What if Your Contractor Business Gets Sued?
Contractors in the Maritimes can face lawsuits from clients or suppliers that involve injury or property damage. Does your commercial insurance financially protect your contractor’s business against lawsuits?
Without any or enough business liability insurance, your Maritimes contractor’s business could face financial hardship if you get sued.
Why do contractors need liability insurance?
Liability insurance for contractors in New Brunswick, Nova Scotia, and Prince Edward Island provides financial protection if you or your employees are named in a lawsuit.
You need to have insurance coverage tailored to the specific risks in your construction work and for the equipment you own.
Who should get contractor insurance?
The following are examples of trades in the Maritimes construction industry that need contractor’s insurance:
- Welders
- Painters
- Electricians
- Plumbers
- Carpenters
- Roofers
- Drywallers
- Masonry
- Excavation
- Deck and fence builders
- Landscapers
- Excavation
- HVAC
- Pavers
- Snow removal
Here are the liability coverages that you need to financially protect your contractor against lawsuits.
Commercial general liability (CGL) insurance
The most important type of insurance you need for your contractor company in the Maritimes is commercial general liability. If you were sued, CGL insurance would help cover the legal costs to defend the claim against your business in court, as well as costs to cover damages to compensate third parties.
What risks does commercial general liability insurance cover?
Commercial general liability covers risks such as:
- Injury to another person who is not your employee
- Damage to someone’s property, damage to rented property.
- Medical bills if someone is injured, legal and settlement costs of liability lawsuits filed against you.
- CGL insurance also helps cover the costs of liability lawsuits related to slander and libel.
Cyber liability insurance
If your computer system is hacked, cybercriminals can sell the information. Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your computer system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform customers that they were affected. Without cyber insurance, the consequences of a cyberattack can be very expensive.
Professional liability insurance
Professional liability insurance helps protect contractors in New Brunswick, Nova Scotia, and Prince Edward Island against claims of negligence when they are performing their duties. It’s also called errors and omissions insurance.
In the case of a negligence claim, for example, a contractor with this type of insurance would have its policy pay for some or all of the claim costs.
What other types of insurance are needed for contractors in the Maritimes?
Tools and equipment insurance
This type of insurance provides financial protection for any transportable tools or equipment that construction businesses use to complete their work projects.
Tools and equipment insurance can provide reimbursement to repair or replace tools if they are lost, damaged, or stolen. Insured events apply to tools and equipment that are vandalized, stolen, lost, or damaged by fire or flood.
Any item valued at less than $1,500 is considered a tool. Anything valued above $1,500 is considered equipment.
Commercial property insurance
Whether you rent or own your contractor business location in the Maritimes, commercial property insurance can provide financial coverage for physical loss, such as a fire, or damage to your business property and its contents.
Commercial auto insurance
Any vehicles used by your contractor business need to be covered by commercial auto insurance, including leased or rented vehicles and personal vehicles used by your or your employees for work. Your personal car insurance usually does not cover your work vehicles.
Commercial auto insurance covers medical fees, legal costs, and repair or replacement costs if your company's vehicles are involved in an accident. It also covers theft and vandalism.
Builder’s risk
Builder’s risk insurance is essential for protecting projects while they are being built or renovated. Builders risk insurance protects specific work sites from:
- Fire, vandalism, theft
- Weather-related damage during construction
- Materials and equipment on-site or in transit
- Structural damage or collapse
- Project interruption costs due to insured event.
This type of insurance is a must have for general contractors and builders in New Brunswick, Nova Scotia, and Prince Edward Island.
Business interruption insurance
This type of insurance supports you when your Maritimes contractor business can’t operate due to a covered loss.
There are a number of losses that could force your construction company to shut down. Some examples are:
- Damage to your equipment from fire or vandalism
- A major reduction in revenue due to a client/supplier facing losses of their own
- A disruption in your supply chain
Business interruption insurance can help with these expenses:
- Payroll
- Rent
- Utilities
- Property taxes
- Alarm monitoring
- Relocation of your business
How much does contractor insurance cost?
There isn’t a set price for contractor insurance in the Maritimes. The following factors are usually considered when determining the cost of your business insurance: Location(s), services provided, number of employees, years of experience, annual revenue, and any past claims.
5 FAQs
Does contractor insurance cover subcontractors?
Subcontractors in the Maritimes typically need their own insurance, especially general liability insurance and tools and equipment coverage. Most contractor policies do not automatically extend to subcontractors unless they are specifically added as "additional insured."
As a contractor, can I get coverage for unique risks or special equipment?
Yes, Maritimes contractors can add endorsements or separate policies for unique risks, such as installation risks, pollution liability, specific machinery breakdown, goods in transit, or protection for highly specialized tools. Insurers will often tailor policies or add-ons based on the contractor's trade and risk exposure. Western Financial Group can help contractors get customized business insurance for their specific trade.
Can business insurance policies for Maritimes contractors be changed?
Yes, coverage, limits, or endorsements can be adjusted as the needs for your contractor business change. Your business insurance policy can be customized to fit your needs as a contractor.
Do I need contractor insurance if I have a construction bond?
Yes, you do. Having a bond does not replace the need for insurance if you are a contractor in the Maritimes. A bond and insurance serve different purposes and protect different parties. A bond, such as a performance bond or payment bond, protects the project owner (client) and guarantees that the contractor will fulfill all contractual obligations. If the contractor defaults, the bond covers the losses, but the contractor must repay the surety for any claims paid out.
Contractor insurance directly protects the contractor from financial losses due to accidents, property damage, injuries, or lawsuits arising from their business operations.
Why should contractors get their business insurance with Huestis?
Huestis Insurance Group can customize commercial insurance coverage to specific trades in the Maritimes construction industry. We provide access to a wide variety of insurance markets to make sure that contractors get a competitive insurance package with competitive pricing.