Contractor
Insurance

Workers compensation obligations depend on state law and the contractor's business circumstances. Construction is classified as one of the highest-risk industries for workplace injuries, and workers compensation class codes for construction trades carry some of the highest experience modification rates in the insurance industry.

Delaware requires workers compensation for all employers with one or more employees. Pennsylvania requires coverage for all employees, including part-time and seasonal workers, with penalties of up to $2,500 per day for non-compliance. New Jersey mandates workers compensation for virtually all employers, and Maryland requires coverage for all employers with one or more employees, with criminal penalties for non-compliance.

Construction class codes carry elevated base rates that reflect the inherent dangers of the trade. Roofing contractors (class code 5551) face some of the highest rates in the industry, often ranging from $15 to $30 per $100 of payroll depending on the state and carrier. Electrical contractors (class code 5190) typically pay $5 to $12 per $100 of payroll. Plumbing contractors (class code 5183) range from $4 to $9 per $100 of payroll. General contractors managing subcontractors (class code 5606) pay rates based on their supervisory payroll plus any uninsured subcontractor payroll.

Your experience modification rate (EMR or mod rate) directly impacts your workers compensation premium. An EMR below 1.0 indicates better-than-average safety performance and reduces your premium, while an EMR above 1.0 increases it. Contractors with strong safety programs, documented training, and low claims frequency can achieve EMRs of 0.70 to 0.85, saving 15% to 30% on workers compensation premiums. Our appointed carriers offer loss control services, safety training resources, and return-to-work programs that help contractors manage their EMR and reduce long-term costs.

OSHA compliance is closely linked to workers compensation. Contractors who maintain comprehensive safety programs, conduct regular jobsite inspections, document toolbox talks, and provide proper personal protective equipment not only reduce workplace injuries but also demonstrate to underwriters that they are proactive about risk management. This translates directly into lower workers compensation premiums and better access to preferred carrier programs.

In Virginia, workers' compensation is required for employers that regularly employ more than two full-time or part-time employees, and contractors must count their subcontractors' employees together with their own: a contractor with three or more total statutory employees must carry coverage even if every subcontractor has its own policy. Under Virginia's statutory employer law (Va. Code § 65.2-302), a contractor can be liable for benefits owed to a subcontractor's injured employees, and Virginia localities will not issue or renew a contractor's business license unless the contractor certifies in writing that it carries any workers' compensation coverage the law requires.

Commercial auto insurance is essential for contractors who operate work trucks, vans, dump trucks, flatbeds, and other commercial vehicles. Most contractors rely on their vehicle fleet to transport crews, tools, materials, and equipment to and from job sites throughout Delaware, Pennsylvania, New Jersey, Maryland, and Virginia.

A commercial auto policy covers liability for bodily injury and property damage caused by your business vehicles, as well as physical damage (comprehensive and collision) to your own vehicles. Delaware requires minimum auto liability limits of $25,000/$50,000/$10,000, but contractors should carry much higher limits, typically $1,000,000 combined single limit, to protect against serious accident claims. Pennsylvania, New Jersey, and Maryland have similar minimum requirements, but contractual obligations and prudent risk management demand higher limits.

Our appointed carriers, our appointed carriers offer specialized commercial auto programs for contractors that include hired and non-owned auto coverage (for employees using personal vehicles for business), motor truck cargo coverage, and trailer interchange agreements. If your fleet includes specialized vehicles like dump trucks, crane trucks, or concrete mixer trucks, you may need a commercial trucking policy rather than a standard commercial auto policy.

Inland marine insurance, sometimes called a contractor's equipment floater or tools and equipment policy, covers your tools, equipment, and materials while they are in transit, at job sites, or stored at temporary locations. Standard commercial property insurance typically excludes coverage for property away from your primary premises, making inland marine coverage essential for contractors who transport expensive tools and equipment. Coverage can be written on a scheduled basis (listing specific items and values) or a blanket basis (covering all tools and equipment up to a specified limit).

Surety bonds are a critical component of many contractors' business operations, particularly for those bidding on public works projects or large commercial contracts. A surety bond is a three-party agreement between the contractor (principal), the project owner (obligee), and the surety company (guarantor) that guarantees the contractor will fulfill their contractual obligations.

The three most common types of contractor surety bonds are bid bonds, performance bonds, and payment bonds. Bid bonds guarantee that the contractor will enter into the contract at the bid price if awarded the project. Performance bonds guarantee that the contractor will complete the project according to the contract specifications. Payment bonds guarantee that the contractor will pay subcontractors, laborers, and material suppliers. In Delaware, Pennsylvania, New Jersey, Maryland, and Virginia, public works projects above certain thresholds require performance and payment bonds, the federal Miller Act requires bonds for federal projects exceeding $150,000, and each state has its own bonding threshold for state-funded projects.

Builder's risk insurance, also called course of construction insurance, covers buildings and structures under construction against damage from fire, wind, theft, vandalism, and other covered perils. Builder's risk policies are typically written for the duration of the construction project and cover the value of the completed structure, including materials, fixtures, and equipment that become part of the building.

For residential builders constructing spec homes in communities throughout Delaware and the surrounding states, builder's risk coverage protects against losses that could wipe out the entire investment before the home is sold. For commercial general contractors managing large projects in Wilmington, Philadelphia, or Baltimore, builder's risk coverage may be required by the project owner or lender. Our appointed carriers offer builder's risk programs tailored to various project types and sizes. Prominent Insurance Services helps contractors secure competitively priced builder's risk policies for projects of all sizes.

General contractors bear significant liability for the work performed by their subcontractors. If a subcontractor causes bodily injury or property damage on a job site and does not carry adequate insurance, the general contractor's insurance may be required to respond to the claim. This is why managing subcontractor insurance requirements is a critical risk management function for every general contractor.

Best practices for subcontractor insurance management include requiring certificates of insurance (COIs) before any subcontractor begins work, verifying that coverage limits meet or exceed your contract requirements, ensuring you are named as an additional insured on the subcontractor's general liability policy, confirming workers compensation coverage is in force for all subcontractor employees, and requiring ongoing certificates that demonstrate continuous coverage throughout the project duration.

In Delaware, Pennsylvania, New Jersey, Maryland, and Virginia, a general contractor who hires subcontractors without workers compensation coverage may become responsible for the subcontractor's workers compensation claims. This exposure is reflected in the general contractor's workers compensation premium, uninsured subcontractor costs are added to the general contractor's payroll for premium calculation purposes, significantly increasing the cost of coverage.

Prominent Insurance Services assists general contractors with developing subcontractor insurance requirements, reviewing certificates of insurance, and ensuring that every subcontractor on every project maintains the required coverage. We also help subcontractors obtain the insurance they need to meet general contractor requirements, creating a complete risk management solution for the entire project team.