Contractor liability insurance protects independent contractors and trades businesses from third-party injury, property damage, and legal claims. It’s essential for meeting client requirements, safeguarding assets, and maintaining professionalism. Ontario contractors can expect annual costs ranging from $650 to $ 2,500 or more, depending on various risk factors.
Contractors operate in high-risk environments, where a single accident or oversight can result in lawsuits, injuries, or substantial property damage. Here’s where an insurance policy tailored to your company’s specific risks comes into the picture.
Whether you're an independent tradesperson or run a growing contracting business, contractors' liability insurance is a foundational layer of protection you can't afford to skip.
In this guide, we'll break down exactly what this insurance covers, who needs it, how to obtain a quote, and how to avoid common misconceptions, all with a Canadian perspective, tailored explicitly to Ontario-based contractors.
What Is Contractors' Liability Insurance?
Contractors' liability insurance is a commercial insurance policy designed to protect contractors from third-party claims arising from:
- Bodily injury
- Property damage
- Personal or advertising injury
These claims may stem from incidents that occur during day-to-day operations, while working on a job site, or even after a project has been completed (commonly referred to as completed operations liability).
In industries where physical risk, subcontractor coordination, and site hazards are the norm, even a minor oversight can lead to significant legal and financial consequences. All these make contractor liability insurance a vital component of any risk management strategy for trades and construction professionals.
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What does contractor liability cover? |
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Contractor liability insurance covers:
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Why Contractors Need Contractors' General Liability Insurance
Contractors face unique liabilities. From power tool mishaps to scaffolding accidents, even a minor accident can result in expensive claims. Without proper business insurance coverage, one incident could cost you your equipment, income, contracts, and even your personal savings.
Here’s why contractors' liability insurance is essential protection for every independent contractor in Ontario:
- Often required by clients and general contractors (GCs): Most commercial and residential clients only award a contract when presented with proof of contractor general liability insurance. This ensures you can handle potential damages or injuries responsibly.
- Protects your reputation and demonstrates professionalism: Having coverage shows clients you take safety, accountability, and risk management seriously. This cautiousness helps you stand out in competitive bids.
- Safeguards your business and personal assets: If a third party files a claim for bodily injury or property damage, contractor liability insurance helps cover legal fees, settlements, and repair costs, so you’re not paying out of pocket.
- Meets provincial and licensing requirements: In Ontario and many provinces, proof of contractor liability insurance is often required for contractor licensing, building permits, and government or large-scale contracts.
At KASE Insurance, we help Ontario-based contractors secure tailored protection that matches their trade, project scope, and client requirements, whether you’re a self-employed electrician, HVAC technician, or managing a multi-crew construction firm.
Pro Tip: Some claims, such as those resulting from faulty wiring, may arise long after the project handoff. A properly structured liability policy includes coverage for completed operations, ensuring you’re not left exposed long after project completion.
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Key Components of Contractors' Liability Insurance
Contractors’ liability insurance covers risks unique to the trades. It excludes several situations that could be covered under your policy through additional coverage.
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Covered by Contractor Liability Insurance |
Not Covered (Requires Additional Coverage) |
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Bodily injury to third parties (e.g., clients, bystanders) |
Injuries to your own employees (covered by Workers’ Compensation) |
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Residential or commercial property damage to a client’s home or business |
Damage to your own tools or equipment (requires Equipment Floater) |
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Legal defence costs for covered claims |
Faulty workmanship or poor design (covered by E&O insurance) |
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Medical payments for injured third parties |
Contractual liability or hold harmless agreements |
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Advertising injury (e.g., slander, libel claims) |
Cyber incidents or data breaches (requires Cyber Insurance) |
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Claims made during and after a project (based on policy) |
Intentional acts or criminal conduct |
1. Bodily Injury
If a third party (client, vendor, or bystander) is injured due to your work, this policy helps pay for resulting expenses, so you don’t use company or personal funds. It covers the following costs:
- Medical bills
- Emergency services
- Legal defence and damages (if sued)
Example: A homeowner trips over your extension cord while renovating. Your policy covers their medical expenses and legal fees if they sue.
2. Property Damage
If your work accidentally damages a client’s property, contractor liability insurance covers repair and replacement costs.
Example: You accidentally crack a marble countertop while installing cabinetry. The repair or replacement cost would be covered under your policy.
