What is Contractors Insurance in Canada?

Contractors insurance is a collection of coverage types designed to protect independent contractors and construction businesses from financial loss due to injuries, property damage, legal claims, or equipment loss during the course of their work.

Is Contractors Insurance required in Canada?

Yes, in many cases. While not always required by law, most clients and general contractors require proof of insurance before work begins. Commercial auto insurance may be legally required depending on your province and operations.

Do I need insurance if I’m a sole proprietor or freelancer?

Yes. Even solo contractors face liability risks. Without insurance, you are personally responsible for claims, lawsuits, or property damage that arise from your work.

Are subcontractors covered under my policy?

Not automatically. Subcontractors should carry their own insurance. You may also need to provide proof that they’re covered when working under your supervision.

What happens if my tools are stolen from a job site or truck?

Tools & Equipment Insurance covers theft or damage to tools and gear, whether they’re stored on-site, in transit, or in a locked vehicle.

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Coverage Guide

Contractor Insurance Coverage in Canada

Contractor insurance in Canada is a type of business insurance designed to protect contractors, tradespeople, and construction businesses from financial losses arising from their work. It typically combines several types of insurance coverage into a package tailored to the risks contractors face on job sites, when working with clients, and while transporting tools and equipment.

It typically includes Commercial General Liability (CGL), Commercial Auto and Worker's Compensation to cover losses from fire, theft, vandalism, and third-party injury or property damage. Many contractors usually add optional insurance like Tools and Equipment Insurance, Business Interruption Insurance, Surety Bonds, Course of Construction, or Builder’s Risk, plus, Professional Liability Insurance and Cyber Insurance.

Contractor insurance is commonly purchased by electricians, plumbers, welders, HVAC contractors, roofers, painters, window installers, carpenters, landscapers, general contractors, drywallers, concrete contractors, and other construction and skilled trade professionals. While not all coverages are legally required, many clients, municipalities, and project owners require contractors to carry liability insurance or provide proof of insurance before work begins.

Workers' Compensation

Workers’ compensation insurance for construction companies in Canada is generally mandatory and provides coverage for employees who are injured or become ill due to workplace activities. It typically covers medical expenses, wage replacement, rehabilitation costs, and disability benefits. Construction employers must usually register with their provincial workers’ compensation authority, such as WorkSafeBC (BC) , WCB (AB) or WSIB (ON). Premiums are based on factors such as payroll, claims history, safety record, and the type of construction work being performed.

Example:

A drywaller slips off a scaffold on a residential build site and fractures their wrist. The provincial board pays for their medical rehabilitation and replaces their lost income while they cannot work.

Commercial General Liability (CGL)

CGL is usually required by most clients, municipalities, landlords, and general contractors before they allow work to begin on site. Commercial General Liability (CGL) insurance for contractors in Canada is a core policy that protects businesses against third-party claims for bodily injury, property damage, and legal defence costs arising from their activities. It is usually not legally mandatory by law, but it is required in most contracts, municipal permits, and developer agreements. Most contractors are required to carry minimum limits (often $2 million to $5 million per occurrence) to work on commercial or public projects.

Example:

An electrical contractor finishes wiring a commercial kitchen. A faulty connection sparks a week later, causing a massive structural fire that burns the restaurant to the ground. CGL covers the multi-million dollar structural rebuild costs.

Builder's Risk / COC Insurance

Builder's Risk, also known as Course of Construction (COC) insurance, protects buildings and structures while they are under construction, renovation, or major repair. It can help cover damage caused by insured risks such as fire, theft, vandalism, windstorms, and certain types of water damage before a project is completed.

Example:

A fire damages a partially completed commercial building before construction is finished. Builder's Risk insurance can help pay to repair the damage and replace covered building materials, allowing the project to continue.

Commercial Auto Insurance

Commercial auto insurance in Canada is required for any vehicles used for business purposes, including work trucks, service vans, and contractor vehicles. It helps protect against financial losses resulting from accidents, vehicle damage, theft, and third-party liability claims. Personal auto insurance may not provide coverage if a vehicle is used for commercial activities.

