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Liability insurance for contractors

General contracting companies vary significantly in size and area of expertise. Despite the pandemic’s initial impacts, the recent rise in demand for contracting services due in part to the residential renovations boom suggests the industry is expected to make a positive recovery.

As a contractor, managing risk is inherent to your business, so it only makes sense that you have a robust risk management strategy in place for yours. At 2autoinsurance, we know what makes your business unique. With over fifty partners, we’ve helped thousands of contractors protect their businesses with flexible insurance policies customized to meet their specific needs. 

What is contractor insurance?

Comprehensive coverage that can withstand multiple projects, managing employees, and general business liability risks is critical to running a thriving construction business.

When it comes to finding the perfect coverage for your business, distinct factors, such as trade, location, and service-related risks, need to be considered. For example, snow removal will have very different types and levels of risk exposure than residential painting. 

We know what makes your business unique. Our contractor insurance policy packages protect contractors against the specific risks associated with contracting trades, such as third-party property damage and equipment theft.

What does it cover?

Individually building approaches his different, and insurance necessities will vary by service; however, contractors’ insurance typically contains the following policies:

Commercial General Liability (CGL) Insurance

         Commercial general liability insurance is the most common and crucial contracting trade coverage. 2autoinsurance is a liability insurance policy for contractors that protects you and your enterprise against expected claims you may run into at an employment area, such as third-party parcel damage. Should your industry be named in a case, CGL may cover medical expenditures and permitted fees, nevertheless of the outcome. Introductory note for contractors, your policy range limit applies to all employees of your business, not each employee. One option to acclimate all of your workers is to expand your limit. Hiring sub-contractors with disadvantaged insurance is another way to ensure all parties have adequate coverage.

Implement sand Equipment Insurance – Your tools and supplies are probably your most important assets, making equipment and tools insurance essential. This policy covers replacing or repairing lost or damaged equipment, tools, accessories, or other property in your care. Anything appreciated at less than $1,500 is believed to be an instrument, whereas anything above is considered a tool. 

  • As an enterprise, the building produces more pollution than flying. Forgetting to plug a construction site or an improperly fitted pipe can lead to severe damage. Pollution liability insurance covers clean-up costs, bodily injuries, and property damages caused by pollution or toxic substances produced due to your work on a covered job site.

 Builder’s Risk Insurance 

               Also known as Construction Liability Insurance, Builder’s Risk protects your building and liability against expensive property claims throughout a project’s duration. 2autoinsurance  typically require their clients to carry this coverage, although sometimes you may be responsible. When completing project details, confirm who will be responsible for purchasing the policy and ensure all involved parties are protected.

 Contractors do generally not need Professional Liability Insurance. Nevertheless, if you offer advice or conferring as part of your services, believe in adding it to your policy to protect against claims alleging you gave incorrect information or failed to deliver a service as sworn.

Due to the interpretation across commerce, discovering a one-size-fits-all approach may be challenging. Converse with one of our technology vendors to see if any of these further coverages are respectable for your business:

  • Products-Completed Operations Liability – Covers you and your corporation against consumer lawsuits alleging parcel damage (e.g., faulty pipes) or a physical injury after you have completed a service or undertaking.
  • Non-Owned Auto Insurance – Auto range for automobiles used about the enterprise you don’t own, lease, rent, or borrow. For example, this coverage could apply to employees using their vehicles for company business.
  • Tenants Legal Liability – This policy covers loss or damage to property you rent or occupy (but do not own) for business purposes, such as a temporary office near a job site.
  • Installation Floater – This is an additional form of coverage, typically included with Builder’s Risk policies, which protect the tools and materials you use during construction from theft, loss, or damage.
  •  Rented, Borrowed Equipment – Range for failure or damage to fabrics and equipment you hire, rent, or borrow.

Due to the variation across trades, finding a one-size-fits-all policy may be difficult. Speak with one of our specialized brokers to see if any of these additional coverages are right for your business:

  • Products-Completed Operations Liability – Protects you and your business against customer lawsuits alleging property damage (e.g., faulty pipes) or a bodily injury after you have already completed a service or project.
  • Non-Owned Auto Insurance – Auto coverage for vehicles used in connection with your business that you don’t own, lease, rent, or borrow. For example, this coverage could apply to an employee who uses their vehicle for company business.
  • Tenants Legal Liability – This policy covers loss or damage to property that your rent or occupy (but do not own) for business purposes, such as a temporary office space near a job site.
  • Installation Floater – This is an additional form of coverage, typically included with Builder’s Risk policies, which protect the tools and materials you use during construction from theft, loss, or damage.
  • Leased, Rented, Borrowed Equipment – Coverage for loss or damage to materials and equipment you lease, rent, or borrow.
  •  

Who needs it?

