CONTRACTOR INSURANCE

 

Construction is one of Canada’s major industries, giving jobs to more than 1.2 million Canadians. The construction industry in Canada is predicted to have a Compound Annual Growth Rate of up to 8.5% by the year 2024; this will make the sector worth around $354.9 billion by that time. Due to the growth of the industry, it has also become an increasingly competitive landscape for many businesses.

 

For a construction company (or any company working in a tangent field), proper risk management is key to staying ahead. Although construction project sites and contractor responsibilities are unique, there are two common risks that most (if not all) contractors face: (1) property damage and (2) causing injury to a third party.

 

In a risk-laden industry like construction and amidst an increasingly litigious environment, contractor insurance in Europe, Asia, the Middle East and Africa is a must-have.

 

Contractor liability insurance is specifically designed to keep companies, contractors, and subcontractors protected against common third-party liabilities. Not only does this insurance give added peace of mind, but it is also mandatory for some businesses.

 

Liberty Mutual Insurance is one of the leading providers of contractor insurance in Europe, Asia, Middle East and Africa and the rest of Canada. We can help you get the protection you need so that you can focus on getting the job done and growing your business.

 

WHAT IS CONTRACTOR INSURANCE?

 

Contractor insurance is often used to refer to contractor’s liability insurance. Contractor’s liability insurance is a type of insurance policy that protects companies, individual contractors, and subcontractors against injuries to third parties and damage to third-party property.

 

However, contractor’s liability insurance is just the foundation of a complete contractor insurance plan. There are also additional coverages that contractors can have depending on their specific needs.

 

A fully customized insurance plan, like the ones put together at Liberty Mutual Insurance, will allow you to easily include additional coverages that address all of the major risks associated with your business.

 

Ongoing building construction

 

WHY IS CONTRACTOR INSURANCE IMPORTANT?

 

The construction industry is one of the most high-risk environments out there. Construction (and related trades) involve the use of heavy-duty equipment, the handling of hazardous materials, and working from great heights on a daily basis.

 

Furthermore, most project sites are close to third-party individuals (e.g. clients, the general public, suppliers) and third-party property (houses, other buildings, public property). This is why the most common potential liabilities for contractors are injuries and property damage concerning a third party.

 

Unforeseen accidents leading to such liabilities can set a business back because of steep legal fees, medical expenses, repair/replacement costs and so on. They may even bring operations to a grinding halt, and sadly, unprotected businesses may not recover so easily.

 

This is why contractor insurance, which includes contractor liability insurance and other additional needed coverages, is so important. Contractor insurance in Europe, Asia, Middle East and Africa offers businesses a safety net by providing peace of mind to project owners, their clients, as well as the contractors/subcontractors working for them.

 

With this type of insurance in place, all stakeholders know that there is protection in case of unforeseen events or accidents. It’s definitely a smart business move to have contractor insurance in Europe, Asia, Middle East and Africa, which is why contractor insurance is oftentimes considered a mandatory requirement. In some cases, before contractors are hired, clients will ask them to first produce this proof of insurance.

 

WHAT DOES CONTRACTOR INSURANCE COVER?

 

The main objective of contractor insurance is to protect companies, contractors, and subcontractors against liabilities and damages. Contractor insurance encompasses contractor liability insurance plus needed additional coverages. 

 

In this section, we’re going to look at the main coverages of contractor liability insurance which include:

 

Damage to third-party property;

Bodily injury;

Completed work; and

Reputational harm

We will also look at additional coverages that you can add to your contractor insurance so that it is tailor-fitted to the needs of your business.

 

1. DAMAGE TO THIRD-PARTY PROPERTY

 

While working on an existing structure, whether it’s a house or a building, there is always a chance of accidentally causing damage to the property itself or something within the property. Damage can also be accidentally inflicted on properties nearby. Contractor liability insurance protects your business during such incidents by covering any legal fees as well as repair/replacement costs.

 

So what do covered incidents look like? Here are some examples:

 

An accidental hammer swing shatters a window during renovation work;

A mistake with a power tool breaks a part of the plumbing, causing a flood;

While working on a basement, an existing crack is aggravated causing structural risks to the home; or

Falling debris from a construction site lands on a parked car and shatters the windshield.

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2. BODILY INJURY

While working on a project, a contractor may also accidentally cause or contribute to an injury of a third-party individual. These individuals may be members of the general public, suppliers, or even the client themselves.

 

In such scenarios, a lawsuit is highly likely to surface and if the business is found legally responsible for the injuries, they would need to shoulder the medical costs. Having contractor liability insurance will make sure that you have assistance paying any necessary legal fees and medical costs.

 

So what do covered incidents look like? Here are some examples:

 

A falling tool or material falls from a high place and hits a nearby third-party individual thereby causing injury;

Scaffolding during home renovation falls and hits a nearby third-party individual and causes them to be injured;

An excavation site wasn’t properly fenced and a third-party individual falls in and gets injured; or

Tools or sharp materials are poorly placed and cause injury to a third-party individual who is passing by.

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3. COMPLETED WORK

When it comes to providing coverage for third-party bodily injury and property damage, contractor liability insurance doesn’t only provide coverage during the project itself; it also gives coverage for when the project is completed.

