Injuries on construction sites are on the rise in Canada. Between 2014 and 2019 injuries due to construction site accidents went from 231 to 357 per year.
Many companies complain that insurance is too expensive. But, how much is it really to ensure your business and your workers? What types of events and accidents should a good contractor instance policy cover?
In this article, we hope to help you understand what this insurance entails!
Who Is Contractor Insurance For?
Contractor insurance is for, as the name seems to suggest, contractors. But, this does not mean all people who work under a contract. A contract worker works under a contract for hire. Most of the time this indicates a mechanical or construction worker.
These include people who work in electrical fields as well as construction and other manual labour jobs. The importance of contractor insurance is to guarantee the safety and protection of the workers.
We will look at each of these jobs individually below.
HVAC Technicians
HVAC is the acronym term for heating, ventilation, and air conditioning units. These technicians specialize in the repair, installation, and maintenance of these units.
They engage with electrical equipment regularly. Despite safety measures, it is still dangerous.
Also, they tend to work in residences which if not maintained or tidy, can have tripping hazards. Animals need to be taken into consideration as well. Often times, booking agents will kindly advise homeowners to have their pets in another room while the service call is taking place. This is due to countless instances where technicians have been bitten.
Electricians
Electricians work in similar areas as HVAC technicians. But, they do not fix climate control units. Rather, they repair the electrical units and systems.
This can take them to places in the forest working on high wire structures. Or, in residential places working on home electrical systems.
Landscapers
On the outside, landscaping may not seem like a hard or dangerous job. However, landscapers handle difficult equipment and dangerous equipment on a daily basis.
Landscapers work with chain saws, blades on lawnmowers, and harmful chemicals every day. For these reasons, they should always be insured.
Plumbers
Plumbers work with pipes and similar equipment every day. They also unclog pipes and ensure water and other fluids can flow securely and effectively.
They are a vital part of the workforce. But, even though their job may seem straightforward, it can be dangerous. They handle dangerous and harsh chemicals. And, they need to weld pipes together on a regular basis which involves blowtorches.
Licensed Builders
A licensed builder may seem like the same idea as a constriction worker or general contractor. But, they are different. One of the main differences is their capacity to inspect the construction.
They must inspect buildings and ensure they are built to a safe and standardized means. Construction sites can be dangerous places. From falling objects to open holes, it is important to have proper insurance.
Door and Window Installers
Door and window installers often come into contact with old dust and mould. Especially when removing old windows and replacing them.
Lifting heavy equipment all day takes its toll, not to mention the dangers of working with glass on a regular basis.
Roofers
Roofers may seem to be the most obvious dangerous job. You must climb rooftops and install slippery shingles and other roofing.
But, they must also climb very tall ladders at times which they could fall from. And, they must lift very heavy materials regularly as well.
Drywallers
Drywall installation can be a potentially dangerous job. You must handle very dusty products and rip out old sheetrock.
Dust can be a harmful substance when it builds up in the lungs. People working in this field are exposed to such substances regularly.
What Does Contractor Insurance Cover?
Contractor insurance covers the property and well-being of the client as well as the worker. The purpose of contractor insurance is to prepare for the worst-case scenario.
Worst-case scenarios can happen any day. This is why it is so important to make sure that you have this insurance. It guarantees that you can pay your employees if they’re injured. It protects you from huge fees if there is an accident.
Damage to a Customer’s Property
Contractor insurance protects the client’s property from damages. It can’t prevent the contractor from paying out huge amounts of money to compensate for an accident.
Contractor insurance allows the contractor to work without fear of losing their business to a lawsuit. But, it also protects the client from damages to their possessions.
Personal Items and Equipment
This is usually covered by most contractor insurance policies. This can vary a little based on your exact plan and what you paid for when you signed up for it.
Regarding your equipment, it usually assists in covering some of the expenses for repairs resulting from work. The client’s personal property is usually included even for basic plans.
Lawsuits
Clients might be unhappy or displeased with your work. This might be them just being difficult or it can mean they have a legitimate claim. But, either way, it can cost you significant amounts of money in lawsuits.
General coverage usually helps you pay for most of the lawsuit expenses. You can also invest in a more inclusive service. This may help you cover more lawsuits.
Property
Your business property may not be insured under a basic insurance policy. Your client’s property is usually protected under most general contract insurance plans.
Your property such as office space or storage for your equipment may not be insured under your insurance plan. This may require you to insure your vehicles and structures separately.
Tool and Equipment
Damage can occur at any time on a construction site. Buying insurance for your individual tools may impact the plan you receive. Sometimes what it entails is increasing the values of the value of tools you have covered.
This means if you have a million dollars worth of tools, you should purchase the insurance up to this value.
