Guild/HMS Insurance is your Seasonal Insurance provider.
Our Favourite Summer Spots
May 29, 2018
What Happens If I Don’t Have Renter’s Insurance?
Do I Need Renters Insurance? Top 10 Reasons Why You Do
June 8, 2018
Guild/HMS Small Contractors Insurance

Small Contractors Insurance Guild/HMS Blog

Small Contractors Insurance…Who Needs It?

Small contractors insurance is insurance intended for independent general contractors that do business across Canada. Typically, a business can qualify for small contractors insurance if it has one or two business owners. In most cases, general contractors operate entirely independently, as one-person ventures. They then hire subcontractors to complete specific tasks for hired construction projects. However, it is not unheard of for a contracting business to have more than one name on the masthead. How big a contracting company can be before small contractors insurance no longer applies will depend on the provider.

Small Contractors Insurance typically splits into two main categories: Property & Liability.

What’s Included in Small Contractors Insurance?


As with many other types of insurance, small contractors insurance coverage typically splits into two main categories: Property and Liability.


Contractors Property Insurance

Contractors property insurance provides coverage for the assets that general contractors utilize in their day-to-day work. Such assets might include tools, equipment, building materials and more. As with other types of property coverage, the contractor will need to discuss with his or her broker to determine how much coverage is required, the deductible, and whether the policy covers actual value or replacement cost. Since the amount of coverage a contractor needs can vary from one project to the next, general contractors often purchase more property coverage than they need.


Contractors Liability Insurance

Contractors liability insurance, covers a general contractor if he or she is found legally responsible for injury or property damage. This type of coverage is crucial, for several reasons. First, general contractors do most or all their work on someone else’s property, which increases the risk of property damage. Secondly, contractors and their teams (or subcontractors) work in high-risk situations, with dangerous power tools, heavy-duty equipment, and potentially hazardous worksites. Commercial General Liability Insurance can cover the cost of a broken window at a client’s house but can also include medical costs and legal expenses if an employee, subcontractor, or bystander is hurt during work.


Protecting Against Risks

Protecting your business against risks isn’t the only reason to have small contractors insurance. The best professionals in the skilled trades business—be they subcontractors or prospective employees—aren’t likely to work for a contractor who lacks the proper insurance. Not only is entering that kind of situation a risk to them, but it also calls into question the credibility and professionalism of the contractor. A good contractors insurance policy can give your employees and your subcontractors peace of mind—not to mention your customers or clients! We bind contractor insurance in all major provinces across Canada such as Ontario, Manitoba, Saskatchewan and Alberta.

There are several other potential add-on coverages you may want to consider.

Other Options for Small Contractors Insurance

While property and liability coverage are the two main components of any small contractors insurance policy, there are also several potential add-on coverages’s that you might want to consider. Below, we have listed some of the most crucial options to discuss with your broker to design a small contractors insurance policy. Your insurance broker should advise you on each of these categories. Your broker should also let you know if your carrier can provide the relevant coverage as part of your contractor’s policy.


Builders Risk Insurance

This type of coverage protects builders and contractors throughout their projects. Say you are working on a project, such as a renovation of a house that you’re building for a client. Ideally, you will finish the project to the client’s satisfaction, get paid, and walk away happy. If your work becomes damaged before completion, this type of coverage will cover your losses. Builders risk insurance is especially important for contractors who are working on construction projects. In these situations, contractors often put up the costs for materials themselves or ask clients to pay a deposit to cover initial expenses. If your work is damaged or destroyed ahead of completion, you’d have made that investment with nothing to show for it.


Bid Bonds

If your profession involves bidding on construction jobs or other projects, then you may need this type of surety bond. A bid bond protects you if you bid on a project but are unable to perform the work. Perhaps you misunderstood the job at hand, or maybe you discovered complications with the project that made it impossible for you to tackle the task. In such a case, your bid bond will pay the difference between your bid and the closest bid from a rival contractor. This type of coverage means you aren’t paying out of pocket to leave a proposal behind. In most cases, you cannot make a bid without a bid bond.


Performance bonds

Bid bonds are essentially a type of deposit that contractors make when they submit a bid. Performance bonds, meanwhile, serve as a guarantee to the owner of the project that work is going to be completed based on a contract. If you finish half a job but cannot complete the work, the owner of the contract can file a claim against your performance bond. The performance bond can then compensate the client for any costs associated with your incomplete work.


Contractor’s pollution insurance

This type of coverage offers special liability protection if your work should harm the environment through pollution. Polluting or poisoning the environment—be it the air, a stream, a groundwater source, or something else—is not covered under standard liability insurance.


Wrap-up liability coverage

Wrap-up insurance is intended for large contractors taking on projects with bid values of $10 million or more. It is mostly a blanket liability insurance policy that covers a contractor and all their subcontractors. Wrap-up policies can also include vehicle coverage, property insurance, and more.

Electricians, carpenters, painters, landscapers, commercial cleaners, and handymen are just a few of the people who might need small contractors insurance.

Who Needs Small Contractors Insurance?

Most of the talk in this blog has revolved around general contractors. However, a general contractor is not the only person that might need or benefit from small contractors insurance. On the contrary, some insurance providers even refer to this type of business insurance as “contractors and skilled trades insurance.” Virtually any independent or small skilled trades business can qualify for coverage in this category. Electricians, carpenters, painters, landscapers, commercial cleaners, and handymen are just a few of the people who might need small contractors insurance. To get started, give us a call at 1-866-277-4949 or click the Tell Me More button.


Our team of insurance professionals are always here to help find the right insurance for you. Send us an email, check out “The Blog”, or give us a call to chat with one of our professionals.