Matt Hands, VP, Insurance and MoneySense
Contractor insurance is a type of commercial insurance that protects you from the risks in general contracting industries, such as electrical, construction, framing, painting, roofing, plumbing, HVAC, and renovations. As a business owner, it’s important to prepare for any accidents or claims that could cost you a massive out-of-pocket payout, potentially shutting down your open jobs and job sites.
For example, if you’re renovating a client’s condo, but you accidentally damage the neighbouring unit, both the building and tenant next door could seek compensation. Having contractor insurance can protect you financially by paying for the damage and legal fees.
Each contracting industry is different - you won’t be facing the same potential risks as an electrician if you’re a window cleaner. Therefore, it’s important to customize the coverage in your contactor insurance policy to suit your business operations and maximize your protection.
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Any independent contractor should consider contractor's insurance as it helps to keep your hard earned money in your pocket if a sudden and unfortunate event occurs. Without a valid contractor's insurance policy, a single slip and fall accident or a property damage claim could force you to park your truck outside of a lawyer’s office, instead of the driveway of your next renovation - costing you time and money.
It’s important to protect not only yourself but also your workers, tradespeople, and clients, allowing you to maintain a good reputation and sustain your contracting business in the long run.
What type of business does a contractor's insurance policy cover:
- HVAC maintenance
- Window washing
- Junk removal
- Cleaning services
- Handyman services
- Appliance repair
General liability insurance
Equipment and tools insurance (contents insurance)
Builder’s risk insurance
Commercial auto insurance
Pollution liability insurance
Products-completed operations liability
Commercial property insurance
How much is contractor insurance in Canada?
For a standard CGL coverage on your contractor insurance policy, you can expect to pay annual premiums of $450 for $2 million in protection. The cost, however, will increase as you add more coverage options to customize your contractor insurance to suit the needs of your business.get a free quote
Each type of contracting service brings a different level of risk. If you’re a locksmith, there are still some risks associated, such as a break-in due to a faulty lock, but you won’t be facing the same type of claims that a demolition contractor would. Therefore, the more risk your service brings, the higher your insurance quote will be as you would be more likely to make a claim that requires a larger payout.
Number of employees
The more people you employ in your contracting business, the more expensive your insurance will be. Being responsible for more people means there is a higher chance someone will make a mistake that results in a claim. As an independent contractor, you have full control over all operations, but with team members, an employee could leave your swzall plugged in, causing a child to injure themselves.
In any profession, experience brings better results and fewer mistakes, and insurers appreciate any reduction in risk. Therefore, if you’re more experienced in your industry, whether it’s painting, plumbing, or construction, you’ll be able to get a cheaper contractor insurance premium than a beginner in the same field.
The more revenue your business brings in, the more expensive your insurance will be because a claimant could seek more in damages knowing how profitable you are. As such, your insurer will also have more to protect.
Business insurance history
If you’ve made business insurance claims in the past, it could raise your insurance premium because it shows you are more likely to make another claim in the future. For instance, if you’re a painter that has damaged multiple carpets in the past, you likely won’t be claims-free later on. Insurers want to work with customers that present less risk, and your business insurance history is used as an indicator of that.
Are subcontractors covered under contractor insurance?
Do contractors need professional liability insurance?
How do I get contractor insurance in Canada?
Do I need contractor insurance if I have a construction bond?
Matt Hands, Business Director of Insurance
With 6+ years of experience at Ratehub.ca, Matt’s focus has been on growing its newest business unit, Insurance. He is a thought leader and a valuable resource to respected publications across Canada. read full bio
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