Example:

A contractor's work truck is involved in an accident while travelling to a job site. Commercial auto insurance can help cover vehicle repairs, third-party property damage, medical expenses, and legal costs, depending on the policy.

Surety Bonds (public projects)

Surety bonds are not insurance, but they work alongside construction insurance in Canada to provide financial guarantees that a contractor will meet their contractual obligations on a construction project. A surety bond involves three parties: The contractor (principal) who must complete the work, The project owner (obligee) who requires the guarantee, The surety company that issues the bond. Instead of paying claims like insurance, the surety guarantees performance. If the contractor fails to complete the project or meet obligations (for example, going bankrupt or abandoning the job), the surety steps in to either: Finance completion of the project, or hire another contractor to finish the work, and recover costs from the original contractor afterward. Common construction surety bonds include:

1. Bid Bonds: Guarantee that if you win a project bid, you will enter into the contract at the quoted price.

2. Performance Bonds: Ensure the project is completed according to contract terms and specifications.

3. Labour & Material Payment Bonds: Guarantee that subcontractors, suppliers, and workers are paid.

4. License & Permit Bonds: required for certain trades or municipal work.

After paying, the surety company has the right to recover its costs from the original contractor. Ultimately, the contractor remains financially responsible for the loss.

Example:

A city invites contractors to bid on a $2 million road repaving project. The selected general contractor must post a performance bond and a payment bond through a surety company. The performance bond guarantees that if the contractor walks off the job or fails to finish the work properly, the surety will either find another contractor to complete the project or compensate the city up to the bond amount. The payment bond guarantees that the contractor’s subcontractors and material suppliers will be paid; if the contractor does not pay them, those unpaid parties can make a claim on the bond. In both cases, the contractor remains responsible to repay any money the surety pays out.

Professional Liability / E&O

Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, protects contractors who provide professional advice, design services, consulting, or technical expertise as part of their work. It helps cover legal defence costs, settlements, and claims arising from alleged mistakes, omissions, or professional errors that cause a client financial loss.

While Commercial General Liability insurance covers bodily injury and property damage, Professional Liability insurance addresses claims related to the professional services or advice a contractor provides.

Example:

A contractor provides design recommendations for a building project, but an error in the plans results in costly delays and additional expenses for the client. Professional Liability insurance can help cover legal costs and potential damages related to the claim.

Tools & Equipment Insurance

Tools and Equipment Insurance protects contractors against the loss, theft, or damage of the tools, machinery, and equipment needed to complete their work. Since many contractors rely on expensive equipment to operate, replacing stolen or damaged items can create significant financial challenges and project delays.

Coverage can help protect items such as power tools, hand tools, generators, specialized equipment, and machinery used at job sites, in vehicles, or stored at business locations. Depending on the policy, coverage may apply to equipment that is damaged by theft, fire, vandalism, or other covered events.

Example:

A contractor’s tools are stolen from a locked work vehicle overnight. Tools and Equipment Insurance can help cover the cost of replacing the stolen equipment, allowing the contractor to return to work with minimal disruption.

Business Interruption Insurance

Business Interruption Insurance helps protect contractors from lost income and ongoing expenses when a covered event forces them to temporarily stop or reduce operations. It is typically added to a commercial property policy and helps cover expenses such as lost revenue, payroll, rent, and other operating costs while the business recovers.

For contractors, a major loss involving equipment, a workshop, office, or job site can create delays that impact their ability to complete projects and generate income. Business interruption coverage can help provide financial support during the recovery period.

Example:

A contractor’s workshop is damaged by a fire, preventing access to tools, equipment, and materials needed for ongoing projects. Business Interruption Insurance can help replace lost income and cover continuing expenses while repairs are completed.

Cyber Insurance

Cyber Insurance helps protect contractors from financial losses caused by cyber threats, data breaches, and technology-related incidents. While contractors may not always consider themselves a target, many businesses store customer information, employee records, financial data, and project documents that can be exposed through cyberattacks.

Example:

A contractor’s computer system is infected with ransomware, preventing access to project files, invoices, and customer information. Cyber Insurance can help cover recovery costs, forensic investigations, and expenses required to restore operations.

