Construction Industry Insurance Guide: 17-State Comparison
Construction is one of the most insurance-intensive industries in America. Between workers’ compensation, general liability, bonding, and specialty coverages, insurance costs can consume 10-20% of project budgets. This comprehensive guide compares construction insurance requirements and costs across 17 major U.S. states to help contractors make informed decisions about where and how to operate.
Executive Summary: State Rankings for Construction
Overall Construction Insurance Cost Ranking
| Rank | State | Cost Index | Key Factor |
|---|---|---|---|
| 1 | New York | 185 | Scaffold Law, labor law |
| 2 | California | 175 | Regulations, litigation |
| 3 | New Jersey | 155 | High WC benefits |
| 4 | Illinois | 145 | Litigation environment |
| 5 | Massachusetts | 140 | Regulated market |
| 6 | Pennsylvania | 125 | Moderate-high costs |
| 7 | Washington | 120 | L&I rates, regulations |
| 8 | Minnesota | 115 | Seasonal factors |
| 9 | Colorado | 112 | Growth demand |
| 10 | Michigan | 110 | Manufacturing crossover |
| 11 | Florida | 108 | Hurricane rebuilding |
| 12 | Ohio | 105 | BWC system |
| 13 | Arizona | 100 | Baseline/average |
| 14 | Georgia | 92 | Business-friendly |
| 15 | Virginia | 88 | Low regulation |
| 16 | Texas | 85 | Optional WC |
| 17 | North Carolina | 80 | Lowest overall |
Index: 100 = national average. Based on combined WC, GL, and bonding costs.
Workers’ Compensation for Construction
State-by-State Rate Comparison
Workers’ comp represents the largest insurance expense for most contractors. Rates vary dramatically by state and trade.
General Carpentry (Classification Code 5403)
| State | Rate per $100 Payroll | $50K Salary Cost | Notes |
|---|---|---|---|
| North Carolina | $5.50 | $2,750 | Lowest |
| Virginia | $6.25 | $3,125 | Very competitive |
| Texas | $6.75 | $3,375 | Optional coverage |
| Georgia | $7.00 | $3,500 | Growing market |
| Arizona | $7.50 | $3,750 | Construction boom |
| Ohio | $8.00 | $4,000 | BWC rates |
| Florida | $8.25 | $4,125 | Hurricane demand |
| Minnesota | $8.50 | $4,250 | Seasonal |
| Colorado | $8.75 | $4,375 | Altitude factors |
| Michigan | $9.00 | $4,500 | Competitive market |
| Washington | $9.50 | $4,750 | L&I monopolistic |
| Pennsylvania | $10.25 | $5,125 | Moderate-high |
| Massachusetts | $11.50 | $5,750 | Regulated |
| Illinois | $13.00 | $6,500 | Litigation |
| New Jersey | $14.00 | $7,000 | High benefits |
| California | $16.50 | $8,250 | Highest regulated |
| New York | $18.00 | $9,000 | Scaffold Law impact |
Electrical Work (Classification Code 5190)
| State | Rate per $100 Payroll | $60K Salary Cost | Notes |
|---|---|---|---|
| North Carolina | $3.25 | $1,950 | Lowest |
| Virginia | $3.75 | $2,250 | Competitive |
| Texas | $4.00 | $2,400 | Market rates |
| Georgia | $4.25 | $2,550 | Business-friendly |
| Arizona | $4.50 | $2,700 | Growth market |
| Ohio | $4.75 | $2,850 | BWC |
| Florida | $5.00 | $3,000 | Stable |
| Colorado | $5.25 | $3,150 | Growing |
| Minnesota | $5.50 | $3,300 | Competitive |
| Michigan | $5.75 | $3,450 | No-fault state |
| Washington | $6.00 | $3,600 | L&I |
| Pennsylvania | $6.50 | $3,900 | Moderate |
| Massachusetts | $7.50 | $4,500 | Regulated |
| Illinois | $8.50 | $5,100 | High |
| New Jersey | $9.25 | $5,550 | High benefits |
| California | $10.50 | $6,300 | Regulated |
| New York | $12.00 | $7,200 | Highest |
Roofing (Classification Code 5551) - Highest Risk
| State | Rate per $100 Payroll | $45K Salary Cost | Notes |
|---|---|---|---|
| North Carolina | $12.00 | $5,400 | Lowest |
| Virginia | $14.00 | $6,300 | Competitive |
