The cost of commercial auto insurance depends on factors such as vehicle year, make, model, and even a driver’s driving record. Still, you can expect to pay approximately $2.000 a year.
Business Property Insurance
The most valuable asset for a handyman is the tools and equipment they use. Therefore, they need to make sure such stuff is entirely protected from damages while stored on a job site or while being in transit (inland marine).
Business property insurance is a policy designed to help contractors protect their equipment and fix it or replace it in case of theft or severe damage. Not all the carriers will issue you a claim check, but they’d rather replace a tool, especially when it’s about a high-end one.
Builder’s Risk Insurance
Builder’s risk is a form of inland marine coverage, which is aimed at protecting tools and equipment while they’re in transit. It will make sure you get compensation in case of theft, vandalism, or adverse weather conditions that damage your assets.
Since most states limit the amount an unlicensed handyman can charge for a job, it’s not worth buying an expensive builder’s risk policy. Instead, try to reduce the risks by getting specific supplies only when you need them for a particular job.
Umbrella Liability Coverage
Umbrella policies always come in handy when the damage costs you more than your insurance can cover. When it comes to handyman insurance, the umbrella can extend the limits of general liability, workers’ comp, and commercial auto liability at the same time.
Umbrella usually provides $1 million per claim, but the truth is that a handyman might not need it.
A surety bond is not a typical insurance product, but it’s still useful for getting a claim processed quickly. It means that a handyman pays $50-$250 for obtaining $5.000-$10.000 bonds from an insurance carrier, who pays a particular amount of money to a client that submits the claim against you for poorly finished work.
Once the carrier pays for the claim, a handyman is obliged to pay them back. Although it leaves the financial responsibility on the handyman, the bond is convenient for dealing with third-party claims more quickly.
Does Homeowners Insurance Cover Handyman?
The answer is no.
When you hire a handyman to do some work on your house, you need to make sure that he has a valid insurance policy. Otherwise, you may end up paying out of your pocket for the damages or medical bills due to a worker’s injuries or property losses.
The reason why homeowners’ insurance doesn’t cover a handyman is that it’s primarily created for personal purposes. That said, you should double-check whether a contractor you hired is insured and avoid financial responsibility due to someone else’s mistakes.
How Much Does Handyman Insurance Cost?
Handyman insurance cost will depend on many factors, such as your policy limits, business risks, the value of your equipment, and more.
Here is the list of common coverages included in handyman insurance and their approximate price:
- Handyman liability insurance ($350/year)
- Workers’ comp ($500/year)
- Commercial auto insurance ($1.300/year)
- Business property ($500/year)
- Tools and equipment insurance ($170/year)
- Builder’s risk ($900/year)
- Umbrella liability ($1.000/year)
- BOP insurance ($1.200/year)
You should know that a total price may also depend on the state where you live, the services you offer, sales volume, and other critical factors. Still, the coverages and limits you choose will play the most significant role in determining the handyman insurance cost.
For example, if you purchase BOP, worker’s comp, and commercial auto insurance, you can expect to pay $3.000 a year ($250 a month).
Benefits of Insurance for Handyman
You’ll never make a mistake by purchasing handyman insurance, which is critical for avoiding potentially high costs due to accidents, perils, and injuries that occur at worksite.
Here are some benefits of handyman policy you may find essential:
- Keeps your business safe from someone else’s mistakes
- Gives you integrity and increases your reputation
- It helps you qualify for greater projects.
Most prospective clients won’t consider you unless they’re sure you won’t cost them a fortune due to your mistakes. Handymen with insurance are more likely to get hired than those without it, which results in higher revenue and more business opportunities.
3 Tips for Successful Handyman Insurance Application
When it comes to applying for handyman insurance, you should have in mind some things that can help you get through the process much faster and less expensive.
Determine the Cost of Replacement of Tools and Equipment
It’s recommended to create a list of all the tools and equipment you have and use for your business. That way, your carrier can have insights into your inventory and determine the cost of insuring it.
If you find it too expensive, you can determine the most important items and insure only them. For example, it’s common that handymen have multiples of the same tools; therefore, they decide to exclude some of them from the policy and reduce costs.
Have in Mind Who Your Clients Are
If you tend to work in luxurious million-dollar homes, you should know that you’re dealing with a higher risk than if you worked in small apartments that have less value. This is important since it can help you choose the right liability coverage and sufficient policy limits.
Besides, high-end clients often require a certificate of insurance (COI) that proves that you’re carrying valid insurance premiums with at least $1 million in coverage.
Check Your State Licensing Requirements
Have in mind that not all the states find it legal to perform handyman work without a proper license. Some states, on the other hand, can limit the amount of money an unlicensed handyman can charge for his services. That said, they can’t charge more than $500 in California, or more than $1.000 in Hawaii – if they want to charge more, they need licensing.
To get a license, you’ll probably need to show your bond or insurance policy to the board.
How to Get a Contractor License in California?
The term “handyman” often refers to unlicensed individuals who perform household repairs that include fixing a broken toilet, yard work, mowing lawns, replacing doors and windows, etc. As mentioned before, they can’t charge more than $500 for their work.
A contractor license will allow you to increase your revenue and participate in bigger projects that bring more money. To get it, you need a 4-year experience in the field in order to qualify for the exam, and meet the following requirements:
- Be at least 18 years old
- Have a valid driver’s license or US-issued ID
- Have a Social Security
- Not being on probation or parole
- Pass the final contractor licensing exam.
H&M Insurance – The Best Handyman Insurance California Brings
Don’t put your business at risk of substantial losses and lawsuits but protect it with the best commercial insurance San Diego offers to handymen and contractors.
Contact us at (619) 296-0005 or request free handyman insurance quotes at our agency. We’re looking forward to hearing from you!