Accidents can happen at any job, but the construction sector in Canada comes with an increased level of liability for entrepreneurs. From on-the-job hazards to the theft of high-value equipment, contractors and construction businesses over-index in potential costly risks.
That’s why operating as an independent contractor or running your own construction business comes with a required level of legal understanding to ensure the safety and security of your work. While the fine print, legalese, and paperwork can sometimes feel overwhelming, it’s essential to your business to remain diligent and to have the appropriate small business insurance to protect your hard-earned assets.
Simply put, investing in insurance shouldn’t be negotiable—it’s just good business. In this guide, we’ll walk you through the ins and outs of obtaining contractor insurance in Canada in 2025, so that you can operate your business smoothly, knowing it’s protected.
Why get insurance as a general contractor?
When operating as a general contractor in electrical, construction, framing, painting, interior design, roofing, plumbing, and various renovation needs, obtaining liability insurance is important from day one. Accidents happen, and without the right coverage, potential risks like property damage or physical injury could cost you the job—or more.
According to data from the Association of Workers’ Compensation Boards of Canada, 10 per cent of lost time claims from non-fatal injuries were reported by the construction industry, despite it making up just 7.8 per cent of the working population, per Statistics Canada.
And the cost adds up—that amounts to an estimated $2 billion a year in direct losses, based on the average cost of $78,000 for a single lost-time injury, reported by the Institute for Work and Health.
And it’s not just workplace injuries that could cost you. Construction businesses are prone to theft at an alarming rate—with an independent study reporting an average of two thefts a year per business—which equates to $46 million in equipment stolen annually.
The right insurance package will include most of what one needs to safeguard against financial loss. Independent contractors and construction businesses should seek coverage to protect themselves, their employees, and their customers. Beyond protection, it can also help solidify professionalism, increase trust, and secure future work from clients.
Choosing the right liability insurance for contractors
Liability insurance exists to help contractors manage risk to their business, with most insurance providers offering multiple options for different levels of coverage. Contractors should consider the risks associated with their business activities and the cost of small business insurance to choose the appropriate coverage. Remember: not all levels of risk are the same for every business. Trade, location, business size and service-related risks should be considered before deciding on the insurance that best suits your needs.
As a general rule of thumb, the most comprehensive coverage could protect you against a broad scope of concerns, but it’s still essential to evaluate and understand each policy. Ask the right questions to help make informed decisions when choosing your business insurance.
Do subcontractors need liability insurance?
It’s important to note the difference between contractors and subcontractors. A contractor operates under a contractual agreement to provide the services, labour, and materials needed to complete a project.
Subcontractors are separate businesses or individuals who complete work for the contractor as part of the agreement. With this in mind, contractors and subcontractors are each advised to seek their own liability insurance to ensure independent coverage should issues arise on a job.
What insurance coverages should contractors consider?
Knowing exactly what contractor insurance covers can help you continue to run your business with the ease and comfort of knowing you have the right resources to protect you against accidents and losses.
Most standard insurance coverages for contractors and construction businesses will include some of the following:
Commercial general liability insurance
Often considered the most critical form of coverage, commercial general liability, or CGL, is a broad general liability policy that covers property damages or bodily injuries caused to third parties throughout your business operations. It can protect against incidents, like damage to a client’s physical assets or neighbouring businesses, and can cover the resulting incurred costs, such as medical and legal expenses.
It’s helpful to note that for construction businesses and contractors, it’s possible to add other businesses you contract with to your CGL policy as additional insureds, which may be useful when working with subcontractors.
Real-world scenario: While a contractor was replacing a roof, a pedestrian walking by the construction site suffered injuries when roof tiles fell due to high winds, resulting in a medical expense claim. Commercial general liability (CGL) insurance may cover some of the medical expenses associated with the pedestrian’s injury.
Contents insurance
Contents insurance is coverage that helps with the costs to replace or repair any lost or damaged tools, equipment, or inventory required to complete your job. In the construction industry, your tools and equipment are among your most valuable investments, and the loss of them may also affect your continuous ability to provide products and services to your customers, making content coverage a critical consideration.
Real-world scenario: A general contractor has $10,000 worth of equipment stored at his office location. A burglar broke into the office overnight, damaging the office’s door and stealing all of the equipment. Contents coverage could help replace or repair the tools, equipment or potential property damage from the theft.
Cyber liability insurance
Nearly every business has a digital footprint in 2025, making cyber liability insurance an important coverage to safeguard technology systems, customer data, and more. The coverage protects against cybersecurity risks, including cyber attacks, and concerns related to hackers, such as website takeovers, data theft, and theft of sensitive information. Protecting the data of your business and your customers is increasingly important in 2025, with the number of cyber attacks on small to medium-sized businesses in Canada on the rise.
Real-world scenario: A contractor receives an email from a vendor they frequently work with that turns out to be a phishing scam and leads to compromised customer data in their system. Cyber liability insurance could help with the costs of the forensic investigation and defending against lawsuits of the impacted individuals whose sensitive data was compromised.
Other coverages to consider
Beyond the foundation business insurance coverages above, there are several nice-to-have coverage add-ons that business owners should consider based on the level of coverage they need:
- Pollution liability insurance: While it may not seem essential, seeking pollution liability insurance, which protects against claims of pollution damage caused by your business activities as a contractor or construction business, may be a useful addition to your policy.
- Builder’s risk insurance: This policy protects a building that is under construction or renovation against expensive property claims that may arise during a project, like theft, weather damage, and other unforeseen events.
Common insurance claims for contractors
While claims may vary depending on the circumstances, like the real-world scenarios described above, some incidents are more likely to occur. Watch out for:
- Damage claims: Common in the construction industry, this claim may arise if a contractor or subcontractor damages property during a project.
- Accidents or injury claims: If a physical injury occurs to a third party during on-site work, due to unforeseen circumstances or by accident.
Ensure that your business is protected against these common claims by choosing liability insurance with adequate coverage.
How much does contractor insurance cost?
The average contractor in Canada may purchase a standard policy that includes up to $2 million CGL and contents coverage, with an approximate annual premium starting at $684. However, the cost of insurance for contractors can vary depending on many contributing factors, including:
- The operating location of your business
- The size of your business
- Your annual revenue
- The number of years that you’ve been in business
- Your history of past claims
Protect your contractor business with Ownr insurance
With the proper business insurance coverage, you can have the peace of mind to focus on completing projects and growing your business—not worrying about worst-case scenarios.
Ownr Insurance offers commercial general liability and contents insurance packages for eligible businesses. Get started with protecting your business with Ownr insurance. To learn more about choosing the best coverage for your needs, book a call with an expert to receive a quote.
This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.