| Texas | $15.00 | $6,750 | Market |
| Georgia | $15.50 | $6,975 | Growing |
| Arizona | $16.00 | $7,200 | Heat exposure |
| Ohio | $17.00 | $7,650 | BWC |
| Florida | $18.00 | $8,100 | Hurricane demand |
| Colorado | $18.50 | $8,325 | Altitude |
| Minnesota | $19.00 | $8,550 | Seasonal |
| Michigan | $19.50 | $8,775 | Weather |
| Washington | $20.00 | $9,000 | L&I |
| Pennsylvania | $22.00 | $9,900 | Moderate-high |
| Massachusetts | $25.00 | $11,250 | Regulated |
| Illinois | $28.00 | $12,600 | Litigation |
| New Jersey | $30.00 | $13,500 | High benefits |
| California | $35.00 | $15,750 | Highest |
| New York | $42.00 | $18,900 | Scaffold Law |
The New York Scaffold Law Impact
Understanding Labor Law Section 240
New York’s Scaffold Law (Labor Law § 240) creates absolute liability for property owners and general contractors for gravity-related injuries:
Key Provisions:
- No comparative negligence defense
- Owner/GC liable regardless of fault
- Worker conduct largely irrelevant
- Applies to falls, falling objects, elevation hazards
Cost Impact:
| Coverage Type | NY Premium vs. National Average |
|---|---|
| General Liability | +40-60% |
| Umbrella/Excess | +50-100% |
| Subcontractor Default | Limited availability |
| Overall Project Cost | +5-10% |
Practical Implications:
- Subcontractor insurance requirements higher
- Owner-controlled insurance programs (OCIPs) common
- Premium allocation disputes frequent
- Settlement pressure intense
States Without Scaffold Law Equivalent
All other 16 states in this analysis allow comparative negligence defenses, resulting in significantly lower liability costs.
General Liability Insurance
Rate Comparison for General Contractors
Per $1,000 of gross receipts, $1M/$2M occurrence/aggregate limits:
| State | GL Rate | $2M Revenue Cost | Key Factors |
|---|---|---|---|
| North Carolina | $8.50 | $17,000 | Low litigation |
| Virginia | $9.00 | $18,000 | Stable market |
| Texas | $9.50 | $19,000 | Tort reform |
| Georgia | $10.00 | $20,000 | Moderate |
| Arizona | $10.50 | $21,000 | Growth |
| Ohio | $11.00 | $22,000 | Stable |
| Minnesota | $11.50 | $23,000 | Moderate |
| Colorado | $12.00 | $24,000 | Growing |
| Florida | $12.50 | $25,000 | Litigation |
| Michigan | $13.00 | $26,000 | Moderate |
| Washington | $13.50 | $27,000 | Regulations |
| Pennsylvania | $14.00 | $28,000 | Moderate-high |
| Massachusetts | $15.50 | $31,000 | Regulated |
| Illinois | $17.00 | $34,000 | Litigation |
| New Jersey | $18.50 | $37,000 | High costs |
| California | $22.00 | $44,000 | Litigation |
| New York | $28.00 | $56,000 | Scaffold Law |
Completed Operations Coverage
Critical for contractors—covers claims arising after project completion:
| State | Completed Ops Availability | Tail Coverage |
|---|---|---|
| Most States | Standard | 3-10 years typical |
| New York | Restricted | Extended tails common |
| California | Available but expensive | Required for many projects |
| Florida | Available | Hurricane-related exclusions |
Contractor Licensing and Bonding Requirements
Licensing Requirements by State
| State | State License Required? | Bond Requirement | Exam Required? |
|---|---|---|---|
| Arizona | Yes | $5,000-$15,000 | Yes |
| California | Yes | $25,000 | Yes |
| Colorado | No (local varies) | Varies by locality | Varies |
| Florida | Yes | $20,000 | Yes |
| Georgia | No (residential only) | $10,000 (residential) | No |
| Illinois | No (local varies) | Varies | No |
| Massachusetts | Yes (construction supervisor) | Varies | Yes |
| Michigan | Yes (residential) | $10,000 | Yes |
| Minnesota | Yes (residential) | $15,000 | No |
