All contractors are different. So, finding the perfect insurance can be challenging. But we’re here to help! Our team can connect you with the best contractor insurers to protect your business from all eventualities.
In this guide, we’ll cover contractor insurance in detail to clear up any misunderstandings and answer your burning questions.
Liability Insurance Coverage for Canada-Based Contractors
The demand for contracting services has risen massively across the country since the impact of the pandemic. The staggering number of residential renovations shows the industry is bound to make a remarkable recovery.
As a contractor benefitting from the demand boom, managing risks continues to be one of the most important business tasks. So, acquiring a diverse, comprehensive contractor insurance policy package is a no-brainer.
At LiabilityCover, we make it easy for contractors like you to access policies from the country’s top insurers at the best prices.
What Is Contractor Insurance?
Contractor insurance is a comprehensive policy package that works to protect you from the risks involved with your particular contracting services, employees, and third parties. It’s essential to running a successful business that withstands trials and tribulations.
Finding the perfect coverage can be difficult as there are so many factors to consider. However, LiabilityCover makes the whole process easy to understand.
All contracting companies are different. So, we find contractor insurance that reflects your bespoke risks.
Real-World Contractor Insurance Claims Scenarios
To give you a better understanding of the numerous risks contractor insurance can cover, take a look at a few real-world examples below:
Example One: Property Damage Claim
You are employed to install new cabinets in Mary’s kitchen. Her counter was fitted the day before by a different workperson.
Unfortunately, while you’re installing the new cabinets, you accidentally damage her brand-new kitchen counter!
Mary sues you for damages. Thankfully, you purchased a commercial general liability policy covering the kitchen counter repair costs, equalling $20,000. Without the policy, you’d be responsible for paying the $20,000.
Example Two: Stolen Tools Claim
You park your truck, filled with tools, at a job site. While you’re working, somebody steals the tools from your truck.
It’s terrible timing — you need the tools to start a large contract with a new client the next day. Therefore, you must pay to rent the required tools until you replace yours.
In this situation, your portable business tools endorsement covers the cost of replacing the stolen tools and compensating you for the rental charges, totalling $15,000.
Example Three: Auto Accident Claim
Your employee drives their car loaded with tools to a worksite. While en route, they get into an accident that damages the two vehicles involved.
Proceedings decide that your employee caused the accident. The repairs of both vehicles equal $35,000. Luckily, your commercial general liability policy with the non-owned automobile endorsement covers the entire amount.
What Does Contractor Insurance Cover?
Every contractor is different; thus, insurance requirements vary. But, most contractor insurance packages include these policies:
Commercial General Liability (CGL) Insurance Coverage
Arguably the most important coverage type, commercial general liability insurance (or CGL), protects you and your contracting business against third-party claims of property damage or bodily injuries.
If your business is cited in a lawsuit, the policy pays for medical expenses and legal fees associated with the case, no matter the outcome.
It’s important to understand the CGL coverage limit applies to your entire business, not individual staff members. Increasing your limit might be a good idea if you run a particularly large operation. But we’ll assess your needs when you complete our simple online inquiry form.
Tools and Equipment Insurance Coverage
Tools and equipment insurance is vital for protecting your most crucial asset — your tools and equipment!
The coverage finances the cost of replacing or repairing damaged or lost equipment, accessories, and tools. When calculating the worth of your tools, know that anything valued over $1,500 is equipment; anything below is a tool.
Pollution Liability Insurance Coverage
Not every project will have a significant impact on pollution. However, environmental liability quickly rises as we move to a more sustainable future.
Pollution liability insurance coverage financially protects you against clean-up fees, bodily injuries (such as respiratory diseases), and property damage (like water damage) caused by toxic substances or pollution produced by your work.
Builder’s Risk Insurance Coverage
Sometimes called construction liability insurance, builder’s risk policies protect your liability and building against high-cost property claims.
Usually, your client should carry this coverage. However, some circumstances call for the contractor (i.e., you) to purchase the policy instead. Therefore, when discussing the project’s details, it’s important to determine which party is responsible for buying the coverage.
Cyber Liability Insurance Coverage
Cyber liability insurance is essential for your contracting business if you store your client’s data on a digital system or take payment using a point-of-sale system. It protects you if somebody hacks your system or breaches your data.
Optional, Specialized Coverage Types
Due to the sheer number of trades, a one-size-fits-all package doesn’t exist. Therefore, specialist brokers offer these policy endorsements to fit your unique needs:
- Installation floater — It protects tools and materials used during a project from damage, theft, or loss. Usually, it’s found under builder’s risk policies.
- Tenants legal liability — Coverage for loss or damage to property you occupy or rent but don’t own.
- Non-owned auto insurance — Coverage for vehicles used for business reasons that you don’t borrow, own, lease, or rent (like employee’s vehicles).
- Products-completed operations liability — It protects against lawsuits alleging property damage or bodily injury once you’ve already completed the project.
- Leased, rented, and borrowed equipment — It covers the loss or damage to equipment and materials you rent, borrow, or lease.
Who Needs Contractor Insurance Coverage?
Any business or independent contractor offering general contracting services should protect their business with a comprehensive contractor coverage package. It won’t just protect you from financial loss, but it will increase your job-scoring success too.
