What Types of Insurance Does a Handyman Business Need?
Although many people can DIY (do it yourself) and fix things simply by following online tutorials, hiring a handyman is sometimes necessary to ensure projects are done right. Handyman services help all types of customers complete home and business projects. However, with various projects come various risks.
Related: Guide to starting a handyman business
What Are Some Risks for a Handyman Business?
Each small business has its own set of risks that may cause financial hardships, particularly if the business doesn’t have good insurance coverage. Some of the risks that handyman business owners encounter include the following:
- Employee injuries
- Customer injuries
- Faulty work
- Damage to equipment
- Car accidents
Most of the injury hazards for employees occur at the worksite. Some of the more common injury claims result from slips, trips, and falls. Fall injuries can be especially harmful from heights. For example, employees who fall off ladders, roofs, or scaffolding may suffer severe injuries. Other worksite hazards include head injuries from falling objects and back strains from lifting heavy objects.
Further, handyman business employees work with many tools, substances, and materials that introduce risks, such as
- Electrical shocks
- Broken bones
- Hearing loss
- Respiratory illness
A handyman business’s office and worksite present different hazards to customers. At the business office, the main concerns are slips or falls that result in injuries. However, the more significant source of liability risks occurs at worksites.
Worksites contain hazardous equipment and materials that can harm third parties and nearby property. For example, a customer or third party can be injured on a worksite from falling or sharp objects, power tools, or exposure to harmful substances. Additionally, the property can also be damaged by falling objects, fires, or leaking water.
Handyman businesses may face bodily injury or property damage lawsuits caused by faulty work. Faulty work can result due to employee negligence, fatigue, or inadequate training and experience.
Incorrect work can have major repercussions, such as fire damage from poor electrical work or water damage from faulty plumbing. Additionally, poor work can cause injuries. For example, incorrectly installed furniture, cabinets, or wall hangings may fall, causing harm to nearby individuals and property.
Damage to Equipment
Most handyman businesses provide their services off-site at a customer’s location. Therefore, their equipment and supplies are constantly in transit; and these mobile items have an increased risk of damage, loss, or theft as they move between job locations.
Handyman businesses provide a variety of services, which means they will have numerous types of equipment, including some that are custom and hard to replace. Repairs and loss of equipment cost the business money and interrupt the business flow.
Handyman businesses often travel as job sites vary from one project to the next. As a result, employees will be on the road daily and likely multiple times throughout the day. Due to the high frequency of time on the road, handyman businesses have an increased risk of car accidents.
Car accidents happen for many reasons, however, some of the more common reasons that car accidents occur include
- Distracted driving
- Poor visibility
- Inclement weather
- Unsecured or moving objects (i.e., tools and supplies in the back of a work vehicle)
In addition to risking employee safety and introducing liability, car accidents also cause damage to business-owned vehicles. And, vehicle damage is more expensive for custom or specialty vehicles as these are harder to replace and more expensive to repair.
What Types of Insurance Should a Handyman Business Consider?
Fortunately, various insurance policies are available to cover the handyman business’s hazards. Some of the key policies to consider include the following:
- Workers’ compensation insurance
- General liability insurance
- Professional liability insurance
- Inland marine insurance
- Commercial automobile insurance
Workers’ Compensation Insurance
A workers’ compensation policy covers employee injuries. If the handyman business has employees, this policy is arguably one of the more significant policies since employees face many hazards that could result in injuries. This risk increases the possibility of an employee injury claim. Therefore, the business benefits from a workers’ compensation policy as it covers the employee’s injury-related costs and protects the business from potential lawsuits.
Some of the coverages included in a workers’ compensation policy are the following:
- Medical expenses
- Reimbursement for lost income
- Coverage for ongoing rehabilitation care
- Disability income
- Funeral expenses
In many cases, a business that hires independent contractors will be required to either verify the contractor has workers’ comp insurance or provide it to them.
General Liability Insurance
A general liability policy, also referred to as a handyman liability insurance policy) insures against customer injury and property damage claims caused by employees or incidents at the job site. In addition, the policy also covers incidents that occur on business property.
Both bodily injury and property damage lawsuits can result in costly expenses. For example, if an employee dents hardwood flooring after dropping an object on it, the business may be responsible for the repairs or replacements. Fortunately, general liability coverage provides third-party medical bills, property repairs, the business’s legal defense costs, and settlements.
Most commercial and many residential clients will require to see a certificate of insurance, which is provided by the insurance broker.
Professional Liability Insurance
Professional liability insurance, which is also referred to as Errors & Omissions insurance (E&O) protects a handyman against lawsuits alleging unsatisfactory, late, or incomplete work.
This policy is similar to a premises and operations liability policy and may overlap. Therefore, it is advisable to have this and a general liability insurance policy with one insurance company to avoid claim coverage disputes. Likewise, the coverage amounts on each liability policy should be the same to further avoid coverage disputes.
A professional liability policy covers the following claim costs:
- Medical bills from incomplete work
- Property damage repairs
- Legal fees
Inland Marine Insurance
An inland marine insurance policy covers equipment and business-owned items that move over land. More specifically, an equipment floater (a type of inland marine insurance) covers the items against perils such as loss, theft, and damage.
This type of coverage benefits businesses with equipment that moves between job sites as the coverage is not limited to the business’s premises. Handyman businesses may have lots of mobile equipment and should consider an inland marine insurance policy with ample coverage.
Commercial Auto Insurance
A commercial automobile insurance policy protects the business from lawsuits resulting from at-fault accidents. Additionally, the auto insurance policy covers business-owned vehicles for physical damage.
At-fault accidents are expensive: The costs quickly add up between medical costs and third-party vehicle repairs. Fortunately, handyman businesses protect themselves from financial hardships with well-rounded liability coverage amounts. Following an at-fault accident, commercial auto liability policies cover the following claim costs:
- Bodily injury
- Property damage
- Uninsured motorist
Additionally, a commercial auto policy covers business-owned vehicles for physical damage. For instance, physical damage coverage protects against collision damage and non-collision damage, called comprehensive insurance. Some of the hazards commonly covered by comprehensive insurance include
- Falling objects
How Much Does Insurance Cost for a Handyman Business?
Coverage amounts and risk exposure determine insurance costs. For instance, a sole proprietor handyman business with no employees will not need workers’ compensation insurance. In contrast, a handyman business with numerous employees working at various job sites will need workers’ compensation insurance with high coverage amounts.
Several factors that affect insurance costs for a handyman business include:
– The number of employees on the payroll
– Employee training and certification
– The type of projects the business performs
– The average number of customers or job sites
– The value and condition of the equipment
– The value and condition of business-owned vehicles
– Any past or current lawsuits or insurance claims
Generally, the best way to determine insurance costs for a business owner’s policy is to contact an insurance company for an estimate. Ideally, you should contact multiple companies to compare coverage amounts, discounts, and pricing. This way, you can pick the company that offers you the best benefits and fits the needs of your handyman business.