Mandatory

Workers' Compensation +

Workers’ compensation insurance for construction companies in Canada is generally mandatory and provides coverage for employees who are injured or become ill due to workplace activities. It typically covers medical expenses, wage replacement, rehabilitation costs, and disability benefits. Construction employers must usually register with their provincial workers’ compensation authority, such as WorkSafeBC (BC) , WCB (AB) or WSIB (ON). Premiums are based on factors such as payroll, claims history, safety record, and the type of construction work being performed.

Example:

A drywaller slips off a scaffold on a residential build site and fractures their wrist. The provincial board pays for their medical rehabilitation and replaces their lost income while they cannot work.

Commercial General Liability (CGL) +

CGL is usually required by most clients, municipalities, landlords, and general contractors before they allow work to begin on site. Commercial General Liability (CGL) insurance for contractors in Canada is a core policy that protects businesses against third-party claims for bodily injury, property damage, and legal defence costs arising from their activities. It is usually not legally mandatory by law, but it is required in most contracts, municipal permits, and developer agreements. Most contractors are required to carry minimum limits (often $2 million to $5 million per occurrence) to work on commercial or public projects.

Example:

An electrical contractor finishes wiring a commercial kitchen. A faulty connection sparks a week later, causing a massive structural fire that burns the restaurant to the ground. CGL covers the multi-million dollar structural rebuild costs.

Builder's Risk / COC Insurance +

Builder's Risk, also known as Course of Construction (COC) insurance, protects buildings and structures while they are under construction, renovation, or major repair. It can help cover damage caused by insured risks such as fire, theft, vandalism, windstorms, and certain types of water damage before a project is completed.

Example:

A fire damages a partially completed commercial building before construction is finished. Builder's Risk insurance can help pay to repair the damage and replace covered building materials, allowing the project to continue.

Commercial Auto Insurance +

Commercial auto insurance in Canada is required for any vehicles used for business purposes, including work trucks, service vans, and contractor vehicles. It helps protect against financial losses resulting from accidents, vehicle damage, theft, and third-party liability claims. Personal auto insurance may not provide coverage if a vehicle is used for commercial activities.

Example:

A contractor's work truck is involved in an accident while travelling to a job site. Commercial auto insurance can help cover vehicle repairs, third-party property damage, medical expenses, and legal costs, depending on the policy.

Optional

Surety Bonds (public projects) +

Surety bonds are not insurance, but they work alongside construction insurance in Canada to provide financial guarantees that a contractor will meet their contractual obligations on a construction project. A surety bond involves three parties: The contractor (principal) who must complete the work, The project owner (obligee) who requires the guarantee, The surety company that issues the bond. Instead of paying claims like insurance, the surety guarantees performance. If the contractor fails to complete the project or meet obligations (for example, going bankrupt or abandoning the job), the surety steps in to either: Finance completion of the project, or hire another contractor to finish the work, and recover costs from the original contractor afterward. Common construction surety bonds include:

1. Bid Bonds: Guarantee that if you win a project bid, you will enter into the contract at the quoted price.

2. Performance Bonds: Ensure the project is completed according to contract terms and specifications.

3. Labour & Material Payment Bonds: Guarantee that subcontractors, suppliers, and workers are paid.

4. License & Permit Bonds: required for certain trades or municipal work.

After paying, the surety company has the right to recover its costs from the original contractor. Ultimately, the contractor remains financially responsible for the loss.

Example:

A city invites contractors to bid on a $2 million road repaving project. The selected general contractor must post a performance bond and a payment bond through a surety company. The performance bond guarantees that if the contractor walks off the job or fails to finish the work properly, the surety will either find another contractor to complete the project or compensate the city up to the bond amount. The payment bond guarantees that the contractor’s subcontractors and material suppliers will be paid; if the contractor does not pay them, those unpaid parties can make a claim on the bond. In both cases, the contractor remains responsible to repay any money the surety pays out.

Professional Liability / E&O +

Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, protects contractors who provide professional advice, design services, consulting, or technical expertise as part of their work. It helps cover legal defence costs, settlements, and claims arising from alleged mistakes, omissions, or professional errors that cause a client financial loss.

