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Commercial Construction Insurance: Cost, Companies & Types

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Homepage > Business InsuranceCommercial Construction Insurance: Cost, Companies & Types


If you own a construction contracting company, you know just how much risk is involved with your work. Although you probably do your best to provide a safe working environment for your team, danger is almost impossible to avoid altogether. 

In this article, we will start by going over the various types of construction insurance and why you may need them. Then, we’ll provide you with some average estimates of how much workers’ comp and liability insurance for a construction company costs. Finally, we’ll review a few of the top commercial construction insurance providers and show you how to get the best, cheapest construction business insurance for your company. 


Commercial Construction Insurance: Why You Need It 

Whether you’re building tiny single-story homes, large multi-family units, or five-story office buildings, there’s always the possibility that something could happen. Perhaps a hammer falls off of the roof and hits a car below, somebody vandalizes your building equipment, or a passing pedestrian trips and falls on your job site. We could give you a two-page long list of potential claims that could happen in the commercial construction industry, but you get the picture. 

The sheer amount of things that could go wrong during a construction project is reason enough to purchase construction insurance for your business. Additionally, most cities and states legally require construction companies to be licensed and insured before they’re awarded a building contract or allowed to pull city permits needed to start a job. 

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Types of Construction Insurance

The construction industry is unique compared to other industries in terms of the insurance you’ll need to consider purchasing. Unlike insuring a small handyman service or carpentry service, commercial construction often involves many risks. It, therefore, requires more significant amounts of coverage and a more diverse policy that’s able to cover all of the potential problems.  

In this section, we’ll give you a brief breakdown of some of the most common types of commercial construction insurance and why you might need them. 

Construction Casualty Insurance and Construction Risk Insurance

While shopping for commercial construction insurance, you may come across the term “casualty insurance” or “construction risk insurance.” These aren’t actually specific types of coverage but rather involve a broad range of different coverages that could include general liability, workers’ comp insurance, and even equipment insurance. We’ll discuss each of these types of insurance in greater detail below. 

Construction General Liability Insurance (CGL Insurance)

Construction general liability insurance (or CGL insurance, for short) is, by far, the most common type of insurance and the one that every construction company needs. Your general liability policy covers many of the potential mishaps, problems, and accidents that could arise on a daily basis.

Essentially, the goal of a general liability insurance policy is to prevent you and your company from being held personally liable for accidents. Some of the things that a general liability policy covers may include are:

  • Third-party liability insurance for construction (pays claims resulting from non-employees getting injured on your job site). 

  • Property damage coverage (pays property damage claims that occur as a result of your job site). 

  • Employee accidents (small employee accidents such as slip-and-fall incidents). 

Read more on general liability insurance

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Construction Equipment Insurance

If you’re using large (and often expensive) construction equipment on your job site, then you definitely need to consider construction equipment insurance. Whether you own the equipment or you’re renting it, it pays to have it insured against vandalism, mechanical failure, and theft. From jackhammers and concrete mixers to large excavators, these pieces of equipment can cost thousands to repair or replace when things go wrong. It always pays to insure your equipment. 

Construction Management Insurance

If you’ve hired third-party agency managers or even employ your own construction project managers for a large commercial job, then you may want to consider getting them insured. As managers, these individuals are responsible for making sure things are done right, according to the blueprint and construction plan. 

Constructing management liability insurance is designed to protect your project managers from claims made against them. If you have a smaller company or you’re working on smaller projects, this probably isn’t necessary. However, if you’re working on a large project with more risk involved, then it may be worth considering. 

Owner-Builder Construction Insurance

Owner-builder construction insurance is often overlooked, but it’s imperative if your project involves lots of materials. Essentially, this type of coverage is designed to cover the cost of goods, tools, and materials that may be lost, stolen, or damaged. For instance, a flood could come and wash away your wood or ruin thousands of dollars worth of welding sticks. 

In addition to providing coverage for the materials on your job site, owner-builder construction insurance can also provide coverage for your materials while they’re in transit. The best way to decide your policy limit for owner-builder coverage is to do the math on the total cost of your building materials and use that number to determine your coverage limit.  

Non-Standard Construction Insurance

Suppose your contracting company is involved in using specialty building materials or non-standard construction. In that case, you may want to purchase this insurance for the duration of the job you’re working on. Non-standard construction is defined as the use of building materials that aren’t common, and may include:

  • Natural wood structures (think treehouses). 

