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Handyman Insurance: What You Need to Know

Adam Grabois - Updated October 20, 2022
Homeowners Insurance
Handyman Insurance: What You Need to Know

Handyman Insurance - Cost, Coverage, & Where to Buy in 2022

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What Is Handyman Insurance?

man-tool-belt-gloves

Handyman Insurance is a type of policy specifically designed for individuals and businesses that offer handyman services to the public. Handyman insurance coverage is typically available as a Business Owner's Policy or BOP. This is commonly called a package policy because it includes a "package" of coverage for both handyman general liability and property damage to small and medium businesses.

The available policies are tailored to the risks involved for a handyman. For example, a handyman's usual activities include small jobs involving carpentry, electrical, and plumbing work. These tasks often are small, single-person jobs.

However, a handyman may even have assistants or hire other handymen to cover other jobs simultaneously. Large handyman businesses that have millions of dollars in sales or operate out of a large building or warehouse could be beyond qualifying for small or medium business insurance. They would require a commercial insurance policy.

Who Should Get Handyman Insurance?

people-looking-at-clipboard

Handyman businesses, especially those with employees—must have handyman insurance. Anyone that offers to perform household or business repair work for others for a fee should strongly consider buying handyman insurance.

Hobbyists that fix their own house or even help family or friends for free are not required to purchase handyman insurance. In case of accident or injury, a homeowners' or renters' policy may sufficiently cover any claims.

However, suppose a handyman performs work on an ongoing basis to the public for a fee. If that handyman is not an employee of another business, they should strongly consider a handyman insurance policy. It is smart financial protection in the event of damage to anyone else's property. No matter how skilled and proficient a handyman may be, accidents happen and people make mistakes. Even a silly accident like knocking over a client’s expensive vase!

Picture an everyday scenario where a handyman installs a ceiling fan or chandelier. Imagine the damage and injury a falling fixture, or faulty electrical wiring, could cause. Even if the fault lies with the manufacturer, the handyman may still have to defend themselves in a claim. Often it is the legal costs alone that can make even a small claim a financial catastrophe.

What does Handyman Insurance cover?

desk-with-tools

A typical small business insurance policy provides a handyman general liability coverage and property damage coverage for claims that may arise in the typical course of a handyman's trade. A single Business Owner's Policy simplifies coverage, so handymen don't have to seek separate policies for various coverage.

Any risks or exposures beyond a typical handyman insurance policy can be purchased as separate coverage or even an endorsement. Insurance carriers have rated and priced premiums for handyman insurance policies based on these usual tasks and their risks. Underwriting establishes coverage and monthly premium pricing based on data from actual losses and claims for the carrier—or even industry-wide.

Handyman policies don't cover major work outside the scope of a handyman's job. For example, operating a tower crane, pouring structural concrete, or replacing an entire roof would not be typical activities of a handyman. However, a handyman could be hired by a general contractor as a laborer or subcontractor. In that circumstance, an individual handyman would either become an employee of the contractor or function as a 1099 independent contractor.

Business liability covers property damage or injury during the handyman's insurance policy coverage period. There are three types of damage or injury a handyman may be exposed to:

Bodily injury

This coverage includes physical injury to others to which the insured is legally liable. This includes injury, disease, sickness, and death. Medical expenses and hospitalization that arise from any accident or circumstance caused by a handyman, regardless of fault, are subject to a specified medical payments limit.

Property damage

Property damage coverage applies to physical damage to other peoples' and businesses' possessions, both tangible and real, including the loss of ability to use it. Property damage liability in a handyman insurance policy includes coverage for being held responsible in a legal action for various torts—an act or omission causing personal injury or harm—from perils like fire or explosions.

Personal and advertising injury

Personal and advertising injury covers a handyman that causes damage to another, including a variety of bodily injuries and non-tangible damage like copyright infringement or a violation of privacy.

