Risks every contractor should know

contractor making notes
3 minute read  

As a business owner – especially one that owns a construction or contracting company, you’re probably busy juggling a lot of things. From planning projects and ordering parts to book-keeping and hiring subcontractors for help, you do a lot in a day! With all the time spent running your business, it’s easy to forget about insurance and why you need it. Here are some insights into why business insurance is important and how it can help protect your bottom line.

Three common risks contractors face

Liability risk

Your day-to-day tasks may be different, especially if you’re working at different sites or managing multiple sites. You might be working on electrical work and drywalling in an old Victorian home one day and tiling a bathroom in a new house the next. Both projects are vastly different, and one might be safer than the other because of the liability risks to you, your employees, customers, and their property.

Mistakes happen, and even if a mistake is small in your eyes, it could lead to bigger problems if it causes an injury or negatively impacts your client’s property.

Whether you’re a contractor or a subcontractor that was hired for a company, if there’s issues with your work and something goes wrong, you may be held responsible. A customer may pursue legal action and file a lawsuit against you, your business, or the business that hired you. If this should occur, having commercial general liability insurance (CGL) can help protect you financially.

Do you work with independent contractors? Your CGL coverage may not cover their work. Make sure the independent contractors you work with provide proof of insurance so they’re protected from liability costs.

Property risk

As a contractor, you rely on a variety of tools and equipment to help you get projects done. You likely store your tools somewhere safe – but that doesn’t guarantee they’re always protected. If there was a situation where your tools got damaged like a fire or flood, having insurance would help shoulder the costs associated with repairs or replacement of your tools.

Commercial property insurance provides coverage that will help protect your shop, its contents, and supplies in the event that they get damaged by an insured peril.

Another type of insurance that you may find helpful is business interruption insurance. This offers protection against loss of income due to the following:

  • A claim
  • If your business is unable to maintain operations due to an insured loss.

An example of an insured loss would be the following: if a fire takes place in your workshop and causes significant damage to all of your tools and electrical equipment, business interruption insurance can help with the costs associated with temporarily relocating as well as relieve some of your lost income while you replace or repair your workshop.


Fires and floods aren’t the only things that can unpredictably strike. Theft is also something that happens unexpectedly, and it’s an ongoing issue across Canada on construction sites. Tools and equipment are an easy target for theft, as they may be left unattended and are easy to resell. Preventative steps can be taken including keeping a detailed and up-to-date inventory of your equipment, storing your equipment in a secure location whenever leaving the jobsite, and investing in a strong video surveillance system.

But in the event of a theft, having the right policy could help you in a few ways, including reimbursement for tool rentals and some financial help to cover the costs of replacement.

Protect your bottom line

Investing in the right coverage and having proof of insurance can help instill trust, so your customers can rest easy. It can also give your business finances a lifeline when faced with an unexpected costly loss.

Help protect your business from financial loss and provide yourself with peace of mind, knowing your business is prepared with insurance coverage from TruShield.

To learn more about insurance designed for contractors and skilled tradespeople, visit our contractor’s insurance page today!

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage, see policy for details.