A general contractor usually learns the real cost of insurance at an awkward moment, right when a client asks for a certificate, before the crew can start. If the premium behind that certificate is higher than expected, a bid that looked profitable can turn thin. Farmer Brown, a San Antonio commercial insurance agency that has worked with contractors since 1996, fields the same question from builders across the country: What should general liability actually run, and what drives the price up or down?
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How carriers set the base rate
General liability for a contractor is priced on revenue, not on the size of any one job. A general contractor usually pays around 0.75 percent of annual revenue, with a minimum premium near $1,600 for smaller operations. A builder doing $500,000 a year lands close to $3,750 in premium, while a shop under six figures often sits at the floor. The rate reflects how likely the work is to cause a claim and how expensive that claim tends to be when it happens.
Trade matters as much as revenue. Roofing is a good example. Because the work happens at height and carries a higher loss history, roofing contractors typically pay closer to 1 percent of revenue, with a minimum of around $2,800. Two companies pulling the same revenue can pay very different premiums if one frames houses and the other tears off and replaces roofs.
What pushes the number around
Claims history is the first lever, and it moves the price more than most contractors expect. A builder with a clean five-year record negotiates from a much stronger position than one carrying two open claims. Payroll and subcontractor use feed in next, since a company that leans on uninsured subs quietly inherits their exposure and pays for it in the premium.
Coverage limits change the number too. A standard $1 million per-occurrence and $2 million aggregate policy costs less than the higher limits commercial projects tend to demand. Location works in the background, where labor costs, local litigation patterns, and weather push regional pricing around. The general liability insurance framework is consistent across the country, but the dollar figure attached to it is not.
Why the lowest quote is rarely the real cost
A low premium usually means a narrow policy. Exclusions for certain work types, tight sublimits, and a high deductible can leave a contractor exposed on exactly the claims the policy was meant to cover. When a client’s contract requires specific coverage and the policy does not match it, the contractor either loses the job or scrambles to fix the gap after signing. Reading the policy against the contract before the bid goes out avoids both outcomes.
For most contractors, general liability is not the biggest line item on a project, but it is the one that determines whether a single accident becomes a manageable claim or a business-ending event. Contractors who want a clear read on their own numbers can compare coverage and pricing with Farmer Brown rather than guessing from an online estimate that was built for someone else’s trade.
