How to find the best contractors insurance

James Rodriguez James Rodriguez updated on 2022-08-10

Did you know that the upper limit for medical bills as a result of a work accident is $100 000 per person? Imagine you are the contractor on a building site and something terrible happens, a wall collapses or there is an electrical fire. If five people are injured you could be left with bills of half a million dollars, before you even begin to compute the loss of working time and possible damage to the site and neighbouring buildings.

Contractors insurance makes sure that in this scenario, and a variety of other liabilities, you have adequate cover so your business can survive the unexpected and unfortunate.

What is contractor’s insurance?

Contractors insurance is a package of business insurance policies that cover accidents during construction. It is typically purchased by builders or contractors and covers them in case of any mistakes made by them or any third parties hired to work on the site.

Contractors insurance can protect you from a variety of problems, whether you accidentally break local pollution rules, your excavator hits a surprise gas main or the electrician you hired never turns up to complete the job.

What does contractors insurance cover?

Each contractors insurance policy can be adjusted to suit the requirements of the contracting business and the project. Adding an extension to a kitchen has different challenges and risks than building a new public swimming pool! When searching for the right policy you should consider the size of your company, the reliance on third parties to complete work and the risk to property and health. Let's take a look at the different elements that can form a contractors insurance policy.

Builders risk insurance

Builders risk insurance covers the physical building that you are working on and your liability for it. Typically it is the client who purchases this kind of policy though this is not mandatory. Before signing off on a contract, the client and contractor should agree on who is paying for the builders risk insurance.

For a more detailed exploration, take a look at our guide to builders risk insurance.

Commercial general liability insurance

Also known as CGL, this policy is the minimum level of insurance required for a contractor. It protects against all forms of liability including accidents, workplace injuries, medical expenses, and legal fees. This insurance is crucial to safeguard your business from having to payout in case something goes wrong.

Pollution liability insurance

This time of insurance covers bodily injuries and damage to property caused by pollution. For example, say that negligence in sealing a gas pipe or improper disposal of asbestos causes respiratory problems for an employee. This type of insurance will cover the costs.

Professional liability insurance

This is an optional add-on that may or may not be required depending on the project. This type of policy protects you in case you are taken to court based on advice you have provided or for failure to complete the services promised in the contract.

Tools and equipment insurance

This policy protects the physical objects used during the work which may be expensive. Anything that costs more than $1500 is considered equipment. Anything costing less is considered a tool.

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Who needs contractors insurance?

Any business providing contracting services should have at the very least a basic level of contractors insurance. There are two very good reasons for this:

  • Accidents can and do happen. Do you want the future of your company to be at risk due to events outside of your control? A big payout for an injured worker's medical costs can run into the $100 000 range. Make sure you don't risk bankruptcy by purchasing an adequate level of insurance.
  • In today's competitive market, clients will want to be informed as to the level of liability insurance for contractors that you possess. Not only do they want their assets protected but they will have more confidence in a company that plans for when things go wrong as well as when things go right. A contractor with a high level of coverage shows that they are professional and competent and will likely do better in competing for jobs.

Some of the types of contractors purchasing this insurance include:

  • Carpenters
  • Electricians
  • Landscapers
  • Painters and decorators
  • Plumbing
  • Renovators
  • Roofers
  • Window cleaners

How much does contractors insurance cost?

Insurance for contractors doesn't have to cost a huge amount. Policies can start from as low as $400 and come with up to $2 million of coverage.

Prices will range depending on how many policies you purchase to make up the overall package of your general contractors insurance, the number of employees that need to be covered, your revenue and your history of insurance claims.

Interested in finding a get price that suits your company's needs? Check our comparison tool for business insurance.

How does contractors liability insurance differ by province?

Contractors insurance can vary in price in between regions due to different working conditions. Buying contractors insurance in Ontario for building work demands different considerations than insuring a cleaning company in the Yukon! Take a look at the table below for some rough estimates of low-end to high-end annual prices.

ProvinceLow-end estimate/yearHigh end estimate/year
 Contractors insurance Alberta$300$1700
Contractors insurance BC$400$1700
Contractors insurance Toronto$700 $1500

Contractors insurance Canada

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