Any independent contractor or business providing general contracting services should protect their company with a contractor insurance policy package.

Not only will it protect you from financial loss, but it will also help in securing jobs. In today’s increasingly litigious society, clients want to see that they have guaranteed contracting resources that are adequately insured.

We’ve insured thousands of contractors across Canada, some of our clients include:

  • Appliance repair

  • Carpenter

  • Construction

  • contractors

  • Cleaners

  • Demolition

  • Decks and fencing

  • Electrician

  • Excavation

  • Flooring

  • Handyman

  • HVAC

  • Independent/Self

  • Employed Contractors

  • Interior Designer

  • Junk Removal

  • Landscaping

  • Painters

  • Pest Control

  • Plumbers

  • Renovations

  • Restoration and

  • Remediation

  • Roofing

  • Snow Removal

  • Swimming Pool

  • Service

  • Tree removalWelders

  • Window Cleaning

How much does it cost?

Contractor insurance starts from $450 annually for a basic CGL policy with a $2M limit for a small or medium-sized business.

When you fill out our online application, we will ask some questions about your business to understand your needs better. The following factors are taken into consideration when determining the best policy options for you: 

  • Years of Experience 
  • Trade Types
  • Annual and Projected Gross Revenue
  • Number of Employees
  • Previous Insurance Claims

We’ve partnered with over fifty insurance providers to offer you different options that suit your business needs at the best price.

Insurance considerations for independent contractors

Working as an independent contractor has many benefits; you define your schedule and contribute your expertise to various projects. However, operating independently has unique risks from an insurance perspective. Unless you are working full-time with one company, you are unlikely to be covered by an employer, meaning you need comprehensive insurance that travels to job sites with you.

General liability insurance for independent contractors could cover any third-party injuries during a project or property damage resulting from your actions, even if you work at multiple sites. Equipment and tools insurance will provide coverage should they be lost, damaged, or stolen, and you should always confirm Builder’s Risk coverage is in place before you begin a project. Suppose you offer advice as part of your services. In that case, you may wish to protect yourself with professional liability insurance, as it protects against claims alleging negligence or failure to deliver a service as promised, which can be costly.

Not only will purchasing insurance protect you from financial loss, but it may also help in securing jobs, as project managers and planners will often ask for proof of insurance before making a hiring decision. Having liability insurance for contractor can be the difference between whether or not you secure a contract.

Suggested Coverage: 

  • Commercial General Liability Insurance
  • Builder’s Risk Insurance
  • Tools & Equipment Insurance
  • Professional Liability Insurance

Common claims scenarios

Problem: You are hired to install new kitchen cabinets for a client and accidentally damage their kitchen counter during construction.

Outcome: Your commercial general liability policy may cover the cost to repair the kitchen counter, totalling $20,000 in damages.

Problem: One of your employees is driving their car to transport tools to a job site. They get into an accident on the way, damaging both vehicles involved.

Outcome: Your employee is found to be at fault for the accident. Your CGL policy may cover auto repairs for both vehicles under the non-owned automobile coverage, totalling $35,000.

Problem: Your tools are stolen out of your truck parked at a job site. You have a large contract with a new client the following day, making it necessary to rent tools until yours are replaced.

Outcome: Your contractor tools policy may cover the costs of replacing the stolen tools and reimburse you for the rental expenses totalling $15,000.

Frequently asked questions

No, having Contractors Insurance is not mandatory, but here are some reasons why you should:

There are many risks involved in a contracting project, e.g., on-site injury, equipment, and property damage, any of which could lead to financial loss if a client files a claim against you.
For risk-management purposes, project managers and planners will often ask for proof of insurance before making a hiring decision. Having Contractor Insurance can be the difference between whether or not you secure a contract.

Contractors do not require Professional Liability Insurance. However, if you offer advice as part of your service, consider adding it to your policy to protect against claims alleging you gave incorrect information or failed to deliver a service as promised.

If you’re still not sure if Professional Liability Insurance is something you need, ask your broker about what types of coverage make the most sense for your business.

Contractor Insurance provides coverage for full-time employees of a business. This policy does not typically include subcontractors; however, if needed, they can be added. Regardless, it is important to ensure you are meeting all insurance requirements in a contract.

Important note for contractors, your policy coverage limit applies to all employees of your business, not each employee. One option to accommodate all of your employees is to increase your limit. However, hiring subcontractors that carry their own liability insurance ensures all parties have adequate coverage.

For subcontractors, consider purchasing liability insurance to ensure you always have coverage, even when an employer can’t cover you. Having liability insurance will also allow you to work on multiple sites.

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