Contractor liability insurance quotes in Canada: subcontractors, completed work and clearances
How Canadian contractors and trades are rated for CGL, why subcontractor certificates and workers' compensation clearances change the price, and what completed operations cover means.
Contractor liability insurance in Canada is usually a commercial general liability (CGL) policy rated on payroll or revenue for your trade, with the price pushed up by uninsured subcontractors, work at heights, hot work and claims history. The three things that most often decide whether a contractor's quote is fair, and whether it pays when needed, are: an accurate trade description, certificates of insurance and workers' compensation clearances from every subcontractor, and adequate products-completed operations cover, because most contractor claims arise after the job is finished. Collect those before you ask for quotes.
This guide is part of the business insurance quote checklist. Rates and premiums below are illustrative.
What a contractor's CGL does and does not cover
| Situation | Usually covered by CGL? | Notes |
|---|---|---|
| A passer-by is hit by falling material from your site | Yes | Bodily injury to a third party |
| Your plumbing joint fails a year later and floods two floors | Yes, under products-completed operations | Damage to other property; the cost of redoing your own joint is usually excluded |
| You must tear out and redo your faulty work | Usually no | "Your work" and faulty workmanship exclusions |
| Your employee falls from a ladder | No, where workers' compensation applies | Covered by the provincial board |
| Your own tools are stolen from the van | No | That is property insurance (tools and equipment floater) |
| A torch-on roofing job starts a fire | Possibly, if hot work is declared and conditions are met | Many policies impose hot-work conditions or exclusions |
| Fuel leaks into a client's soil | Often excluded | Pollution exclusion; contractors' pollution liability is separate |
| Your design for a design-build job is wrong | Usually excluded | Professional services exclusion; consider professional liability |
Why subcontractors change your price
An insurer rating your CGL on payroll or revenue will ask how much you paid to subcontractors and whether they carried their own insurance. Subcontractors without adequate CGL are usually treated as if they were your own workers, because if they cause damage, the claim will come to you.
Worked example (illustrative). An Edmonton plumbing contractor reports $420,000 of payroll. The insurer's illustrative rate for the class is $2.10 per $100 of payroll.
- Own payroll: 420,000 / 100 x $2.10 = $8,820
- Subcontractor payments: $150,000, of which $40,000 went to subcontractors who never provided a certificate of insurance
- Uninsured subcontractor charge at the same rate: 40,000 / 100 x $2.10 = $840
- Premium: $8,820 + $840 = $9,660
Collecting certificates showing at least the limits your contract requires would remove the $840 charge, and more importantly would give your insurer someone else's policy to recover from after a claim. At audit, many insurers will ask for those certificates, so keep them on file by job.
Workers' compensation clearances
Workers' compensation is provincial. On construction projects, contractors are commonly expected to obtain proof that each subcontractor's account is in good standing, because in several provinces a principal can be held liable for unpaid premiums of a subcontractor that is not covered.
| Province | Proof to collect | Board |
|---|---|---|
| Ontario | Clearance certificate; construction is generally a compulsory industry, including for most independent operators | WSIB |
| British Columbia | Clearance letter | WorkSafeBC |
| Alberta | Clearance letter | WCB-Alberta |
| Quebec | Attestation of conformity (certificate) from the CNESST; construction licence from the Régie du bâtiment du Québec | CNESST, RBQ |
| Other provinces | Clearance or letter of good standing | Provincial board |
Check with the board for the exact rules in your province, including how often to renew a clearance during a long project.
Completed operations: the cover contractors need most
Products-completed operations cover responds to injury or damage that happens after your work is completed. Check on every quote:
- Is it included, and is the aggregate the same as the general aggregate?
- Are any trades or types of work excluded, such as condominium or multi-unit residential projects, which some insurers restrict?
- Is there an exclusion for work in certain areas, such as roofs over a certain height or below-grade waterproofing?
- If you retire or close, completed-operations claims can still arrive; ask your broker about run-off or discontinued-operations cover.
Wrap-up policies on larger projects
On larger projects, the owner or general contractor may buy a wrap-up liability policy that covers everyone working on that project. If you are covered by a wrap-up:
- get a copy or summary to confirm you are named
- check whether completed operations continues after the project ends and for how long
- tell your own insurer, because revenue from wrap-up projects may be rated differently or excluded at audit
- keep your own CGL for every other job
Contractor quote preparation checklist
- Trade description and share of revenue for each type of work (new construction, renovation, service, commercial, residential)
- Maximum working height, use of torches or open flame, excavation depth
- Payroll by trade, number of employees and owners
- Subcontractor payments, split between those with and without certificates
- List of larger projects, with contract values and whether any were wrap-ups
- Claims and incidents in five years
- Workers' compensation account number in each province where you work
- Any provincial or municipal licence numbers, such as an RBQ licence in Quebec
Frequently asked questions
Does my CGL cover the cost of fixing my own bad work?
Usually not. CGL covers damage your work causes to other property and injury to people, not the cost of correcting the defective work itself. Some contracts and warranty programs deal with that separately.
My client wants to be an additional insured. Does that cost more?
Often there is a small charge or none for a blanket additional insured endorsement. See certificates of insurance and additional insureds.
Is a new home warranty program the same as liability insurance?
No. Programs such as provincial new home warranty plans protect home buyers against defects under their own rules. They do not replace your liability insurance.
Why is my premium adjusted after the year?
Contractor policies are frequently auditable on payroll or revenue. See premium audits for how the adjustment is calculated.
Sources
- WSIB Ontario — clearance certificates and coverage for construction
- WorkSafeBC — clearance letters in British Columbia
- WCB-Alberta — clearance letters in Alberta
- CNESST — workplace safety and compensation in Quebec
- Régie du bâtiment du Québec — construction contractor licences in Quebec
- Insurance Bureau of Canada — business insurance information for contractors