3. Personal and Advertising Injury
Contractor liability insurance protects your company against non-physical claims that can cause reputation damage, such as:
- Slander or libel
- Copyright infringement
- False advertising
Example: Another contractor claims your business signage or slogan copies theirs. Your policy can cover your defence costs.
4. Medical Payments
Your liability insurance policy can cover immediate medical costs without requiring fault to be established. It’s a goodwill measure that can prevent lawsuits.
What are the Types of Liability Insurance for Contractors
Contractors can choose from different types of liability insurance, which can be included in their tailored policies.
Contractors’ General Liability Insurance
General liability insurance is the core coverage that most contractors need, which protects against third-party bodily injury, property damage, and related legal costs arising from day-to-day work activities. It sets the baseline that most policies include.
Professional Liability Insurance (Errors & Omissions)
Professional liability insurance, or errors & omissions, covers claims related to design flaws, negligence, or failure to deliver services as promised. Claims that can result in reputational damage are included in this insurance.
It’s especially crucial for professionals relying on personal expertise, such as:
- Design-build firms
- Engineers
- Consultants or trades providing advice
Builders Risk Insurance (Optional)
While not technically liability insurance, builders' risk insurance complements your policy by covering:
- On-site tools and materials
- Work-in-progress structures
- Equipment loss from fire, theft, or vandalism
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Do I Need Liability Insurance as an Independent Contractor?
You’ll likely be asked to show proof of liability insurance if you fall under any of the following:
- working on commercial job sites
- subcontracting under a general contractor
- bidding for public sector work
Having a tailored policy helps increase your chances of winning bids, securing clients, and securing projects.
Even as a one-person operation, you need liability insurance since you're personally liable for injuries or damage you cause. Without coverage, you could lose:
- Your income
- Your vehicle/tools
- Your home or savings (in the event of a court judgment)
Tip: Being incorporated doesn’t shield you financially. It only separates you legally. You still need liability insurance to protect your business and personal assets.
→ Learn more: How to Protect Your Business Assets with Contractors’ Insurance in Ontario
How to Get a Contractor Liability Insurance Quote
Getting a contractor liability insurance quote requires knowing your business details and reaching out to a reliable insurance broker experienced in your industry, such as KASE Insurance. Here’s a step-by-step guide.
Step 1: Gather Your Business Details
Insurance providers will ask you to provide details regarding your business. Before contacting brokers, prepare the following information:
- Business name and structure
- Annual revenue and payroll
- Number of employees or subcontractors
- Type of work and average project size
- Locations and project types (residential, commercial, industrial)
- Any past claims in the last 5 years
These details will inform your contractor liability insurance quote, allowing providers to give you an accurate estimate depending on your company's size, unique risks, and past claims history.
Step 2: Compare Quotes from Brokers
Rather than going directly to insurers, work with a brokerage like KASE for a more comprehensive and convenient process. On your behalf, our insurance brokers can do the following:
- Compare rates from top-tier insurers
- Tailor coverage to your trade and size
- Flag any gaps in your existing coverage
With our extensive insurance network, we compile and filter the insurance options that meet your specific requirements. You’ll only need to review our top choices for your company and select the one that best suits your situation.
Step 3: Understand the Cost Factors
When reviewing your options, understand which factors affect the liability insurance final cost. Your premium depends on:
- Trade type (i.e. roofing has a higher risk than interior painting)
- Business size and revenue
- Project scope and location
- Claims history
- Coverage limits (e.g., $2M vs. $5M)
Typical contractor liability insurance costs in Ontario range from $650 to $ 2,500 or more per year, depending on these variables. Keep this in mind when reviewing your policy options.
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What are Common Misconceptions About Contractor Insurance? |
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❌ “I’m Incorporated; I Don’t Need Insurance” Wrong. Incorporation only provides legal separation. You still face financial exposure for lawsuits or claims. |
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❌ “General Liability Covers Everything” Not quite. General liability does not cover:
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❌ “It’s Too Expensive for My Small Business” Policies start as low as $650/year for small trades. With the right broker, you’ll only pay for what you actually need. |
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How to Choose the Right Contractor Liability Insurance Coverage Limit
When choosing your own liability insurance coverage, ask yourself the following:
- What do my client contracts require?
