How Much Does Insurance Cost For Excavation Contractors? 2025 Rates

In 2025, U.S. excavation businesses can expect to pay between $1,440 and $3,000 annually for business insurance, averaging $120 to $250 per month. The primary cost drivers are location, type of excavation work, project size and duration, experience and safety record, number of workers on site, and equipment used.

How Much Does Excavation Insurance Cost?

The average excavation business in the U.S. pays between $1,440 and $3,000 per year for business insurance. That breaks down to roughly $120 to $250 per month. However, this is just a ballpark range and actual business insurance costs can vary widely depending on your specific situation.

Every excavation business has different risks and insurance needs, so there’s no single price that fits everyone. A small company with a few workers will pay much less than a large operation with many machines and employees.

Things like the type of digging you do, the size of your jobs, the value of your equipment, and even where you’re located can affect how much you pay for insurance. For example, businesses working in areas with high theft or accident rates may pay more for liability coverage.

Also, if you work near underground utilities or on busy roads, your insurance might cost more because of the higher risk of damage or injury.

Here are some of the biggest cost drivers:

• Number of employees (affects workers’ comp and liability)
• Type of excavation work (affects overall risk)
• Property size and value (affects commercial property coverage)
• Past claims history (insurers charge more if you’ve filed claims)
• Business interruption coverage and other add-ons

Understanding these variables can help you better estimate your insurance needs and prepare for the real costs of protecting your excavation business.

Average Excavation Insurance Costs For Coverage Types

When it comes to protecting your excavation business, different types of insurance cover different risks. Understanding the average cost, coverage details, and what influences pricing for each policy type can help you build a more effective insurance plan.

Here’s a closer look at the major coverages most excavation businesses need.

• General liability insurance: $120 per month
• Business owner’s policy: $95 per month
• Workers’ compensation insurance: $389 per month
• Commercial auto insurance: $211 per month
• Contractor’s tools and equipment: $49 per month
• Professional liability insurance: $79 per month

General Liability Insurance

The average cost of general liability insurance for an excavation business is about $120 per month.

General liability covers third-party bodily injury, property damage, and advertising injuries. For example, if someone walking near your job site trips over equipment and gets injured, this insurance can help pay for their medical bills and your legal costs if they sue.

Typical policy limits are $1 million per occurrence and $2 million aggregate.

The cost of general liability insurance depends on things like the size of your business, where you work, how many jobs you take on, your claims history, and if you do high-risk work, like digging near underground utilities or working in busy public areas.

Business Owner’s Policy (BOP)

The average cost of a business owner’s policy (BOP) is about $95 per month for an excavation business.

A BOP bundles general liability insurance with commercial property insurance. For excavation businesses, this means it helps cover injuries to others, damage to their property, and also protects your own buildings, tools, and equipment.

For example, if a fire or theft damages your office or machines, a BOP can help pay for repairs or replacements.

Typical policy limits are $1 million per occurrence and $2 million aggregate for liability, with separate property coverage limits based on the value insured.

The cost of a BOP depends on things like the value of your property and equipment, the risk level of your location (like flood or theft), how much money your business makes, how many employees you have, and any extra coverage you add, such as protection for lost income if you have to pause work.

Workers’ Compensation Insurance

The average cost of workers’ compensation insurance for an excavation business is around $389 per month.

Workers’ comp covers medical bills, rehabilitation, and lost wages for employees injured on the job. For example, if a worker gets injured while digging a trench, workers’ comp would help pay for their doctor visits and part of their lost income while they recover.

Policy limits are regulated by each state, but typically include medical costs and a percentage of lost wages without a set cap.

The cost of this insurance depends on the size of your payroll, the kind of work your employees do (like equipment operators or laborers), your past history of claims, and whether you have safety programs in place to help prevent injuries.

Commercial Auto Insurance

The average cost of commercial auto insurance for an excavation business is about $211 per month.

Commercial auto insurance covers vehicles owned or used by the business for accidents, theft, vandalism, or damage. For example, if one of your dump trucks is involved in an accident on the way to a job site, this insurance can help cover the repair costs and any third-party claims.

The cost depends on things like how many vehicles you have, what types they are (like trucks, trailers, or service vans), how often they’re used, the driving records of your employees, and whether you drive locally or long distances. You can also add extra coverage, like hired and non-owned auto insurance (HNOA), if your workers use their own vehicles for business purposes.

Contractor’s Tools And Equipment

The average cost of contractor’s tools and equipment for an excavation business is about $49 per month.

Contractor tools and equipment insurance helps protect the equipment you own, rent, or lease. It covers things like theft, vandalism, fire, and some types of accidental damage, whether the equipment is at a job site, in transit, or stored in your yard.

For example, if someone steals a trailer of tools from a job site overnight, or if a skid steer is damaged during transport, this insurance can help pay to repair or replace the equipment.

