To paraphrase a creative writer, “Every morning, I jump out of bed and step on a landmine. I spend the rest of the day putting the pieces together.” 

Although not directly, there is a correlation between that writer’s comment regarding constructing a story and a general contractor or builder piecing together the necessary parts and dealing with the unexpected to construct a building or complete a project.

After all, it’s the nature of the construction industry to be loaded with unforeseen risks. Outside of the visible dangers involved with operating heavy equipment like cranes, backhoes, and bulldozers, doing hot-torch roofing or excavating a trench, there are countless invisible risks or unexpected incidents that crop up that can affect any contractor or construction business, such as:

Understanding contractors all-risk insurance

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  • Third-party bodily injuries to clients on a job site or passersby
  • Accidental damages to a neighbouring property or a client’s property
  • Pollution or environmental-related hazards
  • A fire or vandalism that damages a job site or materials
  • Theft of tools, equipment, and raw materials
  • Damages from severe weather to equipment or an unfinished project
  • An allegation of professional negligence, poor work, or breach of a contract

Other things could go dreadfully wrong and delay a project or upend a contractor’s finances and business. 

And while contractor liability insurance is generally required by anyone working in the construction industry and covers a range of potential risks, there is the possibility of an incident that falls outside of that coverage. That’s why it may be worthwhile to get what’s known as contractors all-risk insurance.

What Is All-Risk Insurance for Contractors?

As its name implies, contractors all-risk insurance is a customized policy designed to cover all contractors, subcontractors, skilled tradespeople, and business owners involved in a project. 

Specifically, it covers damage to ongoing work, materials, temporary structures, and equipment on the site for things like fire, theft, vandalism, natural disasters, and accidental damage. This type of policy is best suited to large construction projects with multiple contractors, equipment, and a significant amount of materials on site. 

One of the benefits of a contractors all-risk policy is it shifts the burden to the insurance provider to prove a claim for damage or loss falls within an exclusion in the policy.

Contractors All-Risk Insurance v Contractors Insurance: What’s the Difference?

The main difference between contractors all-risk insurance and contractors insurance lies in their scope and focus.

All-risk policies cover a broader range of risks. It serves as a bridge between risks to third parties and subcontractors through a single policy that covers gaps between exclusions that might exist if relying on separate policies. An all-risk policy aims to protect everyone and everything involved in a large construction project.

Contractors insurance is more narrow in focus and is geared toward liability protection for a contractor’s operations during the course of construction, covering their tools and equipment.

What Does a Contractors All-Risk Insurance Policy Include?

A contractors all-risk insurance policy typically includes the following coverages:

  • General Liability Insurance

Commercial general liability insurance, or general liability insurance, covers third-party bodily injuries or property damage at a job site or because of your usual operations.

  • Commercial Property Insurance

Commercial property insurance pays for damages or losses to your office or warehouse, contents, electronics, furniture, and office equipment if affected by fire, water damage, a natural disaster, vandalism, or due to theft following a break-in.

  • Pollution Liability Insurance

Pollution liability insurance is designed to cover the cost of cleaning up environmental hazards caused by your operations, resulting in immediate or gradual third-party bodily injury or property damage at or near the job site.

  • Tools and Equipment Insurance

Tools and equipment insurance covers your transportable tools and heavy construction equipment used at the job site if damaged by fire, water, a natural disaster, vandalism, or if stolen.

  • Professional Liability Insurance

Also called errors and omissions (E&O) insurance, professional liability insurance covers your legal expenses and resulting damages if facing allegations of professional negligence, poor work, mistakes, or failure to deliver a service as promised.

  • Installation Floater Insurance

Installation floater insurance covers a contractor’s property or materials at a temporary site, while in transit, or during the installation process until it is installed at the job site.

  • Delay in Start-Up or Advance Loss of Profits Insurance

This coverage compensates a contractor for financial losses if the completion of the project is delayed due to an insurable loss, such as damage caused by a fire to the construction site.

  • Junk Removal Insurance

Junk or debris removal insurance covers expenses for removing debris or wreckage from a job site following an insurable loss.

What Does a Contractors All-Risk Insurance Policy Not Cover?

A contractors all-risk insurance policy typically excludes coverage for damages and losses resulting from the following:

  • Wear and tear of tools and equipment
  • Intentional acts of damage to property or materials
  • Employee or internal theft
  • War and acts of terrorism
  • A nuclear-related incident
  • Equipment or tool mechanical or electrical breakdowns
  • An overland flood
  • Earthquakes
  • Pest infestations
  • Mould, rot, or gradual deterioration-related damage
  • Explosions

What Does a Contractors All-Risk Insurance Policy Cost?

What a contractors all-risk policy costs depends on the depth and detail of your needs and risks. Insurance providers determine the premium for this type of policy by considering the details of your business, including:

  • Your location and size of your company
  • The type of services and projects you provide
  • How many employees and subcontractors are involved in your projects
  • The value of the tools and equipment you have
  • If your work includes using flammable and toxic materials, working at significant heights, or using dangerous equipment and machinery
  • The coverage limits and deductibles you choose
  • Your years of experience
  • Your annual and gross projected revenue
  • Your insurance claim history

How to Get the Contractors Insurance Coverage You Need Fast

Let us take the hassle of getting the contractors all-risk insurance protection you need off your hands. We can find a low-cost policy and customize it to suit your requirements.

Fill out our online application for a free quote. We’ll shop over 50 Canadian insurance providers, get you covered, and provide you with a certificate of insurance quickly.

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About the Author: Aharshan Thangarasa

Aharshan Thangarasa is a licensed commercial insurance broker and Team Lead, Contractors, at Zensurance.