  • Terracotta roofing. 

  • Adobe/clay. 

  • Composite polymers.

Essentially “non-standard” construction is any building project that involves using uncommon building materials. This policy provides coverage and protection in the event that these non-standard materials cause problems with the structural integrity or result in damage to property or bodily injury. 

Workers Compensation for Construction Companies

Workers’ comp insurance for construction workers covers them in the event that they are injured on the job. If you have full-time employees, then many states legally require you to have this type of coverage, so it’s not something you want to skip! 

Let’s say that you have a worker who falls off of a ladder and severely injures their back. Your workers’ compensation policy would help them cover the cost of their emergency room visit, any surgery they need, physical therapy, and rehabilitation, and would compensate them for lost time at work so they could still provide for their families and pay their bills. 

In the event of accidental death, the workers’ comp policy would ensure that the worker’s family received a fair payout and help cover funeral costs.

Read more on workers compensation insurance 

Employers Liability Insurance for Construction

This is also a good insurance coverage to consider purchasing. Employer’s liability insurance for construction companies is designed to cover claims that are denied by your standard workers’ comp policy. Think of it as a “cover your back” add-on to workers’ compensation. 


How Much Does Construction Insurance Cost?

The average cost of construction insurance will vary significantly, depending on a number of factors, including but not limited to:

  • How many employees you have. 

  • Your gross receipts and annual revenue. 

  • The size of the project you’re working on. 

  • The value of the equipment being insured. 

  • Whether your project is being constructed in the city or a rural area. 

  • The value of your tools and building materials. 

  • What type of coverage and policies you need. 

Below, we’ll show you the average price range for a general liability policy and workers’ comp. These are the two most common types of construction business insurance that all companies need, so we figured we would provide you with a handy chart of the average construction company insurance costs so you know what to expect. 

Construction Liability Insurance Cost

The average construction liability insurance cost is around $98 per month, or $1,168 per year. Below, you’ll find a table outlining some of the most popular insurers and the average monthly and annual premiums for general liability insurance policies. 

Insurance ProviderAverage Monthly RateAverage Annual Rate
AXA XL$108$1,286
State Farm$89$1,062
Geico$97$1,158
BiBerk (Berkshire Hathaway)$103$1,226
Chubb$81$964
Allstate$105$1,250
Next$110$1,304

Construction Workers Comp Insurance Cost

The average construction workers comp insurance cost is around $271 per month or $3,250 per year due to the high risk involved in that industry. Here is a chart outlining the most popular workers’ comp providers and the average rates paid by construction companies. 

Insurance ProviderAverage Monthly RateAverage Annual Rate
AXA XL$291$3,489
State Farm$272$3,260
The Hartford$283$3,390
Chubb$271$3,258
Geico$267$3,196

Best Construction Insurance Companies

If you’re searching for “construction insurance companies near me,” then look no further. In this section, we’ll take a brief look at three of the most popular corporate construction insurance providers in the nation- AXA, Geico, and State Farm. 

Whether you’re looking for new building construction insurance or just a general construction insurance policy, these companies will be able to provide you with just about any type of coverage you need. We’ll give you a brief overview of each company, list some of the notable pros and cons, calculate the average cost of general liability construction insurance coverage, and offer our rating. Let’s take a look! 

AXA Construction Insurance

AXA is a French insurance firm that provides a wide range of construction industry insurance policies for builders and contractors around the world. AXA focuses on construction project insurance, which is categorized on their site under the sub-category of ‘AXA XL construction insurance.’ 

Here you’ll also be able to find a comprehensive list of coverages, including casualty insurance, environmental insurance, construction contractor insurance, and several other umbrella policies designed to cover all of your needs at the same time. So if you’re looking for a one-stop-shop for major projects, AXA is a great company to go with. 

Pros:

  • Provide coverage for projects around the globe. 

  • Specializes in providing insurance for large projects. 

  • Provides specialty environmental coverage. 

Cons:

  • No physical offices in the United States. 

  • Not designed for small residential construction projects. 

Best For: Building under construction insurance and large commercial projects. 

Average Cost: $175/month for general liability coverage. 

Rating: 4.5/5

Geico Construction Insurance

Geico is one of the biggest insurers in the United States, and they offer everything from simple home and auto coverage to insurance policies for large commercial construction projects. Geico is well known in the construction industry for their fair prices and their ease of access. 

