The construction sector has been a major driver of the Canadian economy for decades. In fact, the construction industry in Canada is forecasted to have a Compound Annual Growth Rate (CAGR) of a whopping 8.5% by the year 2024 making the sector worth around $354.9 billion. Amidst its promising growth, it is also known to be a highly competitive environment with various local and international companies vying to get more of the market share. The last thing that any construction company would need in this competitive landscape is the expense and distress brought about by unforeseen events such as:
- Legal action (from clients or third-party individuals)
- Accidental damage to third-party property
- Injuries inflicted on third-party individuals and workers
- Sudden damage/loss/theft of expensive tools and equipment
- Natural disasters causing damage to the business’s property
This is where construction company insurance comes in. Just like with all kinds of business insurance, insurance for construction companies is definitely not a one-size-fits-all. This is why at KASE Insurance we strive to put together the most comprehensive and tailor-fit construction company insurance that will make your business ready for anything!
In this article, we will talk about the different types of insurance for your construction company according to their corresponding risks.
Let’s get started!
Who Needs Construction Company Insurance?
There are many types of construction companies out there. If your business falls under any of the following types or operates in a similar way, you are highly recommended to get construction company insurance:
- General Contractors
- Small Renovation Contractors
- Real Estate Developers
- Construction Program Managers
- Program Managers
- Package Builders
Types of Construction Company Insurance
Though construction company insurance options may seem overwhelming at first glance, we can group them based on what aspect of your business they protect. Select any of the following insurance types to scroll down to its description:
|Main Scope of Protection Along With Corresponding Insurance Types|
|Protection for Damages/Injuries Caused by Day-to-Day Operations|
|Protection Relating to the Unfinished Project, Tools, and Equipment|
|Protection for Other Physical/Digital Assets of Your Business|
1. General Liability Insurance
General liability insurance is a comprehensive insurance policy that will help protect your business from two common sources of third-party lawsuits: injuries and property damage.
Your construction company may have a physical office where potential clients, clients, suppliers, and so on, come and go on a regular basis. General liability insurance protects these third-party individuals while they are within the premises of your business. In the event that they get injured (slips, trips, falls, falling objects, faulty furniture, etc.) and your business is held responsible, general liability insurance will cover legal expenses and medical costs. The same goes for construction sites wherein accidents and falling debris can cause injury to passersby.
Additionally, if your construction operations cause damage or destruction to third-party property or if you are charged with aggravating already-present physical damage, general liability insurance will help with possible legal expenses along with repair/replacement costs.
2. Worker’s Compensation Insurance
Construction projects typically involve great heights, high-powered equipment, exposed electrical components, and many more elements that can cause injury (and even death) to construction workers. In fact, every year in Canada 40,000 construction workers are injured from fall accidents alone. Just in Ontario, the average number of deaths that occur on construction sites is around 20 per year.
If your construction business exposes your workers to heightened risks of injury, illness, or death, it is recommended that you get worker’s compensation insurance. This type of insurance covers medical costs, disability benefits, lost wages during recovery, death benefits, and funeral expenses.
3. Professional Liability Insurance
If general liability insurance covers injuries and property damage to a third party, professional liability insurance protects your business in the event that mistakes in terms of design or execution cause major issues in the project. This is why professional liability insurance is also known as errors and omissions (E&O) insurance.
Professional liability insurance protects you in situations wherein errors, perceived errors, delays, and unexpected costs lead to a lawsuit from the client. Additionally, professional liability insurance also covers eventual damages or injuries that stem from faulty design or execution.
4. Pollution Liability Insurance
Because legislations have been put in place to protect Canada’s natural environment, sudden or gradual pollution as a result of operations can result in environmental claims that can go well beyond $100,000 – not including costs for cleanup as well as medical costs for people affected.
Pollution can result from mistakes regarding waste disposal, mishandling of hazardous chemicals, the aggravation of mould/legionella (which can be common in renovation projects), and so on. Pollution liability insurance will cover legal costs, clean-up costs, and any needed emergency response costs.
5. Builder’s Risk Insurance
In any type of construction work, the risk does not only lie with the safety of people. The incomplete structure can also be prone to risks at certain stages and conditions. There is no way of telling when uncontrollable environmental factors (e.g. high-speed winds, bad weather, floods) can cause damage to the project.
Thankfully, builder’s risk insurance is here to cover any needed repair/replacement costs for the building under construction. This type of insurance can also provide coverage for the tools, machinery, and equipment used in the building’s construction.
6. Inland Marine Insurance
Inland marine insurance, like some others on this list, is not exclusively used in the construction industry. This is because inland marine insurance can cover a broad range of property – such as those in transit, mobile equipment, borrowed equipment, and so on. In the context of construction company insurance, this insurance type is also known as tool and equipment insurance.
It covers for repair or replacement costs in the event that equipment and tools (e.g. generators, excavators, forklifts, computer equipment, etc.) are damaged during transport, damaged in a fire, stolen from the site, or vandalized.
7. Installation and Tool Floater Insurance
Before certain materials or fixtures (i.e. cabinets, sinks, countertops) are properly installed, they have a higher risk of being damaged. This can lead to added expenses and if your business incurs these expenses for the project, it can result in a strained relationship with the client. The absolute worst case would be a lawsuit from the client which can happen if the damage is extensive.
This is where Installation and tool floater insurance comes in. This type of insurance covers the repair/replacement costs for uninstalled materials/fixtures that are damaged or stolen. The coverage can also extend towards tools used in the project – typically those valued at $1,000 or less.
Note – There are a few similarities between builder’s risk insurance, inland marine insurance, and installation and tool floater insurance. At the end of the day, choosing one or more of the three depends on your specific business needs.
8. Commercial Property Insurance
Though most of your operations take place on-site, your construction company is likely to have a physical office as well. Your headquarters houses many valuable items such as project-related documents, tools, equipment, computers, and personal belongings.
In the event that the workplace or its contents sustain damage, it can lead to additional costs and can even halt operations for a prolonged period of time. The contents of your workplace are also susceptible to theft – especially for high-value items.
Commercial property insurance will cover repair or replacement costs related to the above scenarios. The coverage also extends to your lost income due to the resulting business interruption.
9. Commercial Auto Insurance or Truck Insurance
If you operate a fleet of vehicles or trucks, this insurance type will serve you well. After all, road accidents can happen to anyone, even the most seasoned drivers. Moreover, there is a risk of your fleet of commercial vehicles getting stolen or vandalized. In such scenarios, commercial auto insurance can aid with the repair or replacement costs. Additionally, if a road accident involving your vehicle causes injury or property damage, this type of insurance will also give the needed coverage.
10 Cyber Insurance
Many businesses rely heavily on technology and construction companies are no different. Because of this dependence, however, many cybercriminals are just waiting for the perfect opportunity to cash in. In cases wherein digital devices are hacked, cyber insurance is your best friend.
This kind of insurance will cover the cost of lawsuits against you pertaining to lost data. It will also cover for lost income during the downtime as well as the cost of restoring your reputation.
Get Construction Company Insurance from Toronto’s Award-Winning Insurance Broker
KASE Insurance is one of the most trusted insurance brokers in Toronto and all over Canada. We have vast experience serving businesses, big and small, hailing from different industries. Through our years of service, we have gathered immense industry recognition and numerous awards. What truly sets us apart is our personalized service and our dedication to giving only the best for our customers.
When you bring your business to us, we make sure to put together the best tailor-fit insurance plan that will fully protect your business and give you the most value for your money. So whether you're new to business insurance or you’re looking to review/revamp the insurance plan you have right now, our friendly team of experts is ready to help!