 

In the event that your completed work causes injury to a third-party individual or property damage at a later time, contractor liability insurance will still protect your business by covering the legal, medical, and repair/replacement costs involved.

 

So what do covered incidents look like? Here are some examples:

 

A roof you constructed caves in and causes injury to third-party individuals;

A poorly installed window falls, breaks, and damages another part of the house;

Poorly installed pipes leak and cause flooding and water damage to the property; or

Newly set-up electrical wiring eventually causes an electrical fire in the house.

 

4. ADVERTISING AND REPUTATIONAL HARM

Contractor liability insurance also gives protection in cases when your business is sued for advertising or reputational injuries like libel, slander, or copyright infringement. This insurance type will cover the legal costs involved in such scenarios.

 

So what do covered incidents look like? Here are some examples:

 

Your business gets sued by a person or a business for slander or libel;

Through your publications, your business gets sued for violating privacy;

Another business sues you for disparaging their image, their services, or their products;

Another business sues you for copying their advertising idea; or

Your business is sued for copyright infringement.

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5. ADDITIONAL COVERAGES

In some cases, you may need additional coverages that are not included in contractor liability insurance. Obtaining additional coverage could be in accordance with your business’s risk management strategy or based on the recommendations of your insurance company.

 

Either way, here are the common additional coverages obtained by contractors to complete their own personalized contractor insurance plan. 

 

WORKER’S COMPENSATION INSURANCE COVERAGE

Many are aware that construction (and similar/related trades) come with many risks for the workers. This is mainly due to the handling of high-powered tools, exposure to hazardous chemicals, the need to work from high and/or cramped places, possible electrocution, and so on.

 

In fact, throughout Canada, 40,000 construction workers are injured from fall accidents alone. This is why worker’s compensation insurance is a good addition to your personalized contractor insurance plan.

 

Worker’s compensation insurance covers medical costs, lost wages during recovery, disability benefits, and death benefits in the event that workers are injured, become ill, or pass away while at work.

 

COMMERCIAL PROPERTY INSURANCE COVERAGE

Though most of the obvious risks happen on project sites, your office or headquarters needs to be insured as well. This location houses valuable items such as equipment, tools, computers, project-related documents, client-related documents, business documents, and more. Unforeseen events such as extreme weather, fires, and other natural disasters can damage your office (and the contents therein) or make it inaccessible for a while, causing business interruption. The workplace can also be a target for vandalism or even theft especially if there are high-value items inside.

 

Commercial property insurance protects you in such cases by covering repair costs and replacement costs related to property destruction, theft, and vandalism. In cases when operations are shut down due to the office being unusable or inaccessible, this type of insurance will also reimburse the lost income.  

 

BUILDER’S RISK INSURANCE COVERAGE

Structures under construction are even more susceptible to uncontrollable environmental forces (e.g. high-speed winds, bad weather, fire.) Furthermore, people can sneak into the project site and steal tools lying around.

 

This is where builder’s risk insurance comes in. Builder’s risk insurance covers the costs related to the above incidents.

 

COMMERCIAL AUTO INSURANCE OR TRUCK INSURANCE COVERAGE

If your company has a fleet of vehicles or trucks that you use for your business operations, then you need a comprehensive commercial auto insurance or truck insurance policy in place.

 

There is no way of knowing what will happen on the road. Accidents can still happen and can lead to property damage, damage to the vehicle, and physical injuries to those involved.  Additionally, there is a risk that your commercial vehicles will, at one point or another, get stolen or vandalized. 

 

Commercial auto insurance or truck insurance will protect your business in all of the above scenarios. This insurance policy will cover legal costs, repair/replacement costs (for the damaged property and vehicle), and medical costs arising from the incident.

 

CYBER INSURANCE COVERAGE

 Many contractors are making use of digital technology to have more efficiency in terms of documentation, communication, and so on. Though creating such systems carries many benefits, one disadvantage is that this makes the business vulnerable to cyber attacks. With the most valuable information stored as digital files, hackers are looking to cash in.

 

If any of your digital devices get hacked, cyber insurance will cover legal costs relating to lost data, reimburse lost income caused by the incident, and cover the cost of restoring your business’s reputation.

 

WHO NEEDS CONTRACTOR INSURANCE?

 Contractor insurance in Europe, Asia, Middle East and Africa can be purchased by contractors working in construction and renovation as well as carpenters, electricians, HVAC installers, roofers, landscapers and the like.

 

In construction and similar industries that have a high risk of accidents, one can never be too prepared. Protect your company, your employees, or yourself (as an independent contractor) from unforeseen accidents and events that could lead to liabilities.

 

WHY CHOOSE LIBERTY MUTUAL INSURANCE?

 When working in industries like construction, landscaping, and renovation, it’s best to always be one step ahead. Although you’re already doing your business a world of good by getting contractor liability insurance, you can still customize your insurance to any additional coverage that you may need based on your specific needs.

 

As one of the top insurance providers in Canada, Liberty Mutual Insurance is your partner in putting together the best possible insurance plan for you and your employees. We’ve got a great track record serving various clients from multiple industries and garnering numerous awards along the way! You know you’re in good hands with Liberty Mutual Insurance.