What Insurance Should Contractors Have?

What Insurance Should Contractors Have?


Nov 3, 2021

Contractors are hardworking professionals! Their skilled labour contributes so much to what we rely on day to day, from their work and repair on our homes and offices to their contribution to the infrastructure that we use to navigate the world. Without their efforts, our world would quite literally crumble.

Given their importance to everything that we do, contractors need to protect themselves in every way possible. That includes having the proper training, using equipment safely, and of course carrying the right contractor insurance. Liability insurance for contractors is one of the key tools that allows them to do their job safely, without the stress of having to worry about personal liability for any loss or damage that happens on the job.

So what sorts of business insurance should contractors carry in order to operate securely? How can they best protect themselves from liability for anything that happens on the job?

Types of insurance a contractor should have

Any contractor should protect themselves first and foremost with commercial general liability insurance (also known as CGL). Your commercial general liability insurance is going to be the sort of broad, expansive coverage for the work that you do. This includes covering you from legal liability if somebody slips and falls while you are working on a job site, or if they trip over a tool that may have fallen to the ground while you’re up on a ladder.

CGL insurance also covers mistakes that may occur while on the job site. Despite any contractor’s best efforts, human error is sometimes inevitable, and no one is perfect 100 per cent of the time. Naturally a client will not be pleased if their new home renovations are soon ruined by water damage because a water line was not fully sealed, but CGL will cover these types of situations.

Contracts will also want to obtain tools and equipment coverage to make sure that their tools are covered in the event of damage or theft. While most homeowners may have a small tool bag with a basic hammer and screwdriver, contractors have professional-grade tools that usually cost hundreds or even thousands of dollars. Any loss or damage of these tools can make fulfilling contracts impossible, so proper coverage will help ensure that your business is protected in case that happens. Similarly, contractors will want to look into insurance to cover equipment breakdowns, since any loss of time due to broken equipment can cause a significant hit to their bottom line.

Insurance challenges for specific trades

While all contractors should carry contractor insurance, there are certain professions for which the right insurance is especially important.

Roofers insurance, for example, can present a particular challenge. Roofing is obviously high risk work, and there are any number of things that can go awry. While a roofer or their client can be injured due to roofing work, there is also a risk of defects, either through problems with the work or problems with the materials. Only a small number of providers cover roofing work specifically, but ensuring that you have the right liability coverage can help prevent small problems from becoming significantly larger ones.

For contractors who deal with snow removal, the weather turning suddenly can always prevent a risk. It is of course physically impossible to be at every property at once the minute snow starts falling, and there will inevitably be areas of a property that are not cleared right away. When pedestrians do slip and fall, they often make a legal claim against the business, the property owner, as well as anyone else who may have played a role, and contractors can be pulled in through subrogation, so maintaining the right amount of insurance is key.

HVAC contractor insurance also requires significant coverage. Contractors working in HVAC in professional settings deal with large and expensive units such as boilers, and are often dealing with gas which can always present a danger. Comprehensive insurance will not only protect their work, but will protect them against any claims later made against their work product.

Subcontractors need insurance too

As a subcontractor, you may think that insurance coverage acts as this broad safety net, and that the contractor’s insurance will catch you if you fall (metaphorically OR literally!). More often than not, though, you would be mistaken.

Subcontractors need to make sure that they are covered with the right amount of liability insurance for their work. Most contractors will ask to see proof of insurance before letting subcontractors anywhere near their job site, and they are right to do it. Most contractor insurance does not cover the work of subcontractors, so subcontractors need their own insurance as independent contractors. Without that coverage, if a property owner takes action against a contractor for any fault or defect in their work, the contractor may be protected under their own policy, but any subcontractor brought into the claim may be on the hook for their own damages.

Contractors may be experts in their own trade, but many are less familiar with the fine print of their own insurance policy. Knowing that fine print, however, is what will cover them if anything goes awry in their work. Contractors should always make sure that they understand their insurance policies, and know exactly what they cover. Contractors must also make sure that their premiums are up to date so that they don’t miss a single day of coverage.

Buying insurance can be hard, especially when you don’t have a lot of free time on your hands. At Foxquilt, we’ve made it easy. Our technology caters to small business owners to make insurance buying easier, so that you can find insurance products that actually fit your needs. Let’s get started on a quote today.

Contributed by Andrew Soares, Commercial Account Executive at Foxquilt

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