It's also important to know that every insurance coverage has exclusions. A handyman's intentional or patently illegal or criminal behavior may not be covered, even if the handyman insurance coverage is in place.

What type of insurance do you need for a handyman business?

Handymen are often business owners or independent contractors, also known as 1099 workers. Insurance policies are available to independent contractors and those that operate as a formal business. This includes handymen using their name, fictitious trade name, or DBA (Doing Business As). Other insurable business structures for handyman businesses include an LLC (Limited Liability Corporation), Joint Venture, Partnerships, and even a C or S Corporation. Using a corporation is a smart way to protect a handyman’s personal assets.

It's important to know that if your handyman business earns significant amounts of money or has a large annual payroll above $250,000, you may need to speak to your carrier to ensure that you have not outgrown your handyman insurance policy. Also, if you do any outside work that involves heights above three stories, you may not be covered by your current policy.

Is handyman insurance required to operate a business?

Some cities, counties, and states require proof of insurance as a prerequisite to handyman licensing. Also, apartment buildings, condo associations, or homeowners' associations may require vendors to furnish proof of insurance and workers' compensation.

Handymen solve problems in their customers' homes or businesses for a fee. The basis of the handyman trade is competency and trust. If customers cannot trust a handyman, they typically won't hire them. Having handyman business insurance, or even a bond, gives customers both peace of mind and financial protection if the handyman causes more problems than they solve.

What coverage do you actually need?

The coverage a Handyman needs, at minimum, is property damage and general liability. Business automotive insurance is also needed if a vehicle is used for everyday business purposes.

Handymen that maintain other trade licenses or registrations—like electrical, plumbing, or carpentry—may also need bonding, workers' compensation insurance, and proof of those coverages before they can perform work or file for a permit.

Insurance needs beyond the above greatly depends on the nature of the handyman's business. This is because handymen operate and specialize in various trades that include a spectrum of skills, qualifications, and tools for different projects.

Handyman businesses vary in size, from sole proprietors to large, complex operations. They may have significant administrative and managerial staff, or even many handymen in multiple cities or states.

Handyman businesses of various sizes may even own real estate, including warehouses, parking lots, and land. Handymen might even own other business assets like vehicles and trucks, specialized equipment, hand-operated tools, power tools, and other expensive tools, or even intellectual property like websites, trademarks, or household brand names.

How much does handyman insurance cost?

The cost of insurance for handyman businesses depends on various factors. But, typical insurance premiums for a sole proprietor start at about $500 dollars per year and can go up to many, many thousands of dollars in annual premiums.

The cost of handyman insurance depends on the following:

  • Coverage Area
  • Coverage Amount
  • Coverage Limits
  • Coverage Types
  • Business Type
  • Deductible
  • Rating of Carrier

Regardless of premiums, it's essential to have handyman insurance. This is because property damage, medical bills, and legal expenses can be many millions of dollars for a single incident and claim. The cost of handyman insurance is small relative to the financial protection of insurance in the event of a large claim.

What to look for in a handyman liability insurance policy

man-carrying-ladder

A Handyman liability policy should cover three things:

Liability Coverage

  • Pays for damages caused by the insured

Supplementary payments

  • Pays expenses of claims and lawsuits

Medical expenses

  • Pays for accidents caused by handyman operations or those that occur on handyman's owned or leased premises

Evaluate your risks

In evaluating your risks, remember that it is impossible to predict exactly what coverage will be needed in the future. Do an assessment of the type of work you perform, including what tools, equipment, resources, and transportation required to do them safely and profitably.

Decide which types of insurance you need

It is often more cost-effective to get handyman insurance as a package, versus separate policies. Take inventory of the following:

  • Handyman business income
  • Number of employees
  • Value and use of any vehicles or specialized equipment
  • Value of tools and machinery
  • Value of any material or equipment stored or transported for others

Answers to the above will determine what types of insurance coverage you need.