Pollution Liability
Contractors use a lot of different chemicals. They deal with a lot of debris and potentially harmful pollutants.
This could be handling Roundup or asbestos. Either way, you don't want to get in trouble with the EPA (Environmental Protection Agency).
Builders Risk Insurance
Construction workers engage in a lot of potentially dangerous situations. This could be climbing the sides of unfinished buildings.
It can include climbing very tall ladders to the tops of rooves for HVAC workers. Either way, falling is a real possibility. Make sure you are covered.
Insurance for Independent Contractors
Insurance for independent contractors is different from other forms of contractor insurance. Generally, you need to purchase insurance for individual needs (car insurance or health insurance).
But, independent contractors tend to be somewhat on their own. They may be the sole owner of their company and a lawsuit could severely damage your business.
Unlike other more specific insurances, this type is meant to protect the overall worksite. It makes sure you don't lose your business as a result of an onsite accident.
What’s Not Covered by Contractor Insurance?
Contractor insurance is not all-in-one insurance. Rather, it has several components which you may need to purchase in order to be fully insured.
These components include commercial liability insurance and commercial vehicle insurance. These are not typically included within a contractor insurance policy. It will not include a health insurance policy for your workers either.
You must purchase medical and dental insurance separately for your worker. This is usually available on the insurance marketplace. This is commonly called the Health Insurance Marketplace. And, it is not included in the contractor insurance plan.
Worker's compensation insurance is also not typically a part of contractor insurance. This insurance is usually paid for separately and is overseen by the government.
Builder's risk insurance is not included in most contractor insurance plans, either. These plans must be purchased separately and protect buildings being built from vandalism and fire damage.
Risks of Hiring Uninsured Contractors
One of the primary risks of hiring an uninsured contractor is they will damage your property. If they are uninsured, they may not be capable of paying you back for the damage.
It may also indicate other issues, such as them not being known to the IRS or government. If this is the case, and you have no way of tracking the company, suing is difficult. Hiring an insured contractor can protect you from years of lawsuits.
Or, a worker could get hurt while working on your property. If the worker can link the harm to your home or property, they might sue you. This can cost thousands of dollars and headaches.
What to Look for in a Company that Offers Contractor Insurance
An insured contractor will most likely have proof of their insurance. Sometimes this insurance number is etched or painted on the sides of their trucks. This is true for landscapers, construction workers, and other labourers.
They will also likely have their insurance cards with them. Additionally, you can usually find their details on their website. Insured contractors will usually boast of their insured status.
As far as physical attributes there are several things to look for. Good companies usually have transparent policies and contracts. If you find that their contract is vague and unclear, you might want to go elsewhere.
Other signs include the quality of their equipment and trucks. If you notice they are dilapidated, then it's possible they are uninsurable. Just pay attention to the details, but don't write them off just because of these signs.
What Else Does Contractor's Insurance Include?
As explained above, general contractor insurance does not cover many necessities. It is a general and encompassing insurance, not a comprehensive insurance
This insurance covers primarily damages and injuries to the third party. This mainly includes your client or those on the property as you work there. This can include children or spouses of the client.
It covers injuries to the third party or potential slander from them. If they try to sue you based on claims of false advertising, for example. It covers most attorney and legal services and fees.
Typical Costs of Contractor Insurance
The cost of general contractor's insurance varies a little on the extent of coverage. But, on average you can expect to pay over $1,000.00 per year for basic coverage.
This coverage would only include injury and damage to third parties. This means you will have to pay more for additional insurance. Worker's compensation will cost an additional $200.00 or so per month.
Commercial auto insurance and tool insurance will increase your payments as well. For auto insurance, you will expect to pay about $2,000.00 per year. For your tool insurance, you can expect to pay an additional $170.00 per year.
How to Save Money on Contractors Insurance
One of the key ways to save money every day is to find out where you spending. Find out where you are spending that is not necessary. Contractors may be spending more than they need on their insurance plans. So, make sure you know what you need and what you do not need.
Many contractors opt to create a business-owned policy. This is a relatively basic and minimal policy to hold. But, it is significantly cheaper than more elaborate plans.
This plan is only eligible for small businesses. This includes companies with fewer than 100 employees. They must make less than 1 million dollars per year.
This plan is a great way to save money, but only if your business qualifies.
The Takeaway
There is nothing worse than a surprise bill. Everyone wants their business to run smoothly. And, clients want their home renovations to go as planned as well. Hiring uninsured contractors is a risk that is not worth it.
Contractor insurance is a prime means of guaranteeing the security of your work. If you hire contractors, insurance helps protect your property and assets. All around, it is great protection. You need a reliable contractor insurance provider.
Our staff at Insurdinary can help! Along with our partners at APOLLO, we provide all levels and types of insurance to protect your business. Contact us today for a quote!
