Starting a House Painting Business

What Insurance Do I Need To Start a House Painting Business

Tanner Mullen
March 21, 2021

What insurance do I need to start a house painting business?

If you're thinking about starting a House Painting Business, having the appropriate insurance is necessary.

Aside from it being illegal to not have it, having it sets you light years away from most of your competition. It's a great way to gain credibility, and offers invaluable peace of mind.

In this article, we're going to discuss the two types of insurance you'll need to start your house painting business.  

General Liability Insurance: 

General Liability insurance covers any incidents on the actual job itself. An example of this would be if for whatever crazy reason, someone gets over-spray on a car.

The General Liability insurance will cover any damages associated with on-site work. Some policies even cover health-related occurrences such as a slip or a fall, however, not to the extent of what a Workers' Compensation policy will.

In the Residential House Painting business, you will have a premium to pay based on the different specifications of your ideal job-types, you will go through a brief questionnaire to determine the risk the insurance company will take on should they decide to write your policy. (For example, your premium will be pretty expensive if you paint high-rises!)

On average, the cost for a $1,000,000 General Liability Policy in the Residential House Painting industry is between $80-250 per month. There's plenty of companies that cover general business liability insurance, and they can easily be found with a simple Google Search.

Workers' Compensation Coverage:

Ok, so this is the big one - and this is the one many Contractors skip. Not to be negative here, but if someone on your job site gets hurt, they have every right to sue you (or the homeowner, depending on what state you're in) for their medical expenses, which could very well include loss-of-pay.

If you do not have the assets in your bank account to cover those expenses, they could come for your personal assets.

Listen, accidents happen - and you don't want a simple accident to be the reason you are wiped a smart business owner, protecting yourself from this tragedy is 100% necessary, whether it is required in your state to carry the coverage or not.

Workers' Compensation Coverage will ensure that the costs associated with medical care in the event one of your workers gets injured on the job is completely covered. Most states require this coverage so It's important to check your state & local guidelines to see if you are required to carry this coverage. However, even if you are not required to carry it, I recommend carrying it simply for peace of mind.

Now, the reason many contractors forego having this insurance is because it's kind of difficult to attain if you don't have a payroll administrator.

The cost of coverage is completely dependent on your payroll, and the percentage of which you pay is completely dependent on the state you live in. Check out this general guide for each state to determine requirements.

A payroll administrator, like Gusto, they will help you automatically calculate the Workers' Compensation premium, and pay the appropriate vendor on your behalf. They affiliate with a Workers' Compensation company and will help on-board you.

If you plan to make the payments on your own, it may be a difficult to calculate the appropriate costs on a weekly basis, and send the appropriate reports.

At the end of each year, you will be audited to ensure that you paid the correct amount. (Yes, they audit every single year, they do not miss and will be very persistent in getting it done. They usually send an independent contractor to meet with you in person to go over paperwork!)

If I use subcontractors, do I still need to pay Workers' Compensation Insurance?

In some states, you have the ability to file for a Workers' Compensation exemption, the same goes for your Subcontractors (Who are working individually)

However, in most cases, if you hire another company to do work for you, they will have to have their own Workers' Compensation policy on their employees. If for whatever reason they do not, it is up to you to withhold the amount that you would pay on their behalf if they were employees and pay that amount during your audit.

For example, if you have Workers' Compensation policy that requires 10% payment for every $1, and you pay a Subcontractor $10,000 to do the job, you must withhold $1000 for Workers' Compensation audit at the end of the year. (Again, this is what would've been paid had they been ran through your payroll as an employee)

If you are working with independent contractors, and they show proof of exemption, you do not need to withhold on their behalf (because they filed an exemption) 

Cost Recap: 

General liability Insurance: 

Price: $50-150 per month (quoted based on projected payroll

What's it cover?: Property Damage

Workers’ compensation:

Price: Percentage calculated based on the state you work in (I pay 10.56% of every $1.00 in Florida)

What's it cover?: Workplace Injury / Loss of income

What if I'm using subcontractors?: % based on amount paid, due at audit

Filing an Exemption: If your state requires you to have Workers' Compensation coverage, as an "officer" of a legal entity (LLC or S-Corp) you have the right to exempt yourself from carrying the coverage. There is usually a filing fee of between $50-100 to do this on a yearly basis.

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