What to Consider When Choosing One of the Best Handyman Insurance Companies

Coverage Area

Even the best Handyman insurance companies and coverage depends on location. Different regions have different risks, costs, and exposures:

  • Climate
  • Weather events
  • Topography
  • Natural disasters
  • Population size
  • Building density
  • Zoning
  • Laws
  • Building codes
  • Ordinances
  • Cost of living
  • Socio-economic factors

Try to choose a handyman insurance company that will provide coverage state or nationwide. That way, you can prospect and work across a broader area.

Coverage Amount

The best handyman insurance companies will provide a favorable balance per premium dollar of coverage, coverage amounts, deductibles, coinsurance, and policy limits. Policies typically have an occurrence limit, a per claimant limit, an overall aggregate limit, or even a lifetime limit.

Business Type

Handymen often work as sole proprietors or as organized businesses. The best handyman insurance company can offer you coverage regardless of the type of business structure you use, no matter the size.

Quote Process

The best handyman insurance companies have a website where you can easily get a quote. Both instant and electronic quotes can be generated by inputting basic business information.

Claims Process

In the event of a claim, you have to provide a notice of claim to your insurance company within a certain timeframe. The best handyman insurance companies have 24-hour claims departments so that you can notify the carrier immediately of any potential claim. You want to work with a carrier that quickly and fairly processes claims so you can focus on recovering and running your handyman business.

Deductible

Typically, high deductibles mean lower premiums. A deductible is a preset dollar amount an insured must pay before an insurance carrier will pay any part of a claim. A higher deductible is a strategy to keep costs down, especially if you have a history of very few claims. Although, make sure you have cash on hand to cover your deductible. If you don't have enough money, a lower deductible with a higher premium may be a better option.

Additional Policies

Other than handyman insurance, a business auto policy, or workers' comp, handymen should consider a disability insurance policy. As a sole proprietor or business owner, if you are injured while working, your loss of income will not be covered by your injury, disability, or death. Life insurance is also a great way to protect the financial security of your family and loved ones should the unexpected happen. Here are some other worthwhile coverages you may want to explore:

Additional Types of Handyman Insurance

Commercial Auto Insurance

If a handyman has a truck, business owned commercial vehicles, or autos used for handyman work, a Business Auto Policy—also known as a Commercial Auto Insurance Policy—may be needed. This covers business vehicles, personal vehicles owned by employees, or vehicles rented, leased, or borrowed. A commercial auto policy is important, especially since personal auto policies may not cover the risks or damage caused by drivers or vehicles used for handyman work tasks.

Commercial Property Insurance

Commercial property insurance covers three categories of property:

  • Buildings
    • Buildings, structures, and attached fixtures owned by the insured
  • Business personal property
    • Business property located at the insured premises, as well as machinery, equipment, and materials used in business
  • Personal property of others
    • Property leased from others
    • Property borrowed by the insured

Workers' Compensation

Most states and jurisdictions require an employer to carry statutory workers' compensation insurance and disability insurance. These policies usually cover just the medical costs incurred by employee workplace injuries. Each state has different rules and coverage requirements to protect both workers and employers from excessive litigation. State disability or unemployment programs, and federal programs like Social Security or Medicare, also provide benefits to chronically injured workers suffering long-term unemployment.

Tools and Equipment Insurance

Tools and Equipment Insurance is best purchased as an endorsement to a handyman business owner's policy. Although, tools and equipment can also be insured for loss, theft, vandalism, failure, or damage through separate cover. Very expensive tools or mobile equipment may need separate floaters—also known as inland marine insurance—to provide coverage in case of theft or damage while in transport. Some handymen may even make their employees, independent contractors, or subcontractors provide their own tools and equipment coverage.

Professional Liability Insurance

Handyman professional liability insurance covers unintentional mistakes while performing professional tasks. This is known as errors and omissions insurance or E&O. These types of policies can even include cyber liability and data breach insurance, protecting a handyman from losses related to leaks or hacks of private customer information.

