Contractor InsuranceAs an independent contractor, it is always advisable to get a Contractor Insurance coverage Package Program from the same place as you could get a policy with a combination of
- contractors' general liability,
- tools and equipment and
- commercial auto policy, all in one place.
Doing so helps reduce the hassle of dealing with multiple companies, complications with claims, and protecting your skilled trades.
Why is Contractor Liability Coverage Important
What if a subcontractor has no contractors insurance ?
There is an old saying. "There is never enough insurance when you need them." Therefore, it is crucial to have a proper risk management strategy for businesses and other trade areas.
Imagine a bypasser skid and fall due to tripping over the wire you forgot to tidy up, or a collapsed scaffold damaged someone's car parked near your work site due to strong wind. Bad things happened. Without a proper tool to protect your skilled trades, it could mean lengthy and expensive legal litigation or medical bills indefinitely. This could destroy the profitable business any handyman worked so hard to build up.
Who needs contractors insurance?
Most general contractors and subcontractors in the construction business must carry contractors' general liability policy by-laws and businesses they work for. In addition, if your skilled trades is professional and is regulated by a governing body, you will also need a professional liability policy.
Businesses types such as the following will need protection:
- Carpenter, Plumbing, Electrician
- Snow Plow
- And many more.
What kind of contractors insurance should a trades have?
Depending on the line of business and the nature of trades, a trades business should consider the following.
- Commercial General Liability Most contractors should have a general liability policy or CGL designed for their work field.
- Professional Liability Professionals within their skilled trades, such as CPAs and consultants, should carry professional liability, commonly known as errors and omissions coverage.
- Health benefit: If you employed a trades worker in Canada, it is mandatory to carry workers' compensation or get an additional private health policy.
All About Contractors Liability Policy
What does a contractor's insurance cover?
The common Contractors Insurance policy is usually designed to protect the insured in two main categories.
- Liability - Any negligences resulting in other people's injury or suffered financial loss. In other words, the 3rd party coverage.
- Own Property - The first-party policy holder's coverage, such as damage in the insured tools, investment, or any material.
To further clarify, a Contractors General Liability protects contractors financially from loss when they become obligated to:
- Pay due to damages or medical payments because someone suffered from bodily injury, property damage, or personal/advertising injury to third parties and when it occurs during the policy period caused by or relating to the contractor's negligence. (You can read more on Commercial General Liability here).
Property policy covers financial loss due to loss of use, business interruption, tools, or building.
How do independent trades get contractors insurance coverage?
Suppose you run a business that produces income through a service contract and has no employees. In that case, you're considered self-employed trades. You can buy private health coverage, Commercial General, Professional Liability, and property insurance through this website by clicking "get a quote below." You're not considered an employer only because you hire independent contractors to do some work or if you're trying to hire a trade worker in Canada.
What is the Contractors' Proof Of Insurance?
Before being offered a contract, most contractors will be asked for a "proof of insurance certificate" as a standard business practice. The trades business can ask their broker for this certificate. It will have the name, policy number, address, nature of the business, beginning and expiry date, insurer's information, and address. The company requesting the certificate may also include their name as additional insured on the policy in most circumstances from the trades.
How much does a 1 million dollar business liability policy cost?
The cost of Commercial General Liability solely depends on the line of business. Assume you are welding in the military or oil and gas site then, the premium will be high compared with a janitorial working for a commercial office. Another factor that impacts the premium will be the annual revenue, industry, number of employees, and claims ratio from industry peers doing similar jobs. We have seen that the owner's credit score may also impact the premium. Based on our experience, the standard general liability policy for a low-exposure job is surprisingly affordable. Most policies cost less than 1,000 per year. A million policy costs 0 to 1,000 per year. At the same time, a million more worth of coverage will cost an average of 100. Again, these are for references only and subject to many variables, and it goes on a case-by-case basis. Please click below for a more accurate quote.
What can the contractor's insurance cover?
- Commercial General liability
- Commercial Property and equipment.
- Boiler and Equipment.
- Employee tools.
- Business interruption.
Protect Your Business
How do I protect myself as an independent worker or a handyman?
Doing Work as an Independent Contractor: How to Protect Yourself and Price Your Services
- Protect your social security number
- Have a clearly defined scope of work and contract in place with clients.
- Any subcontractor you hire, ensure they are licensed if it is regulated industry, insured, and best of all, bonded.
