Florida General Contractor Practice Exam

What percentage of the wage is typically charged for liability insurance?

1. 5%

2. 2.5%

3. 1%

4. 3%

The correct answer is: 2.5%

Liability insurance is an essential cost for general contractors, providing protection against potential claims or lawsuits related to accidents, injuries, or damages that occur during the course of construction. The percentage charged for liability insurance can vary depending on a number of factors, including the size of the project, the contractor's claims history, and the type of work being performed. The figure of 2.5% represents a common standard based on industry practices. When budgeting for construction costs, contractors often include an estimate for insurance as part of their overall expenses. This percentage strikes a balance that contractors typically find manageable while still ensuring adequate coverage for their operations. Understanding this figure is important for contractors during the bidding process and throughout project management, as it allows for better financial planning and ensures compliance with insurance requirements in Florida. The inclusion of this cost in estimates helps avoid potential shortfalls in coverage that could lead to significant financial risk for a business.