Employer's Liability Insurance

A Handyman employers' liability policy covers employers for liability claims by employees, or their dependents, that fall outside the protection of the workers' compensation law.

AM Best Rating

AM Best is an agency that rates top insurance carriers, rating them from “A++” to “B+” grades. These grades indicate an insurance carrier's ability to pay claims and satisfy financial obligations. Any AM Best rating below B indicates a carrier is at risk of financial distress, insolvency, or suspension. When looking for handyman insurance, always look for an A rating and above.

Are There Other Insurance Handymen Need to Get?

Standard coverage in a business owner's policy may fully cover the comprehensive needs of a handyman business. The below may either be included, available by separate cover, or as an additional endorsement to a business owner's package policy:

Commercial Property Insurance

Handyman commercial property insurance serves to protect buildings owned by the handyman. Commercial insurance also covers a variety of business personal property kept in the buildings and used in the ordinary course of the handyman business.

Business Interruption Insurance

Suppose a handyman business was forced to shut down because of a covered peril, such as a fire. In that case, business interruption insurance could help cover the lost revenue, additional expenses such as temporary relocation or retraining, and usual overhead like payroll, rent, or taxes.

Loss of Income Coverage

Loss of Income coverage is another name for business interruption insurance. It provides the same peace of mind coverage for revenue customarily earned if a loss had not happened. It also covers expenses a handyman may incur, including payroll, rent or mortgage payments, or even temporary relocation costs.

Employee Dishonesty Insurance

Handyman business insurance may offer optional coverage for employee dishonesty. This cause of loss is often excluded from standard coverage. However, an employee dishonesty endorsement will protect the handyman from being financially liable for property damage, loss, or injury caused by employees' unethical or criminal behavior.

Do You Need a Handyman License to Start Your Business?

Whether or not a handyman needs a license depends on where and what type of services they offer to the public. A city, county, or state building department may require a handyman license, while some areas may only require registration or simply a permit.

Other similar requirements include a home improvement contractor registration or license, or a general contractor license. Specific and complex work performed by a handyman—including certain types of carpentry, electrical, or plumbing work—may also require a separate registration, license, permission, or permit. Again, it entirely depends on the local rules and laws of where the handyman works.

Some Homeowners Associations or Condo Associations may even require proof of licensing or permits, including certificates of insurance and workers' compensation coverage. Proof of insurance must be furnished, before work can be performed in those single-family homes, townhouses, or condo units.

Apartment complexes and buildings with rental units are oftentimes owned by a single owner, company, or property manager. Tenants must customarily get their landlord's permission before engaging in any work. Handymen should always inquire about the various guidelines and insurance requirements before accepting jobs.

How to Apply for a License

  1. Look up state requirements
  2. See if more than one type of license is needed
  3. Meet state training requirements.
  4. Choose a business or trade name
  5. Register the handyman business with the state
  6. Submit licensing application

Is there handyman insurance for contractors?

Yes, handyman insurance is available for contractors. This is typically a different level of coverage than insurance policies for general contractors, often referred to as just "contractors."

Some handymen may also be licensed contractors and even bonded as a general contractor. But, handymen generally self-perform their work including providing necessary labor and materials. General contractors hire subcontractors for various trades, and they contract with suppliers for materials. These subcontractors and suppliers commonly provide proof of their insurance coverage, including workmans' compensation coverage, and releases from third-party claims.

Proof of insurance is furnished with a Certificate of Insurance. These certificates, sometimes abbreviated as a COI, can have the name of a general contractor, a client, or a property owner added as an additional insured. This specifically protects them in the event of damage or a claim.

What insurance do you need to be a handyman?

If you want to work in apartment buildings or condos, you may need to show proof of both property and liability insurance. Some may also require evidence of workers' compensation or even bonding. Some cities, counties, and states may require proof of insurance and bonding to maintain or issue a handyman license.

