What Kind Of Insurance Is Covered For Contractors?
A comprehensive commercial insurance policy for contractors begins with 4 core policies:
- Commercial General Liability (CGL) is a business insurance policy that protects you and your contracting business from some of the common risks you can expect to face as a contractor, such as third-party bodily injury and property damage. For example, you are hired to install new kitchen cabinets for a client and accidentally damage their hardwood floors in the process. Your client successfully sues you for property damage and your CGL policy covers the cost of repairing the floors, totalling $20,000. CGL also covers legal and medical costs; should you be successfully sued.
- Commercial Property Insurance is a policy that protects both your workshop and the physical assets inside, such as equipment, tools, and supplies. Commercial property insurance may cover the cost of repairing or replacing equipment that has been damaged or lost due to an external source, such as a fire or theft. This policy may also cover loss of income or additional business expenses incurred due to the damage. Commercial property insurance does not typically include earthquakes or floods, so if you work in a city with a high flood rate, such as Toronto, it is worth speaking with your broker to ensure these events are listed as insured perils.
- Commercial Auto Insurance, also referred to as fleet insurance, is an insurance policy that protects your commercial vehicles in the same way personal auto insurance protects your personal vehicle. You may also consider adding non-owned vehicle coverage, which is coverage for vehicles used in connection with your business that you don’t own, lease, rent, or borrow — for example, an employee who uses their truck for company purposes.
- Equipment Breakdown Insurance is an additional form of coverage you can add to your policy to cover the cost of repairing or replacing tools and equipment that suffer a mechanical or electrical breakdown. For example, the day before you begin a small-scale kitchen renovation, your electric saw breaks down. You purchase a new one and your equipment breakdown insurance covers the cost of the replacement saw, totaling $500.
Every business is unique, and in an industry, as varied as contracting, there is a multitude of risks specific to the individual trades. You may require more or less coverage, depending on your business. Speak with your broker about the different types of coverage you can add to your policy to cover your unique business risks.
Learn more about contractors’ insurance in Ontario, BC, and Alberta.