Ontario Contractor Insurance

Contractor insurance is actually a number of different coverages that are bundled together to meet the needs of your company. 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 reciprocating saw or other tools are stolen while at a worksite, this coverage will pay to replace them, and may cover the cost of rental equipment in the short term so that you can keep working.

Commercial vehicles – If you have a car, van or truck that is used 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 of contents, and lawsuits if someone is hurt while visiting your office/shop.

Contractor insurance typically includes coverage for:

General liability – Provides coverage if people sue your business.

The tools of your trade – Protects hammers, drills and saws from theft, damage or loss. Larger tools and equipment like generators, excavators and backhoes need to be insured individually.

Commercial vehicles – Coverage for company cars, vans, trucks or anything else that has a license plate from theft, damage or loss.

Commercial property (if you have a physical business location) – Protects your office or shop from theft, fire, etc.

Business interruption – Replaces lost revenues if you have a fire, theft or storm damage that prevents the business from running for a time.

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

The cost of contractor insurance in Ontario starts at less than $1,000 a year and depends on a number of factors, including:

– The specific type of contracting you do
– Where your business is located
– 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.

In Ontario, contractors are not legally required 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.

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

• General liability insurance
• Tools and 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 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 to have.

Here are some 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.

These are really two different coverages. Tools coverage is for hand tools and smaller power tools (under $2,500), and is a bit of a catch-all, meaning you don’t have to tell your broker when you buy a new drill.

Contractor equipment insurance is for tools and equipment over $2,500 in value, including things like compressors, generators, bobcats and bulldozers. These items have to be added individually to your larger business insurance policy.

In both cases, coverage will pay to repair or replace the tools and equipment if they are lost, stolen, damaged or destroyed. Learn more here.

Yes and no. First of all, if you are a general contractor, you need to insist that all your subcontractors carry their own liability insurance. It’s often a requirement of your policy, and if they don’t, it could affect your coverage.

That said, in some cases your coverage could pay for losses that were caused by a subcontractor. In those instances, your insurance company could sue the subcontractor to recover their losses.

If you are a subcontractor who is working under a general contractor, you need to have your own contractor insurance in place to ensure that your business and your customers are protected. Most general contractors will insist on it.

Only vehicles that are licensed for the road require auto insurance. So a good guide is if the machine has a license plate, it needs auto insurance.

That said, they should be included on your commercial insurance policy to protect them from physical damage and theft.

Depending on the industry and provincial regulations, professional indemnity insurance can be required for some contractors. In Ontario, contractors are required to purchase general liability insurance, and for some trades they may be required to purchase professional indemnity. Depending on the project owner of your next job or the municipality you operate in, you may also be asked to purchase a surety bond.

Employers who operate in Ontario are generally required to have workers’ compensation. If you have one or more employees operating for your business as a contractor, you should have workers’ comp and must register with WSIB. If you are unsure if you need to register, check out WSIB’s guide for business types.

If a contractor does poor work, whether that’s repairing a roof inadequately and having the shingles come loose or failing to fix a plumbing issue which results in further water damage, contractor insurance will not cover them. There may be endorsements available to cover that contractor for any consequential damage due to their faulty workmanship, such as a professional indemnity policy.

There are hundreds of contractors scattered throughout Ontario, but only some of them are considered preferred by insurance companies and called upon when needed to fix damages for insured losses. You, as a contractor, will likely need to become bonded and have your own insurance. You will also need to have several years of experience, the right insurance backing, and a reputation for good work. You’ll also need to be licensed to work as a contractor in Ontario. Then, all you need to do is apply to your ideal insurance company by filling out a contractor application form.

Bonding insurance, or bond insurance, is not insurance at all but oftentimes a contractual requirement for contractors wishing to bid on a project. Bonds are agreements between three parties, rather than two, and they are designed to protect the project owner or client, not the business. Some bonds are required for contractors to become licensed. Being both bonded and insured is the best way to ensure your company comes off as reliable and trustworthy.

Owners contractors protective insurance, or OCP, is a form of standalone coverage that insures the named insured’s liability for property damage or bodily injury caused by the independent contractor’s work on the insured’s behalf. For general contractors who hire subcontractors, this coverage is crucial.