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Contractor Insurance: Why You Need Proof They Have It

Imagine a scenario where an employees of the roofing contractor you’ve hired has an accident while working on your home. Or the contractor who’s renovating your basement accidently floods the lower level of your home. Who pays for the hospital bills or property damage? If your contractor doesn’t have insurance, the answer might be you, or perhaps your homeowner’s insurance policy.

Unfortunately, accidents happen in the home improvement industry and if you’re hiring painters, landscapers, carpenters, or even handyman services, it’s important to know that your contractor carries enough insurance to protect their company, and you, in the event an accident.

What Types of Insurance Should Your Contractor Carry?

The types and amounts of insurance contractors will carry depends on how many employees they have, whether they have company vehicles, and the size of the projects they normally tackle. At a minimum, your contractor should have:

Public Liability and Property Damage Insurance – this type of insurance covers any damage to your home or property while your project is underway. The contractor should have enough coverage in place to cover the new work they’re doing at your home and any damage that might be inflicted on the existing structure. Their liability insurance policy should cover any loss caused by their employees or any subcontractors they have working on the job.

Workers’ Compensation Insurance – Toronto normally requires any contractor with more than one employee to maintain a Worker’s Compensation Insurance Policy for their workers. The policy helps with medical costs caused by jobsite accidents and can also provide some income for the worker while they’re recuperating. If the contractor is exempt from having Workers’ Compensation Insurance, they should be able to produce a Construction Industry Certificate of Exemption from Workers’ Compensation.

Vehicle Insurance – most accidents involving contractor vehicles on your personal property should be covered by the contractor’s liability insurance policy. But it never hurts to make sure that any of the contractor’s trucks that come onto your property have vehicle insurance.

Don’t be shy about asking your contractors to produce proof of insurance – it’s a common request and most companies in the construction industry can get a Certificates of Insurance from their agents by simply making a phone call. When you’re given a Certificate of Insurance, always check the dates to ensure the policy is still in effect.

How Licences Affect Insurance

Hiring licensed contractors can be just as important as making sure they’re covered by insurance. Toronto and most other cities and towns in Ontario require that many construction trades be licensed before they can work in their trade. If you hire an unlicensed contractor to work on your home, their insurance may not cover them during the project and if they happen to not have insurance, your homeowner’s policy may not cover any accidents or damage caused by unlicensed contractors, and you could be left to foot the bill.