The Essentials: Protecting a Handyman Business
A handyman should carry general liability insurance, commercial auto coverage, a tool floater, and a written scope for every job, and should refuse work that falls outside a state exemption or an insurance exclusion. General liability for a solo operator commonly costs $400 to $1,200 a year, while one uncovered water-damage claim can exceed $10,000. Protection is mostly about matching your policy to the work you actually do.
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What insurance does a handyman business need?
General liability (GL) covers bodily injury and property damage to clients, typically at $1 million per occurrence and $2 million aggregate, which property managers and HOAs often require. Commercial auto covers a vehicle used for business, since many personal auto policies exclude it. Inland marine or a tool floater covers tools and equipment against theft and damage, often $150 to $400 a year. Workers' compensation is required in nearly every state once you have employees, and sometimes for subcontractors without their own coverage. A professional or contractor's errors coverage may be optional. Ask an independent broker for quotes from at least three carriers.
How do you match coverage to the work you do?
Read the classification and exclusions. Policies often exclude or surcharge roofing, work above a certain height (commonly two stories), tree work, mold, asbestos, lead paint, and certain trades such as electrical or gas. Tell your agent exactly what you do, including the number of jobs per year in each category. A misclassification can let an insurer deny a claim. If you do RRP-regulated work in pre-1978 homes, ask specifically whether lead-related claims are excluded and whether a pollution endorsement is available.
Do you need a bond, and is it the same as insurance?
No. Insurance pays for claims against you; a bond assures a licensing agency or client that you will perform or pay. Most handymen working under a small-job exemption do not need a bond. California requires a $25,000 contractor bond for licensed contractors, and some cities, property managers, and government clients ask for bonds on larger work. If someone asks whether you are licensed, bonded, and insured, answer each part accurately rather than repeating a slogan.
What should a written scope-of-work include?
Even for a $150 job, write the tasks, the price or rate, the materials policy, the timing, and what is excluded. Include a sentence that concealed conditions such as rot, mold, or older wiring may change the price, that licensed trades are excluded, and that you will document existing damage with photos. Ask for a signature or a written text approval. A simple agreement stops arguments such as I thought that included the other outlet, and it supports your side if a dispute goes to small claims court, where limits commonly range from $5,000 to $25,000 depending on the state.
How do photo documentation and job procedures reduce claims?
Take before, during, and after photos of every job, including the surrounding area, and store them by client and date in your scheduling software. Use drop cloths, floor protection, and dust barriers, and shut off water or power at the source before working. Avoid moving heavy furniture or appliances unless your policy covers it. Give clients a written cleaning and safety note if you disturb old paint or insulation. These habits are inexpensive and are the best defense when a client claims new damage.
When should you decline a job?
Refuse work that requires a license you do not have, work above your ladder or fall-protection comfort, anything near live electrical panels, gas, or structural elements, and any job where the client will not sign a scope or pay a deposit. Also decline when a request is above your policy limits, such as a roof repair when your GL excludes it. Refer these jobs to a licensed contractor and, if appropriate, ask for a referral fee only where your state allows it.
What contract and payment terms reduce non-payment risk?
Collect a deposit for jobs with meaningful materials, often 25 to 50 percent, and take the balance at completion by card, Zelle, or check. State late-fee terms on commercial invoices, commonly 1 to 1.5 percent a month where the law allows. Keep a card on file for repeat property-manager accounts. If a client refuses to pay, send a written demand with photos and the signed scope, then consider small claims court; filing fees are often $30 to $100. Some states also allow mechanics' liens only for licensed contractors, so confirm before you threaten one.
How do you protect your own health and records?
Handymen face falls, repetitive strain, dust, and chemical exposure. Use proper ladder setup (the 4-to-1 rule, three points of contact), wear respiratory protection for dust, and consider a personal disability policy since sole proprietors have no sick pay. Back up job photos, signed scopes, invoices, and insurance certificates in cloud storage, and keep them for at least three to seven years. Renew insurance early so coverage never lapses, and calendar the policy end date.
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FREQUENTLY ASKED QUESTIONS
Does general liability insurance cover every job I might do?
Not automatically. Policies list excluded work and classifications, and a claim on an excluded task can be denied. Provide your agent a complete list of services and ask for the exclusions in writing. If you add a new service, such as deck repair or tile, tell your agent before the first job.
What should I do if a client says I damaged something?
Stay calm, document the area with photos, and do not admit fault on site. Notify your insurer promptly, since most policies require timely notice, and send the client a written response offering to inspect. Small issues may be repaired directly, but check with your insurer before promising payment.
Is a written agreement necessary for jobs under $200?
Yes, but keep it short. A text or estimate listing the tasks, price, payment timing, and exclusions, followed by the client replying approved, is enough. Disputes on small jobs are common because both sides remember the scope differently, and a written record is the fastest way to resolve them without a lost review.
How much does a tool floater cost?
Often $150 to $400 a year, depending on tool value and deductible. Keep an inventory with serial numbers and photos, and ask whether the policy covers theft from an unattended vehicle, since some require a locked compartment or visible signs of forced entry.
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