- Get general/professional liability insurance.
- Consider incorporating or creating a limited liability company.
What happens if I hire an unlicensed trade worker?
It is illegal for an unlicensed person to perform contracting work on any project if the work is regulated by law. If an unlicensed trade tries to sue someone who hired them for unpaid work, no court will enforce payment! On the other hand, any damage caused by the unlicensed worker to a third party may be liable to you or your insurance. This will result in an increase in your contractor policy premium or an outright decline on your insurance renewal the following year. It happens to every unlicensed worker in Canada.
How Do I Handle Damage Caused by a Subcontractor or another handyman?
Start with your insurance company. First, call your broker and explain the problem. Next, call the subcontractor and explain that you've already talked to your insurer. Finally, keep cleanup to a minimum. Always ensure your sub-contractors have their insurance and request "proof of insurance" with your company as additional insured on the certificate before allowing them access to a site.
What does it mean if a subcontractor is licensed?
In a regulated professional such as HVAC, Plumbing, Electrician, if the subcontractor is licensed, it means that they have a legitimate claim to be a professional in their industry. Having a license also shows that the subcontractor is serious about each job they do. They won't cut corners when it comes to their work on your construction project.
Do subcontractors need their insurance?
As a self-employed, it is your responsibility to make sure your policy covers are suitable for your business and offer cover. You can take many insurances, but, as mentioned above, two of the most important are Commercial General Liability and Professional Liability insurance.
What is the difference between a contractor being bonded and insured?
The most appealing subcontractors are often both bonded and insured. Insurance protects you in the event of an accident and allows you to operate legally. Bonds help create a trust that you'll complete the required project and enable you to work on public jobs.
How to protect yourself when hiring a Subcontractor?
Some other best practices to keep in mind as you finalize a written agreement:
- Ensure the subcontractor or yourself obtains a permit if the job requires one.
- Ask for a copy of the subcontractor's license and proof of insurance.
- Pay by check and get a receipt.
- Document any changes to the contract in writing.
- Keep a file for all related paperwork.
This could work when you hire a skilled worker in Canada.
How do you tell if a subcontractor is bonded?
Most suppliers and subcontractors will only work with a contractor who has a bond in place. Ask them for a bond number and certification to determine whether your contractor is bonded. You should take extra precautions to ensure that both the bond and the license are up to date.
How to confirm a business is licensed, bonded, or insured?
Licensed Ask if the business is licensed and, if so, with whom. Then contact the licensing agency to confirm
Insured Ask the company to have its agent send a Certificate of Insurance directly to you.
Bonded Bonding is often a misunderstood and unique insurance product.
Other Business Insurance Coverage You May Need
Small Business Owner Insurance Policy (BOP)
A small business owner policy (BOP) could consist of a couple of packages. The adhering to are the eight most common insurance policy coverage types that an entrepreneur must recognize.
Commercial General Liability
- This coverage protects if bodily injury, property damages, injury, or advertising injury incur with your business.
Have this coverage part of small business owner insurance to defend when business earnings and extra expenditure are at risk.
Secure against a business when found responsible for an issue with one of the items they offer.
- If a business within its skilled trade gives professional guidance or provides a professional opinion, it should probably carry professional liability insurance.
The Course of Construction Insurance
Secure against Construction If you are in the renovation of builders.
Defence against tools or equipment breakdown. (It can be a furnace or machine) when it requires time and money for a replacement.
Secure against your content or stocks
Bundling with a small business owner package (BOP) to with business use vehicle including transport of cargo.
- Employment Practices Liability
- Electronic Data and Equipment
- Valuable Papers and Records
- Job site Short-Term Pollution from Pollutants
- Identity Theft
- Blanket Insurance on valuable property
- Limited Property of Others Liability
Cyber risk coverage
If you take online orders, store sensitive information on the computer, you need proper cybercrime protection. See this section about Cyber insurance.
Always Review Your Insurance Coverage
Over time, businesses may have an increasing need for insurance coverage as their business grows. Always review your insurance and fill in gaps as the situation changes.
As an insurance broker, we'll help small business owners within their skilled trades decide what is needed and the best fit for their insurance.
What you need to know about Contractor Insurance Package: Be careful and detailed on all coverage. We issue liability, contractor insurance, and certificates fast, all in one. Call now to discuss the details.