Liability insurance built for contractors.

Understanding contractor liability insurance in Canada.

If you’re hired on as a contractor, you’re likely there to perform a specific, often specialized, job or service. You may produce a product or maybe you provide advice. If a third party or your client claims you’ve failed to deliver, made a mistake, faulty installation, or cost them financially, they may sue you. Regardless of who’s at fault, you’ll have to deal with the litigation process.

As a professional, it is always recommended to purchase liability insurance for contractors to cover yourself in case any lawsuits should arise claiming malpractice, negligence, or error. Professionals may also be asked by clients or other stakeholders to provide proof of insurance. Certain professionals may even be required to carry a certain minimum amount of contractors professional liability insurance to operate.

Contractor liability insurance helps cover damages, legal expenses, or settlements for claims or unforeseen events that fall under the policy conditions, which exclude deliberate dishonesty, misrepresentation or fraud. As litigation costs can quickly escalate, this coverage is critical if you’re a contractor.

How much contractor liability insurance should I have in Canada?

The amount of coverage depends on the nature and size of your business, who your clients are, as well as a number of other factors, including:

What factors affect liability insurance for contractors in Canada?

The amount of liability insurance for contractors depends on:

The right liability insurance protects your business where it matters most—without leaving gaps or unnecessary costs. Being underinsured could mean paying out of pocket in a lawsuit, while overpaying for coverage you don’t need strains your bottom line. That’s why it’s essential to work with specialists who understand contractor risks.

Our liability insurance brokers offer expert guidance and tailored coverage to keep your operations protected. Connect with a broker or complete an online quote to get started.

The cost of contractor liability insurance.

Each policy comes with a certain coverage limit. Common coverage liability limits includes: $1 million, $2 million and $5 million. This is the maximum amount that will be paid out over the 12-month policy period, regardless of how many claims you make. This includes judgement awards, settlement, and defense costs.

• For higher coverage limits of around $3,000,000 liability rates can be around $1100 per year or $1350 per year for a $5,000,000 liability.
• The average price for contractors’ liability insurance begins at around $850 per year with the standard amount of $2,000,000 liability protection.

Your deductible will depend on your company’s revenue, ranging from $250 to $1,500 per claim. You’ll need to pay a deductible for each claim, i.e. if you have two claims, you’ll pay the deductible twice.

Keep in mind you won’t be covered for deliberate fraud, dishonesty or misrepresentation and not all scenarios are covered. If you fail to advise your insurance company of a known incidence that could likely result in a claim, you may also not be covered. For example, let’s say you made a mistake that results in a delay for a project. You should let your insurer know, even if it doesn’t escalate to a lawsuit. Sometimes being served comes as a complete surprise, but often you know ahead of time that there is a risk. Communication is key.