What does handyman insurance cover?

Handyman insurance covers general liability and property damage up to specified monetary limits for any claim made against the handyman that they may be held responsible for.

Will handyman insurance cover subcontractors?

Handyman insurance generally will not cover a subcontractor. A subcontractor is often a separate and distinct business hired by a handyman. Subcontractors should have their own insurance policies and provide a hold harmless agreement indemnifying any handyman or general contractor hiring them.

If a subcontractor's employee is injured, the subcontractor's workers' compensation coverage should take care of those medical expenses. If a subcontractor causes any property damage or personal injury on a job, the handyman would be protected as a named additional insured of the subcontractor's insurance policy.

Will handyman insurance cover tools and equipment?

A Handyman Insurance business owner's policy will typically include tools coverage and equipment coverage. Tools and equipment specifically used in the handyman trade are protected from losses from open perils, or other specified causes of loss—up to a specified policy limit. Handyman insurance will not cover wear and tear on equipment and tools, and it may not cover losses on the personal effects of handymen or employees.

What does handyman insurance typically cost on average?

On average, handyman insurance policies for a sole proprietor cost between $800 to $2,500 per year. Of course, premiums depend on many factors.

What is an ACORD 25 certificate?

An ACORD 25 certificate is known as a Certificate of Insurance or COI. It is typically a one-page document proving insurance coverage. The ACORD 25 provides detailed written information on:

  • Type of coverage
  • Amount of coverage
  • Name and contact information of the carrier
  • Name of the insured
  • Name of the insurance broker
  • Policy or certificate number
  • Location and address of any covered building
  • VIN of any covered vehicle.
  • Additional insured parties covered in the event of a claim

How do I start a handyman business?

Getting your first customer is the best way to start your handyman business. If you currently have a full or part-time job, see if you can build a book of business while working evenings and weekends. Once you establish a viable client base, consider taking a leave of absence from your employment to pursue the handyman business full-time.

What type of work can a handyman do legally?

What a handyman can do legally depends on the rules and regulations in the city, county, or state. Some areas may require handymen to be registered, licensed, bonded, and insured. A handyman can legally do simple carpentry, electrical, and plumbing work that doesn't require a license.

What can a handyman help with?

A handyman can help with most small repair and installation tasks in homes and businesses. These can include:

  • Building store-bought furniture
  • Hanging pictures
  • Installing drapes or blinds
  • Installing a ceiling fan
  • Installing a simple light fixture
  • Replacing lightbulbs
  • Patching a wall
  • Fixing a leaky faucet
  • Moving furniture
  • Installing christmas lights
  • Running heavy-duty extension cords
  • Power washing

Is being a handyman profitable?

For individuals with the skill and knowledge to be a handyman, it can be a very profitable career with few expenses or overhead. You can even do it as a solo entrepreneur—all you need are tools, transportation, and the right handyman insurance to protect yourself in case of a claim.

How do I get customers for my handyman business?

Word of mouth and referrals are the very best way to get customers. You can even start with a relative or friend as your first customer.

Also, social media can be a great source of customers. Have your satisfied customers post reviews on map sites, or you may even get permission from clients to post photos of completed work on review sites and hyper-local social media websites.

You can also offer your services via task apps that connect you with customers looking for a handyman to perform various types of jobs in their household.

Adam Grabois

Adam Grabois

Lead Insurance Writer

Adam Grabois is a Florida based Insurance Broker and Certified Professional Claims Adjuster. He is a graduate of Tufts University and Columbia University. Working as project and portfolio manager for decades, Adam has dealt with all manner of complex issues related to protecting business and personal assets for clients nationwide. An advocate for educated consumers, Adam is committed to sharing informative, high quality information and strategies to help manage risk. He can be reached on LinkedIn [linkedin.com/in/allneeds](https://www.linkedin.com/in/allneeds).

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