Contractor insurance in Pennsylvania — coverage by county
HICPA's registration insurance minimums, the Act 72 test for 1099 subcontractors, and the coverages Pennsylvania contractors get asked for.
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Pennsylvania contractor insurance
Contractor insurance in Pennsylvania is priced by trade. A roofer and a finish carpenter both need general liability, but the class code, your payroll or receipts, and the share of work you subcontract move the price far more than the county you work in. A roofer in Chester County can pay much more than a finish carpenter in the same county for the same $1,000,000 limit, because roofing claims tend to be more frequent and more costly.
Two Pennsylvania laws touch your policy directly. The Home Improvement Consumer Protection Act (HICPA) requires contractors doing residential home improvement to register with the Attorney General's Bureau of Consumer Protection and show proof of at least $50,000 of liability insurance for personal injury and $50,000 for property damage. You aren't a "contractor" under HICPA if your home improvements totaled less than $5,000 in the previous taxable year: the test is your prior-year total, not the size of one job. For construction work, the Construction Workplace Misclassification Act (Act 72 of 2010) decides whether a 1099 worker counts as an independent contractor or an employee for workers' comp. Some projects and municipalities also call for a contractor surety bond.
New to contractor coverage? Start with our Contractor insurance overview, then pick a county below, such as Chester County, home of our Devon office, or Philadelphia.
HICPA registration insurance minimums
| Liability insurance covering personal injury | $50,000 |
|---|---|
| Insurance covering property damage caused by the work | $50,000 |
These apply to contractors who register for residential home improvement work. You aren't a contractor under HICPA if your home improvements totaled less than $5,000 in the previous taxable year.
Source: Home Improvement Consumer Protection Act (Act 132 of 2008), § 4(a)(1)(ix).
Act 72 and 1099 subcontractors
Under Act 72, a person doing construction work for pay is an independent contractor only if they have a written contract, are free from your control over how the work is done, and are customarily engaged in an independent business. To meet that last test, the worker must:
- Own the essential tools and equipment for the job.
- Stand to make a profit or take a loss on the work.
- Work through a business they have a proprietary interest in.
- Keep a business location separate from yours.
- Have done the same work for others, or be available to do it, on the same independent terms.
- Carry at least $50,000 of liability insurance for the term of the contract.
The year-end premium audit
General liability and workers' comp are usually priced on estimated payroll or receipts. After the policy term, the insurer audits your actual figures and bills or refunds the difference. Keep a current certificate of insurance from every subcontractor you hire. Without one, the auditor may count what you paid that sub as your own payroll, which can mean an unexpected bill.
Coverages beyond general liability
- Commercial auto. A personal auto policy may not cover a truck or van used for your business. Tell us how each vehicle is used and who drives it.
- Tools and equipment. General liability doesn't cover your own tools. An inland marine policy does; see tools and equipment coverage.
- Workers' compensation. Generally required once you have employees, including 1099 workers who fail the Act 72 test. See workers' comp for contractors.
- Umbrella. Adds liability limits above your general liability, commercial auto and employer's liability when a contract calls for more than your primary limits.
- Surety bonds. Some permits, licenses and contracts require one. See surety bonds.
Certificates of insurance
COIs are the most urgent request we get from contractors. General contractors hold payment until a current certificate is on file, so send us the GC's insurance requirements (limits, additional insured, waiver of subrogation) as soon as you have them, and we issue the certificate once the coverage is bound.
Contractor insurance by Pennsylvania county
Frequently asked questions
What insurance do I need to register under Pennsylvania HICPA?
HICPA requires proof of liability insurance of at least $50,000 for personal injury and at least $50,000 for property damage caused by your work (Act 132 of 2008, § 4(a)(1)(ix)). Those are floors. General contractors and property owners may ask for higher limits, such as $1,000,000 per occurrence and $2,000,000 aggregate, so the contracts you sign usually set your real limit.
Does HICPA say anything about insurance in my contract?
Yes. A HICPA home improvement contract has to include your agreement to maintain at least $50,000 of personal-injury liability insurance and $50,000 of property-damage insurance, and has to state the amount of coverage you carry when the contract is signed (§ 7(a)(11)). Keep your declarations page handy when you write contracts.
Do I need workers' compensation if I'm a sole proprietor with no employees?
Not under state law. Pennsylvania's Department of Labor and Industry lists a sole proprietor with no other employees among the cases excluded from the requirement to insure. Once you bring on help, you need it, and a 1099 worker who fails the Act 72 test counts as an employee for workers' comp. Many general contractors also require subs to carry their own workers' comp and send a current COI before work starts.
What's the difference between general liability and workers' compensation?
General liability covers third parties: bodily injury or property damage you cause to a customer, the public, or someone else's property. Workers' compensation covers your own employees' on-the-job injuries, including medical bills and lost wages. They are separate policies, and a claim under one doesn't trigger the other.
Can you write a Business Owners Policy (BOP) for a contractor?
Sometimes. It depends on the trade and the operation. A BOP bundles general liability with commercial property and business income coverage. It can fit lower-hazard trades such as interior finish or painting that work from a fixed shop. Higher-hazard trades such as roofing or demolition, and contractors without a fixed business location, are usually better served by a separate general liability policy plus an inland marine policy for tools and equipment.