As a business owner, you wear a lot of hats — from sales and accounting to customer service and human resources. You work hard, which is why it’s important to protect your hard work by investing in contractors insurance.
When contractors search for liability insurance, they’re often overwhelmed by the differences in price. Many factors determine how much a contractor will pay for insurance. We review general liability insurance for contractors, what factors determine its price and where you can find the best deals on contractor insurance for businesses in Canada.
What Is Contractors Insurance?
Could your business weather a flood? What about a break-in? Do you have the financial resources to defend yourself in a lawsuit? If you’re a skilled trade worker, independent contractor or freelancer, you can’t afford to forego contractors insurance.
Although many people think of the traditional contracting jobs (roofing, electrical work) when they hear “contractors insurance,” the reality is that this type of coverage applies to a broad range of industries. If you own a small business that provides goods or a service to the public, there’s a good chance a contractors insurance policy is right for you.
Also known as general liability insurance or business liability insurance, contractors insurance is a growing niche within the insurance industry — thanks in big part to the expanding gig economy. According to Daniel Kosir at the business development and entrepreneur site Canada One, there are 1.8 million temporary and contract workers in Canada. A study conducted by Intuit reveals that 40 percent of American workers will be freelancers by 2020.
This massive shift in how people work has created a wave of small businesses and entrepreneurs. If you’re part of the new workplace, you’ll want to protect what you’ve worked so hard to build. This is where contractors insurance comes in.
What Does Contractors Insurance Cover?
Whether you own a plumbing, electrical or lawn care business, or you design home interiors, repair computers or provide handyman services, it’s a good idea to have liability insurance. Contractors insurance covers a wide range of professions, and insurance companies offer policies that protect your business against a variety of losses.
Large, small or solo, your business might not survive if disaster strikes. Statistics reveal that more than 40 percent of businesses never recover from a disaster, such as a flood or fire. Contractors insurance also protects:
- Buildings - Business liability insurance will cover damage to buildings, such as warehouses and headquarters. If you have a storefront or physical location, your liability insurance can also protect you against premises liability claims if someone slips and falls on your property.
- Personal Property and Equipment - For many professionals, such as electricians and plumbers, tools of the trade are an integral part of their business. Contractors insurance protects you against theft, damage and loss.
- Lawsuits and Claims - Stay in business long enough and you’re likely to experience at least one or two lawsuits. Regardless of the merit of the case, you generally have no choice but to defend yourself and your business’s reputation. A general liability insurance policy guarantees you don’t have to reach into your own pocket to cover the cost of your defense.
- Customers’ Property Damage - Your contractors insurance will also cover damage to customers’ property that occurs while it’s under your control, care or custody.
Without contractors insurance, your business is vulnerable. A general liability policy can give you peace of mind, so you can focus on growing your business instead of worrying about what-ifs.
What About Cyber Insurance?
It’s worth noting that most general liability policies will not cover losses caused by cyber attacks or computer crimes. To safeguard against losses related to data theft and breaches, it’s a good idea to purchase cyber insurance in addition to general liability insurance.
And while major retailers and big film studios have been highly publicized targets of cyber criminals, it’s actually small businesses who need to be concerned the most. As Brian Hughes of Entrepreneur explains, “Small businesses are just as likely to be the victim of cyber attacks as large corporations — we’re just less likely to hear about these attacks.” Furthermore, small businesses are less likely to perceive themselves as a target, and are thus less likely to be prepared for an attack.
How Much Does General Liability Insurance Cost?
Every business is different, which is why insurance companies determine premiums on a case by case basis. However, you can get a general idea of how much you’ll pay for contractors insurance based on the nature of your business and industry. You can also get fast quotes from 28 top insurance companies in Canada. Contact My Insurance Broker, and we’ll get started on your quote now.
Like they do with car insurance and other types of coverage, insurance companies set contractors insurance premiums based on assessment of risk. Together, these factors dictate how much a contractor or freelancer will pay for general liability insurance.
Insurers look at a variety of factors to determine how much risk a particular company or contractor poses. Premiums also vary from insurer to insurer, which is why it’s important to shop around before choosing a general liability policy.
Here are some of the factors insurance companies consider:
How Long You’ve Been in Business
New business owners face an uphill battle when it comes to survival. In fact, about 50 percent of businesses in Canada will close their doors before reaching the five-year mark. Inexperience is a leading factor for why such a large number of new companies struggle to thrive. Insurance companies know this, and they typically charge more to insure a new business.
On the other hand, being a startup company doesn’t mean you’ll automatically pay top dollar for independent contractor insurance in Ontario or elsewhere in Canada. Insurance companies will also take a look at an individual’s personal work history, employment experience and training. If you’ve worked in your industry for years before starting your own company, you pose less of a risk than someone who is hanging their shingle for the first time.
Likewise, longevity can help lower your premiums. If you have been in business for years, your business is more likely to be financially stable. As a result, you pose less of a risk to insurance companies.
If you have a history of filing claims, there’s a chance your premiums may be higher than a business with a clean claims record. However, most insurance companies will consider the nature of past claims, including the circumstances that caused your business to suffer damage or a loss.
In some cases, claims are beyond a contractor’s control. For example, if your business was flooded during a season of record rainfall, an insurer may choose to exclude claims associated with those losses in its assessment of your current risk.
Where You’re Located
Location can also play a role in how much you’ll pay for contractors insurance. If you operate in the heart of a large city, your business may be more likely to suffer theft or a violent crime than a business situated in a rural area.
Type of Industry
Some industries are more dangerous than others. For example, roofing and construction are among the top 10 most dangerous jobs in Canada. For obvious reasons, electricians and HVAC professionals who work on construction sites are more likely to face on-the-job hazards and injuries than a wedding planner or freelance computer consultant. Insurance companies consider the inherent riskiness of your industry when setting premiums.
Size of Your Company
How many employees do you have? The size of your workforce is a big factor in how much you can expect to pay for contractors insurance. Simply put, the more people you employ, the more opportunities there are for someone to accidentally damage a client’s property, crash a work vehicle or spill soda on a company laptop.
The insurance company will probably want to know how many people you employ, where they work (on site, remote or in a satellite office) and whether they’re full-time, part-time or subcontractors.
Insurers also consider your business’s assets and property when setting your premium. If your work requires you to maintain expensive equipment and tools, such as backhoes and other construction vehicles, you will probably pay more than a business owner who needs little more than a phone and a computer to do their work.
Get an Affordable Contractors Insurance Policy from My Insurance Broker
Protect your business with contractors insurance from My Insurance Broker. We partner with 28 insurance companies in Canada to bring you the best coverage for the most affordable price. Get in touch today by calling 1 (855) 482-5001. You can also use our contact form to schedule an appointment or receive a free quote over the phone in minutes.