- Can I pay out of pocket if I am sued for $500,000?
- Am I working with high-value materials or properties?
Your answers here define the scope of your contractor insurance policy package. The bigger the requirement, risks, and material value, the higher the coverage limit you’ll need, so you’re sufficiently protected from all dangers.
Typical coverage limit depends on the project scope and the type of work required. Keep in mind that most commercial projects in Ontario require contractors to carry:
- $2M in general liability for basic jobs
- $5M+ for public, institutional, or high-risk work
Use this as a baseline when reviewing policies to find the right insurance coverage for your business.
Need more than the minimum? Ask about umbrella insurance to increase your protection across all policies (commercial general liability insurance, commercial auto insurance, liability insurance, etc.) without paying individual surcharges.
5 Ways to Reduce Your Liability Insurance Costs
A comprehensive construction insurance policy doesn’t need to cost an arm and a leg. Here’s how you can lower your contractor liability insurance cost without limiting your coverage.
- Bundle your policies. Combine CGL, tools/equipment, and auto for discounts and a lower total.
- Maintain a clean claims history. Your claims history affects your premiums. The lower your claims, the better your premiums at renewal. However, be transparent with your history. Do not exclude previous claims to reduce your quote, as this may lead to reputational damage and inaccurate quotations.
- Invest in safety training. Some insurers offer credits for certified programs that ensure your employees are trained to handle covered incidents, which lowers your company’s risks for claims.
- Choose appropriate limits. You might be paying for policies you don’t need. Avoid over-insuring and pay only for what your trade requires.
- Work with an industry-experienced broker. A brokerage insurance company familiar with your trades provides you with tailored options fit to industry compliance regulations and your company’s specific requirements.
At KASE Insurance, we advocate for you and identify overcharges or policy gaps, ensuring you receive only the protection you need, nothing more, nothing less.
KASE Insurance Covers Contractors Across All Trades
Without proper coverage, your construction business could be one incident away from battling reputational damage and shouldering medical, legal, and operational expenses. Prepare for all contractors' risks with a tailored contractor liability insurance policy crafted by our expert brokers at KASE Insurance.
We provide custom-built liability insurance solutions for:
- Electricians
- Carpenters
- Plumbers
- Masonry crews
- HVAC technicians
- Construction and demolition teams
- Landscapers
- Roofers and siding professionals
- Sewer and watermain contractors
- Snow removal contractors
Whether you’re a sole proprietor or managing a team, our brokers help match the right coverage to your exposure.
FAQs About Contractor Liability Insurance
It depends. If you're licensed, working commercially, or bidding on projects, yes. Many municipalities and clients mandate it.
You need to ensure their liability is covered under your policy or require proof that they carry their own.
Usually, yes. With proper documentation, KASE can bind a policy within 24 to 72 hours.
Not under contractors’ general liability insurance, but tools and equipment insurance can be added easily.
Key Takeaways
- Purpose: Contractor liability insurance covers third-party bodily injury, property damage, and legal defence costs.
- Who Needs It: Required for contractors working on commercial, municipal, or subcontracted projects, even sole proprietors.
- Coverage Highlights: Includes bodily injury, property damage, advertising injury, and medical payments; excludes employee injuries and faulty work.
- Cost Range: Typically $650–$2,500+ per year in Ontario, depending on trade, revenue, and project size.
- Common Misconceptions: Incorporation doesn’t replace insurance; general liability doesn’t cover everything.
- Savings Tips: Bundle policies, maintain a clean claims record, and work with an experienced broker to reduce premiums.
- Compliance: Many clients, general contractors, and municipalities require proof of liability coverage before awarding contracts.
- Next Step: Compare tailored quotes through experienced brokers like KASE Insurance to ensure your coverage matches your trade and risk profile.
Protect Your Trades with KASE Insurance
For trades professionals, contractors' liability insurance is your first line of defence against unforeseen costs. Whether you're framing walls, installing fixtures, or laying concrete, accidents happen. With the right policy in place, you don’t have to face them alone.
At KASE Insurance, we understand the trades and each one’s main priorities. We’ll help you:
- Get fast, accurate quotes tailored to your operations
- Find the right level of protection
- Avoid paying for coverage you don’t need
Get the protection you need in less than five steps. Talk to a KASE broker today for a free contractor liability insurance quote.