General contractor insurance in Illinois
Learn about business insurance requirements and the most common policies for general contractors in Illinois.
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What are the most common policies for general contractors in Illinois?
General contractors may need different types of insurance depending on the work they do. These are the most popular insurance policies for Illinois general contractors to protect against financial losses.
General liability insurance
A general liability policy covers basic risks, such as a client who is injured on your jobsite. Bundle it with commercial property insurance for savings in a business owner's policy.
- Customer bodily injuries
- Damaged customer property
- Advertising injuries
Business owner's policy
A BOP bundles general liability coverage and commercial property coverage at a discount. It's often the most cost-effective type of insurance for general contractors.
- Accidents that injure clients
- Client property damage
- Damage to your building or its contents
Workers’ compensation insurance
Illinois requires workers’ comp for general contracting businesses with employees. It also protects sole proprietors from workplace injury costs that health insurance might deny.
- Employee medical expenses
- Disability benefits
- Employee injury lawsuits
Commercial auto insurance
This policy covers the cost of injuries and property damage in accidents involving a general contractor’s vehicle. It can also pay for repairs to vehicles damaged by weather or vandalism.
- Legal costs from an auto accident
- Property damage caused by your vehicle
- Vehicle theft and vandalism
Inland marine insurance
This policy helps pay for repair or replacement of a contractor’s saws, nail guns, hammers, and other tools if they're lost, stolen, or damaged. It's also called tools and equipment insurance.
- Hand tools and power tools
- Scissor lifts and other equipment
- Other items brought to worksites
Professional liability insurance
This policy is also called errors and omissions insurance (E&O). It covers legal defense costs when a general contractor is sued over a mistake, such as using the wrong materials.
- Accusations of negligence
- Failure to complete a project
- Work mistakes and oversights
Contractor surety bonds
A bond guarantees reimbursement for the client if a contractor fails to fulfill the terms of a contract or adhere to building codes. Common bonds include bid, performance, and payment bonds.
- Compliance with laws
- Incomplete jobs
- Breach of contract
Builder's risk insurance
This policy covers structures in progress and materials, often paying for damage caused by fire, vandalization, and non-severe weather events.
- New construction
- Building renovation
- Worksite theft and vandalism
Contractors pollution liability insurance
Contractors pollution liability covers costs related to pollution, such as a lawsuit alleging harm caused from exposure to silica dust on a construction job site.
- Pollution events
- Spills during transport
- Lawsuits over contaminants
Which policies are required for general contractors in Illinois?
General liability insurance
General liability insurance is the foundation of a general contractor’s protection. It covers damage to client property, as well as third-party bodily injuries and advertising injuries.
Depending on where you're working in Illinois, general liability insurance may be required. For example, general contractors in Chicago are required to carry general liability insurance in order to obtain a mandatory license.
Additionally, a commercial landlord, client, or lender might ask you to provide a certificate of insurance showing that you have this liability coverage.
Adding commercial umbrella insurance can boost your coverage on general liability insurance and other policies.
Workers' compensation insurance
If you own a construction or home improvement business in Illinois with one or more employees, your business is required to carry workers’ compensation insurance.
Workers’ comp can help pay for medical bills and lost wages when an employee is injured on the job.
Sole proprietors and those without employees should also consider purchasing workers' comp to protect themselves in the event of an accident or injury.
Commercial auto insurance
Commercial auto insurance protects vehicles owned by your general contracting company. It covers property damage and medical bills resulting from an accident, along with vehicle theft, weather damage, and vandalism.
Minimum auto liability requirements for Illinois businesses are:
- $25,000 in bodily injury liability per person
- $50,000 in bodily injury liability per accident
- $20,000 in property damage liability per accident
- $25,000 in uninsured motorist coverage per person
- $50,000 in uninsured motorist coverage per accident
You may want to consider additional coverage, depending on the kind of work you do and the vehicles you own. Vehicles with U.S. Department of Transportation serial numbers, such as semi-trucks, will require higher coverage.
For vehicles that are used by the business but are leased, rented, or otherwise not owned by the company, you'll need a separate policy called hired and non-owned auto (HNOA) insurance. Personal auto insurance will typically not cover accidents or incidents that occur during work-related activities.
If you plan on transporting expensive equipment to and from worksites, you may want to consider inland marine insurance to protect your business property in transit.
Surety bonds
Licensure requirements in Illinois sometimes include a surety bond, depending on the type of work you do.
A surety bond guarantees reimbursement for the client if a general contractor fails to fulfill the terms of a contract or adhere to building codes. Common types of surety bonds include bid bonds, performance bonds, and payment bonds.
How much does insurance cost for general contractors in Illinois?
Construction business owners in Illinois who buy policies from Insureon pay an average of:
General liability: $113 per month
Workers' compensation: $446 per month
Commercial auto: $110 per month
Several factors affect the cost of general contractor insurance, including:
- Type of building construction, such as townhouses, multifamily homes, or offices
- Business property and equipment
- Business income and size
- Previous liability claims
- Years of experience in the construction industry
- Policy limits and deductibles
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When do you need a general contractor business license in Illinois?
Many Illinois contractors are required to carry a license and registration. However, unlike many other U.S. states, general contractor licenses are managed by cities and counties and not at the state level.
For example, in Chicago, general contractors are required to carry a license for many construction activities. Licenses are based on classes depending on the types of activities undertaken and the project values. Different classes will require different small business insurance policy limits, ranging from $1-5 million per occurrence.
In Peoria, contractors are required to obtain a trade license, which requires passing an International Code Council (ICC) test.
Contractors in Aurora are also required to pass an ICC test, submit an application, and pay a fee of $200. The fee is the same for roofing professionals, plumbers, handymen, and other types of construction industry specialists.
To obtain a license, Illinois contractors will need to adhere to their local city and county requirements before undertaking construction projects. Check with your local ordinances before performing any construction activities.
How do I get Illinois contractors insurance?
Insureon helps general contractors in Illinois save time and money shopping for liability insurance policies by comparing free quotes from top-rated providers.
Our insurance agents are licensed in Illinois and can answer any questions you may have as you consider the best coverage for your insurance needs.
To make the application go quicker, have this information ready:
- Workforce details, such as the number of employees and subcontractors
- Current and projected revenue
- Business partnerships
- Desired coverage limits
- Claims history
- Commercial lease insurance requirements
Apply for free insurance quotes for general contractors today. We can work with you to identify and purchase the best types of coverage for your business.
Most small business owners receive a certificate of insurance (COI) within minutes.