While Commercial General Liability insurance covers bodily injury and property damage, Professional Liability insurance addresses claims related to the professional services or advice a contractor provides.

Example:

A contractor provides design recommendations for a building project, but an error in the plans results in costly delays and additional expenses for the client. Professional Liability insurance can help cover legal costs and potential damages related to the claim.

Tools & Equipment Insurance +

Tools and Equipment Insurance protects contractors against the loss, theft, or damage of the tools, machinery, and equipment needed to complete their work. Since many contractors rely on expensive equipment to operate, replacing stolen or damaged items can create significant financial challenges and project delays.

Coverage can help protect items such as power tools, hand tools, generators, specialized equipment, and machinery used at job sites, in vehicles, or stored at business locations. Depending on the policy, coverage may apply to equipment that is damaged by theft, fire, vandalism, or other covered events.

Example:

A contractor’s tools are stolen from a locked work vehicle overnight. Tools and Equipment Insurance can help cover the cost of replacing the stolen equipment, allowing the contractor to return to work with minimal disruption.

Business Interruption Insurance +

Business Interruption Insurance helps protect contractors from lost income and ongoing expenses when a covered event forces them to temporarily stop or reduce operations. It is typically added to a commercial property policy and helps cover expenses such as lost revenue, payroll, rent, and other operating costs while the business recovers.

For contractors, a major loss involving equipment, a workshop, office, or job site can create delays that impact their ability to complete projects and generate income. Business interruption coverage can help provide financial support during the recovery period.

Example:

A contractor’s workshop is damaged by a fire, preventing access to tools, equipment, and materials needed for ongoing projects. Business Interruption Insurance can help replace lost income and cover continuing expenses while repairs are completed.

Cyber Insurance +

Cyber Insurance helps protect contractors from financial losses caused by cyber threats, data breaches, and technology-related incidents. While contractors may not always consider themselves a target, many businesses store customer information, employee records, financial data, and project documents that can be exposed through cyberattacks.

Example:

A contractor’s computer system is infected with ransomware, preventing access to project files, invoices, and customer information. Cyber Insurance can help cover recovery costs, forensic investigations, and expenses required to restore operations.

How Contractor Insurance Works in Canada

Why Canadian Contractors Need Robust Contractor Insurance

When a contractor project begins, the parties involved, such as the owner, developer, general contractor, and subcontractors, purchase different types of insurance policies.

These policies respond if there is:

Property damage
Bodily injury
Equipment loss
Project delays caused by insured events
Legal claims from third parties
Worker injuries

If a covered incident occurs, the insured party files a claim with the insurer. The insurer investigates the loss and, if approved, pays for covered damages, legal costs, or repairs after deductibles are applied.

Know your baseline

Contract Requirements and Coverage Extensions

Contractor insurance is not just about having a policy in place, it is about ensuring your coverage aligns with your project requirements and contractual obligations. Reviewing insurance requirements before signing a contract helps ensure your policies, endorsements, and coverage limits provide the protection needed to manage project risks and avoid unexpected disputes.

Review every project contract with your insurance broker to confirm your coverage meets the required terms before work begins.

Avoid underinsurance

Exclusions to Watch For

Contractors should understand that standard insurance policies do not cover every risk. Common exclusions may include faulty workmanship, wear and tear, pollution, mold, cyber incidents, certain water damage, and professional design errors. Understanding these exclusions helps identify coverage gaps before a loss occurs. A key distinction is that the cost to correct defective work is often excluded, while resulting damage caused by that work may be covered depending on the policy.

The right contractor insurance policy is not just about having coverage, it is about understanding what is excluded and filling gaps before a claim happens.

Why comparing matters

Aligning Coverage With Project Needs

Contractor insurance policies can vary significantly depending on the type of work, project requirements, coverage limits, exclusions, and available endorsements. Comparing policies helps contractors understand the differences between options and ensure their coverage protects against the specific risks they face on job sites.

Choosing a policy based only on price can leave contractors with coverage gaps, unexpected expenses, or issues meeting client and contract requirements.

