Do You Have the Contractors Insurance You Need?

Whether your operation is big or small, contractor’s insurance can protect your business from the financial implications of theft, property damage and legal action. If on occasion you hire subcontractors, you are responsible for their work and well-being too so having general contractor’s insurance in place is a wise choice to safeguard your business and good reputation.

Custom Coverage For Ontario Contractors

As a contractor, you work in and around people’s homes and businesses, and even if you apply the strictest quality and safety standards, customers and/or third parties could sue you if they think that your work has led to injuries or damage to their property. Without liability insurance, one claim could cost in the millions of dollars and put you out of business. Without insurance on your vehicles, tools and supplies, a fire or theft could also cost you hundreds of thousands of dollars.

Call for a quote on contractors insurance: 1.800.731.2228

Contractor Insurance Considerations

There are many trades and a wide variety of contractors, so that’s why there are numerous options available to customize a contractor’s insurance policy to your exact requirements according to the risks you and your business face. When shopping for contractor’s insurance, consider the following:

  • Are you at risk of lawsuits from clients or third parties due to injuries, property damage or other disputes?
  • Do you have employees or subcontractors who use their own equipment, tools or vehicles on the job?
  • Do you require replacement income if you are temporarily unable to work?
  • Do you have an office location or home office?

All of the above can be insured. Whether you’re a general contractor, subcontractor or construction tradesperson in Ontario, Mitchell Whale Insurance has policies to help protect you, your employees, your building materials and your equipment – on the job, in the shop and anywhere in between.

Insurance tip

Quick-tip: Yes, your subcontractors need insurance too

If your business uses subcontractors, you may think that your business insurance is sufficient to cover any damage or injuries caused by your subcontractors. This is not true. Most business insurance policies assume that subcontractors are properly insured.

If you have to make a claim based on the actions of an uninsured subcontractor, this could cause your premiums to increase, or worse. Your insurer could refuse to renew your policy, and if the loss exceeds the limits of your policy, your business could be out of pocket for the loss.

Contractors Insurance FAQs

Contractors insurance is actually a number of different coverages that are bundled together to meet the needs of your business. The following examples relate to the most common coverages:

General liability – If work done by your plumbing business leads to water damage at a customer’s home, your general liability policy will pay to fix the damage so you don’t have to.

The tools of your trade – If your backhoe is vandalized or stolen while at a worksite, your tools coverage will pay to repair or replace the backhoe, and may cover the cost of a rental in the short term so you can keep working.

Commercial vehicles – If you have a car, van or truck that you use for business purposes, your commercial vehicle policy will pay to repair or replace your vehicle if it’s damaged, destroyed or stolen. It also includes liability coverage that pays out if your business is sued.

Commercial property – If you have a physical business location, a commercial property policy can pay for damage to the buildings, theft or damage to contents, and lawsuits if a customer is hurt while visiting your office/shop.

Contractors insurance is a type of business insurance that typically includes coverage for:

General liability – Paying out when other people sue you;

The tools of your trade – Protecting hammers, drills, compressors, but also larger tools like excavators and backhoes, from theft, damage or loss;

Commercial vehicles – Protecting cars, vans, trucks, anything that has a license plate, from theft, damage or loss; and Commercial property (if you have a physical business location) – Protecting your office or shop from theft, fire, etc.

Depending on the nature of your contracting business and the types of risks involved, you may want other coverage, including equipment breakdown insurance, product liability insurance, errors and omissions insurance, business interruption insurance, and pollution liability insurance.

The cost of contractors insurance in Ontario starts under $1,000 a year and depends on a number of factors, including:

– The specific type of contracting you do
– Where your business is
– The size of your business (annual revenues)
– Whether or not you have employees
– Your years of experience and those of your employees
– Your previous claims

As with most insurance, you can usually reduce your premiums by choosing lower policy limits and higher deductibles.

Learn More

In Ontario, contractors are not required by law to have insurance, but may be required to have insurance for the following reasons:

– Subcontractors may need insurance in order to get work from general contractors.
– Banks may require proof of insurance for a business loan.
– Customers may ask for proof of insurance.

Contractors insurance is sometimes called contractor’s combined insurance because it combines a number of different coverages to meet the specific needs of your contracting business. A contractor’s combined package can include any or all of the following:

– General liability insurance
– Tools or equipment insurance
– Commercial vehicles insurance
– Commercial property insurance
– Product liability insurance
– Errors and omissions insurance
– Business interruption insurance
– Pollution liability insurance
– Cyber liability insurance

Contractor’s protective insurance is another way to describe a general liability policy that covers your contracting business in the event that your work or that of your employees leads to injuries, illnesses, damage to property or other losses for a customer or third party.

Pollution insurance is a type of liability insurance that covers your business in the event that someone falls ill or suffers a financial loss as a result of pollution or contamination caused by your work or that of your employees. Even if your business doesn’t handle highly toxic materials, pollution insurance may be a good idea. Examples of pollution claims:

– Improper installation of plumbing contaminates drinking water with mold.
– A homeowner falls ill from breathing welding fumes.
– In an older building, renovations accidentally release asbestos into the air.
– It’s important to note that most general liability policies exclude pollution-related losses.

Contractors equipment insurance, also known as tools insurance, will pay to repair or replace the tools you use in your business if they are lost, stolen, damaged or destroyed. Tools covered can include simple tools like hammers and drills, but also larger, more complex tools like bobcats and bulldozers.

No. If you are a general contractor, you need to insist that all your subcontractors carry their own insurance. If they don’t and you have to make a claim, it could affect your premium.

If you are a subcontractor who is working under a general contractor, you need to have your own contractors insurance in place to ensure that your business and your customers are protected. If your work or that of your employees leads to an injury, damage to property or other loss, you are liable. If you don’t have insurance, the general contractor’s insurer may pay for a customer’s damages, then sue you personally to recover their losses.

Have a question about contractor’s insurance? Just send it to us via Facebook or Twitter with the hashtag: #askadam.