| New Jersey | Yes (home improvement) | Varies | No |
| New York | No (local varies) | NYC varies | NYC only |
| North Carolina | Yes (over $30K) | Varies by class | Yes |
| Ohio | No (local varies) | Varies | No |
| Pennsylvania | Yes (home improvement) | Varies | No |
| Texas | No (mostly local) | Varies | No |
| Virginia | Yes | $50,000+ | Yes |
| Washington | Yes | $12,000 | Yes |
Surety Bond Capacity
Bond availability varies significantly:
| Tier | Typical Capacity | Requirements | States Available |
|---|---|---|---|
| Small Contractor | Up to $500K | 2+ years, financials | All 17 states |
| Mid-Size | $500K-$5M | 3+ years, audited financials | All 17 states |
| Large | $5M-$25M | Strong financials, track record | All 17 states |
| Mega Projects | $25M+ | Substantial equity | Limited markets |
Equipment and Builder’s Risk
Equipment/Inland Marine Rates
| State | Rate per $100 Value | $500K Equipment Cost | Factors |
|---|---|---|---|
| Most States | $1.50-$2.50 | $7,500-$12,500 | Standard |
| Florida | $2.50-$4.00 | $12,500-$20,000 | Hurricane |
| California | $2.00-$3.50 | $10,000-$17,500 | Earthquake |
| Colorado | $2.00-$3.00 | $10,000-$15,000 | Wildfire |
| Texas | $2.00-$3.00 | $10,000-$15,000 | Weather |
Builder’s Risk by Region
| Region | Rate per $100 Project Value | $5M Project Cost |
|---|---|---|
| Northeast | $0.35-$0.55 | $17,500-$27,500 |
| Southeast (inland) | $0.30-$0.45 | $15,000-$22,500 |
| Southeast (coastal) | $0.75-$1.50 | $37,500-$75,000 |
| Midwest | $0.30-$0.45 | $15,000-$22,500 |
| West (non-CA) | $0.30-$0.50 | $15,000-$25,000 |
| California | $0.50-$0.85 | $25,000-$42,500 |
Subcontractor Insurance Management
Minimum Requirements by State Practice
| Requirement | Low-Cost States | Moderate States | High-Cost States |
|---|---|---|---|
| General Liability | $1M/$2M | $1M/$2M | $2M/$4M |
| Auto Liability | $500K CSL | $1M CSL | $1M CSL |
| Umbrella | Often waived | $1M-$2M | $5M-$10M |
| Workers’ Comp | Statutory | Statutory | Statutory + $1M EL |
| Additional Insured | Required | Required | Required + Primary |
| Waiver of Subrogation | Sometimes | Usually | Always |
Certificate Tracking Costs
Managing subcontractor insurance adds overhead:
- Manual tracking: $50-100 per subcontractor annually
- Software solutions: $2,000-$10,000+ annually
- Third-party services: $25-75 per certificate
Commercial Auto for Construction
Fleet Insurance Comparison
5-vehicle fleet, mixed trucks and equipment:
| State | Annual Premium | Per Vehicle | Key Factors |
|---|---|---|---|
| North Carolina | $12,000 | $2,400 | Low rates |
| Virginia | $13,500 | $2,700 | Competitive |
| Ohio | $14,000 | $2,800 | No-fault |
| Texas | $14,500 | $2,900 | Large state |
| Georgia | $15,000 | $3,000 | Growth |
| Arizona | $15,500 | $3,100 | Distance |
| Minnesota | $16,000 | $3,200 | Weather |
| Colorado | $16,500 | $3,300 | Mountain driving |
| Washington | $17,000 | $3,400 | Urban |
| Pennsylvania | $17,500 | $3,500 | Dense traffic |
| Florida | $18,000 | $3,600 | High accidents |
| Illinois | $18,500 | $3,700 | Chicago metro |
| Massachusetts | $19,500 | $3,900 | Urban density |
| Michigan | $21,000 | $4,200 | No-fault |
| New Jersey | $23,000 | $4,600 | Highest density |
| California | $24,000 | $4,800 | Traffic, litigation |
| New York | $26,000 | $5,200 | NYC impact |
Total Insurance Costs: Sample Contractor Scenarios
Scenario 1: Small Residential Contractor
5 employees, $1M annual revenue, $250K equipment
| State | WC | GL | Auto | Equipment | Bond | Total |
|---|---|---|---|---|---|---|
| North Carolina | $11,000 | $8,500 | $6,000 | $3,500 | $2,000 | $31,000 |
