Why Contractors Need Insurance


Renovation Contractors Need Insurance More Than Ever Before!

A general contracting company is hired to install a new roof on a residential home. During the construction process, a load of shingles is accidentally dropped on a vehicle parked below. The vehicle owner sues the general contractor for the value of the vehicle.

Commercial General Liability (CGL) insurance is becoming more important every year as contractor customers are becoming more aware of their rights, and the increasing responsibilities of the contractors completing work for them.

CGL provides two main types of coverage:

  1. Property damage caused to third parties (eg. dropping a load of shingles onto a vehicle)
  2. Bodily injury caused to third parties (eg. dropping a load of shingles onto a human)

Limits of at least $2,000,000 are usually recommended, with higher limits for riskier operations such as welding and snow removal.

CGL can be sold on its own, as well as in combination with other coverages in a package. The most common additional coverages include tools and equipment, whether stationary at a workshop, or mobile traveling from job site to job site. Another important coverage for contractors is called an installation floater, the transport of building materials to and from job sites. A renovation contractor installing a new kitchen could have $20,000 or more worth of materials in transit and at customer locations at one time, including flooring, cabinets, countertops and appliances, and these items are the responsibility of the renovation contractor until the work is completed.

All contractors need CGL at the very least, and this would include carpenters, plumbers, electricians, landscapers and heating & air conditioning contractors, to name a few. Some operations carry less risk, such as painters and window washers, while other operations carry higher risk, like roofing and environmental contractors. The premium charged will depend on the operation itself, the gross annual revenue of the contractor, and possibly the territory where the majority of work is completed.

It should be kept in mind that contractor insurance usually does not cost as much as people think. Many contractors go years without claims, and because of this, premiums have remained consistently low for many years. Some industries have experienced more losses than others in the last few years, such as roofing and plumbing, and as such, they will usually pay more for insurance than electricians and carpenters.

Regardless of cost, insurance is imperative for all contractors, as one loss could cause financial ruin.


James Mior

James Mior

COMMERCIAL LINES MANAGER - James has managed the Commercial Lines department at KTX Insurance Brokers since February 2014, including Commercial Property/Liability, Commercial Auto/Fleet, and Commercial Customer Service. James obtained his RIBO licence in 2002, and has spent his entire career in Commercial Lines. Along with managing the commercial team, he also writes new business with standard Canadian insurers, as well as managing agents and Lloyd’s of London. He developed and still manages a successful I.T. insurance program, and has successfully placed coverage for thousands of clients in retail, general contracting, real estate, professional services, and errors & omissions for consultants. Unlike traditional brick-and-mortar brokerages, James leverages the technology of Kanetix to provide instant online insurance quotes for many business owners.

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