At LiabilityCover, we’ve worked with found the perfect insurers for all kinds of contractors across Canada, including:
- Construction contractors
- Flooring and ceiling installers
- Decks and fencing installers
- Waste removal
- Painters and decorators
- Swimming pool servicepeople
- Tree removal specialists
- Snow removal specialists
- Independent contractors
- Interior designers
- HVAC installers
How Much Does Contractor Insurance Cost?
For a basic contractor commercial general liability insurance policy with a $2 million limit, you should expect to pay around $450 per year as a small- or medium-sized business.
However, plenty of factors come into play when insurers figure out the total cost of your company’s premium. Some of these factors include the following:
- Your years of experience — No matter your profession, experience gives better results and a lower likelihood of making mistakes. Insurers like to see any risk reduction. Thus, you can expect to get cheaper contractor insurance as an experienced professional than a beginner in your trade.
- Your business size — The more people you employ, the more expensive your insurance premium. A higher number of employees increases your chances of making mistakes that result in a contractor insurance claim. Independent contractors benefit from lower premiums in this area since they have full control over their inner workings.
- Your company’s annual and forecasted revenue — The more money your company brings in, the higher your premium because third parties could request more in damages when they understand how profitable your business is. With that in mind, insurers have more to protect and hike up your costs.
- Your service type — Every contracting service comes with different risk exposures. For example, a locksmith could still be held liable for a break-in, but they aren’t exposed to the same claim types as demolition contractors. Therefore, the higher the risk number, the more expensive your contractor insurance quote.
- Your business insurance claims history — If your company has made insurance claims before, you may experience increased premiums as you’re more likely to make another claim in the future. Insurance providers want to work with those who present the least risks, and they use your history as an indicator.
- Your company’s location — Some areas of Canada suffer from adverse weather conditions, and others have higher-than-average crime rates. If you conduct business in these areas, you should expect to spend more on your insurance premiums.
We work with a plethora of the country’s leading insurers to guarantee you access to the best possible rates.
How To Get Contractor Insurance in Canada
Getting contractor insurance through LiabilityCover is wonderfully straightforward. Our process affords you the time and space necessary to make well-informed contractor insurance decisions by pairing you with your perfect insurer.
Here’s how to get the coverage you need:
- Firstly, complete our intuitive online request form.
- Next, our team analyzes your insurance requirements.
- Then, we use our findings to connect you to one of the country’s best insurers with experience covering others in your trade.
- Finally, the designated broker or agent contacts you to guide you through the process.
Why Choose LiabilityCover?
LiabilityCover affords you the knowledge, time and space necessary to make effective protection decisions.
Over the years, we’ve partnered with leading insurers to bring contractors like you a diverse range of coverage. Thanks to our easy process, you can spend less time worrying about insurance and more time scoring clients and completing high-quality jobs.
Frequently Asked Questions
Are Subcontractors Covered Under Contractor Liability Insurance?
Generally speaking, contractor liability insurance doesn’t cover subcontractors, only full-time staff. However, your subcontractors can be included under your policy if needed.
Please remember that your policy limit applies to all your employees, not each individual. So, it might be financially beneficial for your business to request each subcontractor purchases their own liability coverage.
Should Contractors Add Professional Liability Coverage To Their Comprehensive Insurance Package?
Typically, you don’t need professional liability coverage as a contractor. With that said, if you offer advice as part of your job, we’d recommend adding the policy to protect you against allegations of incorrect information or failure to deliver a service as promised.
The brokerage we assign you will be well-versed in supplying comprehensive insurance packages to contractors in your field. They’ll help you decide whether professional liability coverage is suitable for you.
Is Contractors Insurance Required By Law?
Canadian law does not mandate contractor insurance. However, it’s highly recommended since numerous risks are involved in any contracting project (such as on-site injury, property damage, equipment damage, etc.) that can lead to excessive financial loss if your client takes legal action.
Plus, project managers or planners might ask for your proof of insurance when conducting risk management before hiring. Therefore, acquiring the relevant coverage can be the factor that scores you the project.
How Much Insurance Should an Independent Contractor Carry?
Being an independent contractor comes with a plethora of benefits. However, it presents unique risks from an insurance point of view. Since you don’t have a single employer, you need a comprehensive insurance package that moves seamlessly from job site to job site.
With that in mind, we suggest the following coverages for independent contractors:
- Builder’s risk insurance
- Tools and equipment insurance
- Professional liability insurance
- Commercial general liability insurance
We strongly recommend a limit of no less than $2 million for the latter. Contractual lawsuits often come with exorbitant price tags, so at least $2 million should ensure you’re covered for the entire case.
Which Insurance Providers Do Our Brokers Work With?
Our years of experience have allowed us to build unmatchable relationships with the country’s leading insurers, including:
- Berkley Canada
- CFC Underwriting
- Chesterfield Canada, Inc.
- Chubb Insurance
- Chutter Underwriting Services
- Coast Underwriters Limited
- Cowan Insurance Brokers
- Eagle Underwriting Group Inc.
- Elliott Special Risks Ltd.
- First Media
- Beacon Underwriting Ltd.
- AM Fredericks Underwriting Management Ltd.
- ACE Insured
Do You Need Contractor Insurance If You Have a Construction Bond?
Construction bonds don’t protect you from the same risks as insurance. For instance, bid bonds are utilized to confirm you’ll finish the job at the quoted price, and performance bonds cover your client if you cannot complete a project.
On the other hand, contract insurance financially protects you from bodily injury, property damage, and equipment replacement (to name only a few).
Bonds and insurance are two separate entities that help you manage business risks. You can’t replace one with the other.