The cost of this coverage depends on the total value of your tools and equipment, the age and condition of your machinery, where and how the equipment is stored, and how often it’s transported or used on different sites.

Professional Liability Insurance

The average cost of professional liability insurance for an excavation business is about $79 per month.

While this type of insurance is more common in fields like engineering or consulting, it can still be important for excavation contractors who offer design advice, site planning, or project management.

If your excavation plans result in improper grading that later causes drainage problems or foundation issues for a building, the client may sue you for damages. Professional liability insurance would help cover your defense costs and any payout, up to your policy limits.

The cost of professional liability insurance can change based on a few things, like how much coverage you want, how big your business is, and the type of work you do. Insurance companies look at these details to decide how much your premium will be.

What Factors Impact Your Excavation Insurance Costs?

Excavation insurance premiums are carefully calculated by underwriters based on your business’s risk profile. From the type of digging you do to the depth of your projects, your location, and your safety record, several key factors influence what you’ll pay for coverage.

Type Of Excavation Work

The kind of excavation you’re doing plays a big role in how much your insurance will cost. Jobs like trenching, tunneling, or digging near existing buildings are considered higher risk because they have a greater chance of causing damage or injury.

On the other hand, basic grading or clearing in an open area is less risky. Insurance companies look at the specific tasks involved to determine how dangerous the work is, and they charge more if the risk is higher.

Project Size & Duration

The size of the excavation project and how long it will last also affect insurance pricing. Larger and longer projects tend to face more risks simply because there’s more time and space for something to go wrong, such as accidents, weather damage, or theft.

Insurers take this into account, and usually charge more to cover the increased risk over an extended time or a bigger job site.

Location Of The Project

Where your excavation is taking place makes a difference in insurance cost. Urban areas are usually more expensive to insure because of the higher likelihood of damaging underground utilities, nearby buildings, or public infrastructure.

These places also have more foot and vehicle traffic, increasing the chance of accidents. In contrast, rural or open areas may pose fewer risks, which can lead to lower insurance premiums.

Experience & Safety Record

Your company’s experience and past safety performance are important to insurers. If you’ve been in business for a while and have a good safety record, with few or no past claims, it shows that you manage risks well.

This can result in lower insurance costs. On the other hand, if your company is new or has had several accidents or claims, the insurer will see you as higher risk and raise the premium.

Equipment Used

The kind of equipment you use on your excavation site also influences the cost of insurance. If you’re using large, expensive, or specialized machinery, the potential repair or replacement cost in case of damage or theft is higher. As a result, insurance for that equipment will cost more. Proper maintenance and secure storage of equipment can help reduce this cost.

Number Of Workers On Site

The more workers you have on a job site, the higher the chances that someone could get injured or that an accident could happen. Insurance companies look at how many people are involved because more workers generally mean more liability.

This affects both general liability insurance and workers’ compensation premiums, which may increase with larger crews.

How To Lower Your Excavation Insurance Costs

Running an excavation business can be expensive, but your insurance bill doesn’t have to break the bank. While you can’t eliminate the need for coverage, you can take smart steps to reduce your premiums without sacrificing protection.

Here are some practical ways to lower your excavation insurance costs:

1. Bundle Your Policies

One of the easiest ways to save is by bundling multiple policies. Most insurers offer a Business Owner’s Policy (BOP) that combines general liability and property insurance at a lower rate than if you bought them separately.

If you also need workers’ compensation, bundling both through the same provider can lead to additional discounts. Not only does this simplify your paperwork, but it also makes your coverage more cost-efficient.

2. Ask About Discounts

Insurance companies often reward businesses that commit to a policy long-term. Ask your provider if they offer multi-year discounts for signing a two- or three-year agreement instead of renewing annually. You might also qualify for lower rates if you pay your premium in full instead of in monthly installments.

3. Implement Safety Measures

Accidents can be costly for both your excavation business and your insurance company. By taking steps to make your job sites safer, you can lower the risk of injuries and possibly reduce your insurance premiums over time.

For example, marking off hazardous areas, keeping equipment well-maintained, training workers on safety procedures, and using proper signs around open trenches can help prevent accidents. The safer your operations, the lower your general liability risk may be.

4. Create A Safe Working Environment

A strong safety program can help lower your workers’ compensation insurance costs. This means training your crew on how to use heavy equipment safely, how to dig near underground utilities, proper lifting techniques, and what to do in case of an emergency.

You should also make sure everyone wears the right safety gear and follows site safety rules. When fewer accidents happen, there are fewer insurance claims, which can lead to lower premiums over time.

5. Adjust Your Deductible

Your deductible is the amount you pay out of pocket before insurance coverage kicks in. Choosing a higher deductible can significantly reduce your monthly premiums. Just make sure you can comfortably cover that amount if a claim arises.