Self-employed tradesmen – from electrical contractors, plumbers, builders, roofers, and other trades – may be the unsung heroes of the construction world. They are pivotal in building large industrial complexes, commercial properties, and residential communities.
Statistics Canada shows 2.9 million Canadians were self-employed in 2018, up from 1.2 million in 1976. Moreover, self-employed workers account for 15% of total employment nationally, with British Columba having the highest rate of self-employed workers (17.9%). Fast-forward to 2021, and data from Statista finds there are 1.5 million self-employed or employed construction workers in Canada.
Whether legally required to or not, these professionals need insurance for trades to protect themselves and their tools and equipment from damage and loss.
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What Is Tradesman Insurance?
Tradesman insurance is a general term describing a business insurance policy geared towards self-employed tradespeople or owners of a small construction company. It combines different coverages in one policy that protects their tools, equipment, and construction projects and provides financial support for third-party bodily injury or property damage claims.
This type of policy can be customized to suit your trade’s specific needs, whether that work is a private job you take on alone, as a subcontractor working on a larger project, or when offering consulting services.
Why Do Self-Employed Tradespeople Need Insurance?
There are several reasons why self-employed tradesmen require insurance protection. Among those reasons:
It’s required
Either by law (as is the case with some trades like electricians) or as a project requirement, if you’re hired as a subcontractor to work at a job site, you need coverage to enter a job site or get paid for your work.
For licensing
Licensed tradespeople are usually required to carry a certain amount of liability insurance to maintain their licences.
Income protection
A tradesman’s income is linked directly to their line of work. One third-party lawsuit – even a frivolous one without merit – could wipe out your savings, thrust you into bankruptcy, and damage your reputation.
What Insurance Coverages Should Tradesmen Have?
What a customized tradesman insurance policy contains depends on multiple factors, including the type of work you do, where you work, and your years of experience. In general, your policy is designed to provide you with compensation for costs related to the claims you file, whether replacing stolen tools, paying for a third party’s medical expenses, or defending yourself in court.
Nevertheless, there are five main types of insurance your policy should have. They are:
1. Commercial general liability (CGL) insurance
CGL, or general liability insurance, is the most common protection self-employed tradesmen have in their policies. It shields you from third-party bodily injury and property damage claims related to your work or which result from an accident. Since you work in professional trades and on construction sites, it may be worthwhile to include builders’ risk insurance in your policy. It covers your entire project, including the structure you’re building or working on and the materials at the job site if losses or damages occur because of fires, water damage, theft, or vandalism.
2. Tools and equipment insurance
Without your tools and equipment, how can you do your job? Moreover, your high-quality tools are specialized and expensive, as is your equipment, such as a bulldozer or backhoe. Construction site theft is rampant and constant. Tools and equipment insurance covers your costs if your tools are stolen or vandalized, or damaged by water or in a fire.
3. Professional liability insurance
Also called errors and omissions (E&O) insurance or tradesmen indemnity insurance, professional liability coverage protects you from allegations or claims of negligence, misrepresentation, mistakes, and failing to deliver a service as promised. If you make a mistake and it costs your client money, they could pursue you legally for damages. Professional liability coverage provides funds for your legal costs and damages a client suffers from your services.
4. Installation floater insurance
Installation floater insurance helps fill a gap in your overall policy by covering your client’s materials prior to and during an installation job, including when it’s in transit. It’s designed to reimburse you for client materials or property that’s damaged, lost, or stolen until the final installation of those materials is completed.
5. Pollution liability insurance
As a tradesman, you may be contractually required to carry pollution liability insurance. If not, it’s still a wise move to include it in your policy. It covers the costs of third-party bodily injury, property damage, and environmental damage caused by your work, whether gradual or sudden.
Getting Insurance for Trades That’s Affordable
Getting tradesmen insurance to protect your finances and reputation isn’t as tough as nails. Fill out an online application for a free quote from Zensurance. With over 50 insurance providers in our partner network, we can find the comprehensive but affordable policy you need.
– Reviewed by Matt Daniels, Practice Leader, New Business, Zensurance.
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