Who Needs Handyman Insurance?
Handyman services include everything from unclogging toilets and fixing leaky faucets to repairing electrical systems and sagging backyard decks. It's a lot of projects, so do you have the right handyman's insurance coverage for the job.
You might think that your business is too small to need this type of coverage. But you'd be wrong.
Handyman's insurance can protect your business in case you accidentally start a fire that damages a client's house or leave behind sharp tools that cause serious injury to a homeowner.
This insurance protection, in fact, can keep you from losing your business to a catastrophic loss in case you make any mistake that results in destroyed or damaged property or bodily injury. Not investing in this insurance could prove a costly mistake for your dreams of growing a successful handyman's business.
"Any and all contractors, artisans, general contractors and handymen should carry proper general liability coverage along with proper auto liability," says Michael Senderovich, principal of Zeyger Insurance Services in Calabasas, California. "Many artisan contractors think it's OK to carry personal insurance with low limits, and it's absolutely not."
General liability and handyman services
Entrepreneurs running handyman services can usually purchase enough financial protection through a general liability insurance policy, says Randy Krantz, vice president of Neckerman Insurance Services in Madison, Wisconsin. A general liability policy protects consumers and business owners from bodily injury and property damage that might be caused while on a job.
As an example, say a homeowner hires a handyman to work on a residence's electrical system. Maybe the contractor while working on the electrical system starts a fire that eventually burns down the house. A commercial general liability insurance policy will pay for these damages.
This is a positive for the consumer, of course, who is far more likely to receive the funds needed to rebuild. But it's also good for the business owner.
Without an insurance policy, a lawsuit for extensive property damage could cause a handyman service to file for bankruptcy or go out of business entirely.
The same holds true for bodily injuries. Say a contractor is painting an exterior wall and drops a bucket of paint on the child of the homeowner. This could seriously injury the child. The homeowner could then sue the handyman for the price of medical treatment. Without insurance, the owner of the handyman business could again lose that business when a big lawsuit is filed against it.
The high risk of financial pain is why Krantz recommends that anyone who is performing repair or renovation services for an individual or business with the expectation of getting paid for that work should invest in a general liability insurance policy.
"You can be the best person, the most skilled handyman, and still get yourself in a bad situation," Krantz says. "Maybe someone did work in the past on an electric outlet that you were not aware of. They messed up, and when you start working, a fire starts. That could cost you a lot. It could cost you your business."
How much does handyman insurance cost?
No one enjoys buying extra insurance. And it can be tempting for the owners of handyman services to consider skipping a general liability policy.
Some owners might think the work they do is too minor for extra insurance protection. Maybe they spend most of their time unclogging drains or replacing leaky kitchen faucets. But the truth is, even these small jobs can result in costly property damage.
They could even lead to serious injuries to both the contractor, any people this contractor employs or homeowners and visitors to the property. Why take the risk?
Krantz says that a commercial general liability policy in his area costs about $600 a year while providing about $1 million in coverage for every incident and up to $2 million in total protection for a year.
This cost might vary in other parts of the country. But the fee is still a reasonable, and affordable, one, especially when compared to the possibility of losing your handyman’s business because of an injury or property damage that you might have caused while at work.
“It doesn’t make sense to skip on this,” Krantz says. “If you do, you are putting your company at risk.”
Additional insurance coverage for a handyman
When insurance companies offer what they call handyman’s insurance, they are usually offering a package of insurance products, a package designed to protect smaller contracting business, and one that usually starts with a general liability policy.
Senderovich says that the owners of handyman services might consider adding inland marine insurance to their handyman’s insurance packages.
This insurance provides financial protection for the tools and equipment used by the owners of handyman services.
Those with expensive equipment should consider this protection as a way to receive the money they might need to replace their equipment or tools should they get damaged or destroyed, Senderovich says.
But not all providers of handyman services need this extra protection, Krantz says.
Those who rely on tools that aren’t overly expensive can probably do without it, he says.
“If you have tools that are worth hundreds of dollars, you probably don’t need this coverage,” Krantz says.
If you have tools and equipment worth thousands of dollars, "you might want to consider it.”
Some owners of handyman businesses might also consider boosting their auto insurance, especially if they ae using their personal vehicles to transport people and materials to job sites.
Again, though, each entrepreneur will have to look at his or her own situation to determine if more auto insurance is needed, Krantz says. Most owners will find that their current auto coverage is adequate.
Before making any decisions on a handyman’s insurance package, business owners should first talk to an insurance broker familiar with this kind of coverage, Senderovich says.
“It’s fairly complex,” he says. “And there are a ton of cut-rate policies out there.”