Contract Requirements and Coverage Extensions +

Know your baseline

Contractor insurance is not just about having a policy in place, it is about ensuring your coverage aligns with your project requirements and contractual obligations. Reviewing insurance requirements before signing a contract helps ensure your policies, endorsements, and coverage limits provide the protection needed to manage project risks and avoid unexpected disputes.

Tip: Review every project contract with your insurance broker to confirm your coverage meets the required terms before work begins.

Exclusions to Watch For +

Avoid underinsurance

Contractors should understand that standard insurance policies do not cover every risk. Common exclusions may include faulty workmanship, wear and tear, pollution, mold, cyber incidents, certain water damage, and professional design errors. Understanding these exclusions helps identify coverage gaps before a loss occurs. A key distinction is that the cost to correct defective work is often excluded, while resulting damage caused by that work may be covered depending on the policy.

Tip: The right contractor insurance policy is not just about having coverage, it is about understanding what is excluded and filling gaps before a claim happens.

Aligning Coverage With Project Needs +

Why comparing matters

Contractor insurance policies can vary significantly depending on the type of work, project requirements, coverage limits, exclusions, and available endorsements. Comparing policies helps contractors understand the differences between options and ensure their coverage protects against the specific risks they face on job sites.

Tip: Choosing a policy based only on price can leave contractors with coverage gaps, unexpected expenses, or issues meeting client and contract requirements.

Connect With an Expert →

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Cost Factors

What Determines the Cost of Contractor Insurance in Canada?

The cost of contractor insurance in Canada depends on several factors related to the type of work performed, project risks, and the level of protection required.

Key factors that influence contractor insurance costs include:

Type of trade and work performed Higher-risk activities, such as roofing, excavation, and structural work, typically have higher premiums than lower-risk trades.
Business size and revenue: Larger contractors with higher annual revenue or more employees may require higher coverage limits, which can increase costs.
Coverage limits and policy options Higher liability limits and additional coverages, such as tools and equipment, builder’s risk, professional liability, or cyber insurance, can affect premiums.
Project types and locations Large commercial projects, high-risk job sites, or work in multiple locations can impact pricing.
Claims history A history of frequent or costly claims may result in higher insurance costs.
Number of employees and subcontractors businesses with more workers or subcontractor exposure may face higher liability risks.
Equipment and vehicle usage The value of tools, machinery, and commercial vehicles can influence the cost of coverage.
Safety practices and risk management Strong safety programs, employee training, and proper documentation can help demonstrate lower risk.

Trade Class & Risk Category	Typical Annual Cost	Key Coverages Usually Included
Low-Risk TradesPainters, drywallers, handymen, and interior finish carpenters.	$50 - $1,500	Baseline $2M CGL, small tools allowance.
Moderate-Risk TradesElectricians, plumbers, and residential HVAC technicians.	$1,500 - $3,800	$2M–$5M CGL, completed operations, equipment.
High-Risk TradesRoofers, excavation teams, and structural general contractors.	$3,500 - $9,000+	$5M CGL, hot-work riders, subcontractor coverage.
Large-Scale OperationsCommercial builders with extensive payrolls and multi-city projects.	$5,000 - $15,000+	Master packages (CGL, Builders Risk, Pollution).

The cost of contractor insurance in Canada varies depending on factors such as the type of trade, business size, project risks, coverage limits, and claims history. A basic contractor insurance policy with Commercial General Liability (CGL) coverage may start at approximately $500–$1,000 per year for lower-risk contractors. Businesses that require broader protection, higher liability limits, employee coverage, commercial vehicles, equipment protection, or specialized construction coverage may pay more.

Practical Tips for Contractor Insurance Every Canadian Contractor Should Know

Contracts and Coverage

Start by making sure your coverage matches your contracts exactly, many issues happen when policy limits, endorsements, or wording don’t align with project requirements. Keep your insurance and workers’ compensation records up to date, because expired certificates or missing clearance letters can stop you from getting on site.

Align Your Insurance to Contracts and Keep Records Current.

Subcontractors

Work closely with experienced, properly insured subcontractors, since their claims history and coverage can directly affect your own risk exposure. It also helps to maintain strong site safety practices and documentation, as insurers often reward good safety records with better pricing over time.

