The question shows up in my inbox every spring, usually phrased the same way. Somebody built a neighbor’s deck for $2,800, the neighbor told a coworker, and now there are three more people asking about pergolas. Do I need insurance for this?
Short answer: the day money changes hands, yes. Liability coverage for small handyman-scale work runs $30 to $60 a month. If you are doing structural work, expect the pricing to shift to a percentage of revenue with a floor around $1,600 a year. Neither number is what most people are braced for, and both are smaller than one bad Saturday.
I have watched a few friends learn this the expensive way. So here is what I tell people now, in the order it usually matters.
Image: Andy Quezada for Unsplash
Your homeowners policy stops helping the moment you get paid.
Helping your brother-in-law hang a gate is one thing. Invoicing him is another. Homeowners policies are written around personal life, and most of them exclude business activity, which is exactly what a paid deck build is.
The property side is tighter than people expect too. According to the Insurance Information Institute, a typical homeowners policy carries only about $2,500 in coverage for business equipment at your house and roughly $250 for business property away from it. Read that second number again if your tools ride in a truck.
The tools are usually the first real loss.
Nobody starts a side business by pricing insurance. They start it by buying a track saw.
Which is why the first painful conversation is almost always about a trailer. Somebody pops the lock on a Tuesday night and takes $6,150 worth of gear off a job site: the miter saw, the two impact drivers, the good jobsite radio, the nail guns. Under a homeowners policy with a $250 off-premises business property limit, that is not a claim. That is a bad week and a credit card.
The product that actually covers gear on the move is an inland marine policy, which is an old shipping term that now mostly means tools and equipment away from a fixed location. For a small operation it runs around $800 a year. If you have ever added up what is in your truck bed on a Friday afternoon, you already know whether that math works.
The truck changes categories before you notice.
This one gets skipped constantly, and it is the one that scares me most.
A personal auto policy is priced for commuting and errands. It is not priced for a half-ton hauling framing lumber and a dump trailer to a paying job four days a week. Plenty of personal policies contain business-use exclusions, and a carrier that discovers commercial use while investigating a serious accident can decline the claim.
Commercial auto for a pickup or van runs about $1,200 a year. Heavier iron costs more, and a dump truck can run $4,000 and up, which tracks with how much damage it can do. If the truck earns money, insure it like it earns money.
Liability is the piece that protects everything else.
Tools and trucks are replaceable. The claim that follows you home is the one where somebody gets hurt or something expensive gets ruined, and that is what liability coverage is for.
The standard policy is $1 million per occurrence and $2 million aggregate. That sounds enormous until you price a lawsuit. For light, low-risk work you are looking at $30 to $60 a month for those limits. Once you are doing general contracting, general liability coverage for contract work is typically priced at about 0.75 percent of annual revenue with that $1,600 floor. Roofing sits highest, around 1 percent with a floor near $2,800, because carriers treat roofs as the riskiest place to put a person.
People ask whether they can save money by halving the limit to $500,000. The savings come to less than $100 a year, and the lower limit gets you disqualified from most commercial work. Not worth it.
The friend who helps you for a hundred bucks.
Here is the part that catches everyone. Paying a buddy cash to help set posts for a day makes you something closer to an employer than a guy with a friend, and if he wrecks a shoulder lifting a header, his medical bills come looking for you.
Workers compensation is the coverage that handles that, and the thresholds vary by state, so ask before you hire rather than after. There is a related trap on the other end. If you bring in a sub who has no coverage of his own, carriers commonly count that sub’s payroll as your payroll at the end-of-year audit, which turns his gap into your correction bill. Collecting proof of insurance from anyone you hire is free and takes one email.
Then somebody asks for a certificate.
You will know the side hustle turned into a business the day a client, a property manager, or an HOA asks for a certificate of insurance before you start. It is a one-page document proving your coverage is real and current, it costs nothing, and an agency can usually send it within hours.
Which is the practical reason to get this sorted before the work shows up rather than after. The guy who can produce a certificate on a Friday afternoon takes the job. The guy starting from zero spends a week getting quoted while somebody else builds the deck.
My Rule of Thumb
If you are building for yourself, build for yourself and enjoy it. The moment you accept money for work on somebody else’s property, treat it like the business it now is: liability coverage, a real policy on the tools, a truck insured for what it actually does, and proof of insurance you can email in five minutes.
It is maybe a hundred bucks a month at the low end. Less than a decent cordless kit, and considerably less interesting. It is also the difference between a side business and a story you tell about the year you lost your savings over a fence.