Claims can be easily made through their insurance app, and agents typically get back to policyholders quickly and handle claims efficiently. So whether you’re looking for small construction business insurance or coverage for a larger project, Geico can help you create a customized plan that’s perfect for your needs. 

Pros:

  • Large insurer with agents and locations nationwide. 

  • Fair prices. 

  • Provides coverage for small companies/projects and larger projects alike. 

  • Handle claims through the Geico app. 

Cons:

  • Some policy coverage will go through a third-party insurance partner. 

Best For: Small to mid-sized commercial construction contractors. 

Average Cost: $158/month for general liability coverage. 

Rating: 4/5 

Read more about Geico insurance

State Farm Construction Insurance

While Geico may be the nation’s biggest insurer, State Farm is one of the country’s oldest insurance companies. Through their history of being in business, the insurance provider has built a stellar reputation based on providing outstanding customer service, competitive pricing, and offering a wide variety of coverage options for business owners and contractors. 

Whether you’re looking for comprehensive worker’s compensation plans, new building site coverage, builder-owner insurance, or general builder’s risk insurance, State Farm can cover all of your needs. If you’re looking for an insurance company that makes getting insurance a breeze and provides reliable service and respectful communication, State Farm is one of the best in the industry. 

Pros:

  • Amazing customer service and claims handling. 

  • Wide variety of comprehensive construction insurance plans available. 

  • Competitive pricing and deals available for loyal customers. 

  • Brick-and-mortar offices located nationwide for easy access. 

Cons:

  • You may have trouble when making out-of-state claims. 

Best For: Small to large-sized local commercial construction companies. 

Average Cost: $179/month for general liability coverage. 

Rating: 4.5/5 

Read more on State Farm insurance


Construction Business Insurance FAQ

So far, this article has been a construction insurance for dummies guide. However, there are a few other noteworthy questions that we’ve recently received. We figured that we would finish off the article by addressing them. In this section, we’ll also provide you with some excellent tips and tricks to help you get the best cheap construction insurance possible! 

What Are Construction Surety Bonds? 

For most commercial construction projects, contractors will be required to sign a construction surety bond. This is essentially a legal contract between the contractor and the investor that a surety bond company or bank mediates. 

The contract outlines the job that needs to be completed, how long it will take to complete the job, and the quality guaranteed by the contractor. Suppose the contractor fails to abide by the terms outlined in the bond and it disrupts the investor’s business operations. In that case, the surety bond company will pay the investor a sum of money as compensation. Then you (the contractor) will be responsible for paying the debt back to the surety bond intermediary. 

Commercial Construction Insurance vs Residential Construction Insurance 

Generally speaking, commercial construction insurance will cost significantly more than residential construction insurance. This is because commercial projects are typically a lot bigger, involve more risk, require more heavy machinery, and employ more workers on the job site. So although the types of insurance you’ll need are the same, the policy limits will be far higher for the average commercial construction project than they are for a smaller residential project. 

New Construction Insurance Vs. Building Renovation Insurance

If you’re looking for home construction insurance, it will fall under the category of new construction insurance or building renovation insurance. Of course, the cost of these insurance policies will vary significantly, depending on the size and degree of the project. The main difference between the two categories is the type of coverage you’ll need. 

New construction policies typically require higher coverage for equipment, workers’ comp, or employer liability coverage. In addition, building renovation insurance typically will require a higher degree of coverage for property damage. This is because your renovations will be performed around the existing property, which can be easily damaged during renovations. 

How To Get Cheap Construction Insurance (Tips and Tricks)

The best way to get cheap construction insurance is to shop around and make a construction insurance quote comparison from different companies. Most of the time, when the insurance companies know that you’re looking at other offers, they offer you special pricing and deals to "win" your business. Here are a few quick tips and tricks you can employ to get the best rates on construction insurance:

  • Offer to pay higher deductibles. 

  • Only pay for the coverage that you need, nothing more. 

  • Bundle all of your policies under the same company. 

  • Ask about discounts for safety certifications. 

If you’re ready to compare construction insurance quotes, then click one of the ‘Get Quotes’ buttons on this page to receive customized policies and rates from some of the top construction insurance providers on the market! 

Compare Construction Insurance Quotes

Get all the best quotes from leading providers in a click of a button!

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