Partner with Insured Subcontractors and Build a Strong Safety Record.

Get Free Expert Advice

Before starting a project, review all key policies together, CGL, builder’s risk, equipment, and professional liability, to ensure they work together without gaps or overlaps. Finally, involve a broker early so they can structure coverage properly and help you avoid issues before construction begins rather than after a claim occurs.

Review Key Policies Together and Involve Your Broker Early.

Regular Policy Reviews

Regularly review your insurance program as your business grows or your project types change. Coverage that worked for small residential jobs may not be sufficient for larger commercial or high-risk projects, so updating limits, endorsements, and policy structure before new work begins helps prevent unexpected gaps in protection.

Review and Update Your Insurance as Your Business Grows.

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Ways to Save

Ways to Lower Your Contractor Insurance

Contractor insurance costs in Canada can be reduced by improving risk management and presenting a lower-risk profile to insurers.

Discounts

Smart Site Security and Monitoring Credit +

Insurers offer substantial premium discounts (often 10% to 20%) on Builder’s Risk/COC policies for active site protection. To qualify, you must deploy 24/7 mobile video surveillance carts equipped with AI-driven thermal imaging, or install wireless, cellular-backed smart water leak detection sensors to mitigate early-stage plumbing bursts.

Safety Certification Discount +

In Canada, maintaining a formal safety designation like the Certificate of Recognition (COR) or Small Employer Certificate of Recognition (SECOR) signals an institutional-grade risk profile. Underwriters reward this documented safety culture with preferred tier pricing and lowered base rates on Commercial General Liability (CGL) policies.

Claims-Free Loyalty Credit +

Firms that present a clean loss-run history (typically 3 to 5 consecutive years without a single payout) qualify for claims-free discounts. This history proves your internal quality control and safety programs are actively preventing the minor "nuisance claims" that underwriters penalize heavily.

Continuous Subcontractor COI Verification Credit +

If a general contractor enforces a strict, software-tracked protocol to collect and verify Certificates of Insurance (COI) from every sub-trade, insurers will reduce the CGL audit premium. Ensuring your firm is always named as an Additional Insured with a formal Hold Harmless Agreement lowers your primary risk exposure.

Multi-Policy Bundling and Volume Discount +

Placing your CGL, Builder's Risk, commercial auto, and tool/equipment floaters with a single insurance carrier unlocks multi-line discounts. For high-volume firms, transitioning from individual project policies to an annual Blanket or Reporting Form Builder's Risk policy significantly drops the insurance cost per square foot.

Smart Savings Strategies

Work With a Broker +

A broker helps construction companies in Canada by matching their specific project risks with the right insurance coverage from multiple insurers. Because construction insurance is highly specialized and varies widely between policies, brokers help identify coverage gaps, ensure contract requirements are met, and compare different underwriting options.

In addition, brokers can negotiate pricing, help with endorsements, and support contractors during claims to ensure the process is handled correctly and efficiently.

Increase Your Deductible +

Choosing a higher deductible can lower your annual premium because you are taking on more of the smaller claim risk yourself. Just make sure the deductible is an amount you could comfortably pay if needed.

Leverage Multi-Policy and Annual Volume Discounts +

Bundling your insurance products with a single brokerage or insurance carrier unlocks significant multi-line discounts. Instead of buying ad-hoc, project-by-project Builder's Risk policies, high-volume contractors can set up a Blanket or Reporting Form Builder's Risk policy. This structure covers all active projects under one umbrella, dropping the insurance cost per square foot compared to standalone policies.

Implement a Strict Subcontractor Vetting Protocol +

General contractors can insulate their primary Commercial General Liability (CGL) policy from rate spikes by transferring risk downward. Ensure every sub-trade signs a formal indemnification agreement and holds their own independent CGL coverage. Collecting and verifying up-to-date Certificates of Insurance (COI) naming your firm as an Additional Insured guarantees that subcontractor mistakes hit their insurance policy, not yours.

Ask About Discounts +

Not every discount is advertised. Ask your broker about claims-free discounts, loyalty pricing, multi-policy binding discounts, and new-client incentives.