| Texas | $13,500 | $9,500 | $7,000 | $4,000 | $2,500 | $36,500 |
| Georgia | $14,000 | $10,000 | $7,500 | $3,500 | $2,000 | $37,000 |
| Ohio | $16,000 | $11,000 | $7,000 | $3,500 | $2,500 | $40,000 |
| Florida | $16,500 | $12,500 | $9,000 | $6,000 | $3,000 | $47,000 |
| Colorado | $17,500 | $12,000 | $8,000 | $4,500 | $2,500 | $44,500 |
| Illinois | $26,000 | $17,000 | $9,000 | $4,000 | $3,000 | $59,000 |
| California | $33,000 | $22,000 | $12,000 | $5,500 | $4,000 | $76,500 |
| New York | $36,000 | $28,000 | $13,000 | $4,000 | $4,000 | $85,000 |
Scenario 2: Commercial General Contractor
25 employees, $5M annual revenue, $750K equipment
| State | WC | GL | Auto | Equipment | Umbrella | Total |
|---|---|---|---|---|---|---|
| North Carolina | $55,000 | $42,500 | $18,000 | $10,000 | $8,000 | $133,500 |
| Texas | $67,500 | $47,500 | $21,000 | $12,000 | $10,000 | $158,000 |
| Georgia | $70,000 | $50,000 | $22,500 | $10,000 | $10,000 | $162,500 |
| Ohio | $80,000 | $55,000 | $21,000 | $10,000 | $12,000 | $178,000 |
| Florida | $82,500 | $62,500 | $27,000 | $18,000 | $15,000 | $205,000 |
| Colorado | $87,500 | $60,000 | $24,000 | $13,500 | $12,000 | $197,000 |
| Illinois | $130,000 | $85,000 | $27,750 | $12,000 | $18,000 | $272,750 |
| California | $165,000 | $110,000 | $36,000 | $16,500 | $25,000 | $352,500 |
| New York | $180,000 | $140,000 | $39,000 | $12,000 | $35,000 | $406,000 |
Regional Construction Market Analysis
Northeast (NY, NJ, PA, MA)
- Highest insurance costs nationally
- Scaffold Law (NY) dominates market
- Union labor prevalent
- Older infrastructure = more renovation risk
- Winter weather delays
Southeast (FL, GA, NC, VA)
- Generally lowest costs
- Hurricane exposure (coastal FL, NC)
- Rapid growth markets
- Right-to-work states
- Less unionized
Midwest (IL, OH, MI, MN)
- Mixed cost environment
- Illinois outlier (high litigation)
- Manufacturing construction strong
- Seasonal limitations
- Infrastructure investment
West (CA, TX, AZ, CO, WA)
- Widest cost variation
- California highest, Texas among lowest
- Wildfire exposure (CA, CO)
- Earthquake concerns (CA, WA)
- Rapid growth (AZ, TX, CO)
Cost Reduction Strategies
By State Type
High-Cost States (NY, CA, NJ, IL, MA):
- Maximize safety programs (ROI highest)
- Consider wrap-up programs for larger projects
- Use captive insurance if qualified
- Aggressive claims management
- Pre-qualify subcontractors carefully
Moderate States (WA, PA, MN, CO, FL, MI, OH):
- Shop market aggressively
- Focus on experience modification
- Bundle policies where possible
- Invest in loss control
- Maintain relationships with multiple carriers
Low-Cost States (TX, VA, GA, NC, AZ):
- Don’t underinsure—low cost doesn’t mean low risk
- Build safety culture to maintain advantage
- Prepare for market hardening
- Use cost savings competitively
- Ensure coverage adequacy as you grow
Key Takeaways for Contractors
- Location dramatically impacts costs - NY/CA can be 2.5-3x more expensive than NC/TX
- Scaffold Law is unique and costly - New York’s absolute liability adds significant expense
- Workers’ comp is your biggest expense - Safety programs have highest ROI
- Subcontractor management matters - Their coverage affects your risk
- Bonding capacity enables growth - Build relationships early
- Market conditions change - Today’s rates aren’t forever
This guide provides general information about construction insurance across 17 states. Actual costs vary based on specific trade, claims history, project types, and market conditions. Work with specialized construction insurance brokers for accurate quotes.
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