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Contractors Insurance

Contractors insurance is a niche type of insurance product meant for businesses that operate in the contracting space. In general terms, a contractor is anyone who sells his or her materials or labour on a contractual basis. Contractors insurance, though, is intended for contractors operating in or adjacent to the construction industry. General contractors, subcontractors, or individual tradespeople are all contracting businesses who can benefit from having this type of insurance policy.

What Does Contractors Insurance Protect?

As a contractor, every new job brings an opportunity to do more work and earn more money. However, every project also brings a new set of risks. You and your team are the ones taking on these risks. This means the client’s insurance policies won’t provide any protection. Instead, you need to have an insurance policy of your own. You need to protect your business, your employees, your equipment, your materials, and yourself. A contractors insurance policy fits the bill.

Who Needs Contractors Insurance?

As a business owner operating in the construction or installation industry, you should plan to have this type of insurance policy. Most of the coverage types discussed above are designed to cover the unique risks that general contractors take on daily. Failing to have any of these coverage types for even one project can be catastrophic for a contractor. Theft of materials, damage to an in-progress project, or injury to a bystander could happen in the world of contracting. Without proper coverage, any of these incidents could bankrupt your business.

Do note that your business insurance needs may shift from one project to the next. For instance, your taking on a new job that will involve an increased crew size. You would likely need to upgrade your insurance for this type of change.

Typically, a contractors insurance policy will include the following types of coverage:

Commercial General Liability Insurance

If your work results in injury or property damage, commercial general liability coverage will cover the legal liability costs. Construction can be risky work with a long list of safety hazards, which makes contractors liability insurance crucial.

Business Property Insurance

Most contractors and contracting firms have offices or business premises where they meet with clients, store equipment, and more. You will want business property insurance to cover your property and contents.

Tools and Equipment Coverage

Many contracting or building jobs involve leaving equipment or materials on an external worksite for extended periods. Your business property insurance policy will not extend coverage this far. This is where tools and equipment coverage comes into the equation. If your tools or equipment are damaged, destroyed or stolen during the course of work, this policy would cover the losses.

Installation Floater

On any given contracting job, you will likely need to buy materials to get the work done. Once these materials are in transit or on the worksite, they can no longer be covered under your property insurance policy. You need an installation floater to cover losses or damage until the moment the client accepts your work. Once your client accepts the work the materials effectively become theirs.

Builder’s Risk Coverage

Builder’s risk insurance also known as course of construction insurance, is insurance that covers a building that is under construction. Builders risk coverage kicks in when the structure you’re working on burns down or there’s hail, wind damage. Builder’s risk typically covers only the structure, although some policies also cover materials that have not yet been installed. Builder’s risk insurance does not cover tools or equipment.


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