Find My Best Rate →

Bundle & Save

Save up to 10%

Contractors that bundle their policies can enjoy meaningful savings, simpler policy management, and one point of contact for their coverage needs.

Save up to 10% on your business insurance
Save up to $600 on personal car & home when you bundle with us
One broker, one renewal date, simpler management
Potential for combined deductibles on shared claims
Loyalty benefits that grow with tenure

Bundle and Save Today →

FAQ

Frequently Asked Questions

What is contractor insurance? +

Contractor insurance is a type of business insurance that protects contractors and tradespeople from financial losses related to their work. It can include Commercial General Liability (CGL), Commercial Auto, Tools and Equipment, Builder's Risk, Professional Liability, and other coverages based on the contractor's needs.

Is contractor insurance mandatory in Canada? +

Some types of contractor insurance are mandatory, while others are optional. Commercial auto insurance is required for business vehicles, and workers' compensation is generally required if you have employees. Other coverages, such as Commercial General Liability, may not be legally required but are often required by clients or contracts.

Is subcontractor work covered under my policy? +

No, subcontractors are not automatically covered under a general contractor’s commercial insurance policy in Canada. Because subcontractors are considered independent business entities rather than employees, they are generally required to carry their own insurance, including commercial general liability and workers’ compensation where applicable. In many construction contracts, general contractors also require subcontractors to provide proof of coverage and maintain specific limits to ensure proper risk transfer on the project.

Do independent contractors need insurance? +

Yes. Even self-employed contractors can be held responsible for property damage, injuries, or legal claims arising from their work. Insurance helps protect both the contractor and their business.

What insurance do I need as a general contractor? +

General contractors commonly need Commercial General Liability, Commercial Auto, Workers' Compensation, Tools and Equipment Insurance, Builder's Risk, and, in some cases, Professional Liability and Cyber Insurance.

Why do clients require proof of contractor insurance? +

Many clients require proof of insurance to reduce their own risk. Providing a Certificate of Insurance demonstrates that you have appropriate coverage and can meet contractual insurance requirements before work begins.

What is a Certificate of Insurance (COI) and why do I need it? +

A COI is a formal, one-page document issued by your insurance broker that proves your contracting business carries active liability coverage. It details your policy number, effective dates, and total coverage limits.

Clients will routinely demand a COI naming them as an "Additional Insured" so that your policy shields them if your work causes an accident on their property

Are subcontractors required to carry their own insurance? +

Yes. In Canada, subcontractors are generally required to carry their own insurance because they are considered independent business entities rather than employees of the general contractor. Most construction contracts require subcontractors to maintain Commercial General Liability (CGL) insurance, workers’ compensation coverage where applicable, and sometimes commercial auto or equipment coverage depending on the work being performed. General contractors will also typically request Certificates of Insurance and workers’ compensation clearance letters before allowing subcontractors on site to help reduce liability exposure and ensure proper risk transfer.

Does contractor insurance cover stolen tools? +

Standard liability insurance does not usually cover stolen tools. Contractors typically need Tools and Equipment Insurance to protect against theft, damage, or loss.

What happens if a subcontractor doesn't have insurance but causes damage on site? +

If an uninsured subcontractor causes damage on a construction project in Canada, the general contractor or project owner may become financially responsible for the loss, especially if the subcontractor cannot pay for the damages themselves. In many cases, the claim may still be submitted under the general contractor’s insurance policy, which could lead to higher deductibles, increased premiums, or future underwriting issues. This is why construction contracts typically require subcontractors to carry their own liability insurance and workers’ compensation coverage, along with providing Certificates of Insurance before starting work on site.

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Contractor Insurance Coverage in Canada

Workers' Compensation

Commercial General Liability (CGL)

Builder's Risk / COC Insurance

Commercial Auto Insurance

Surety Bonds (public projects)

Professional Liability / E&O

Tools & Equipment Insurance

Business Interruption Insurance

Cyber Insurance

Mandatory

Optional

Why Canadian Contractors Need Robust Contractor Insurance

Contract Requirements and Coverage Extensions

Exclusions to Watch For

Aligning Coverage With Project Needs

Why Canadians Choose Western Financial

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