Contractor’s Insurance in Ontario: A Complete Guide

October 16, 2025 Brian Meyer

Running a construction or contracting business in Ontario comes with its share of risks. From on-site accidents to property damage, unexpected events can lead to significant financial losses. This is where contractor’s insurance steps in as a critical safeguard.

This guide will walk you through everything you need to know about contractor’s insurance in Ontario. We’ll cover why it’s essential, the different types of coverage available, and how to choose the right policy for your business. By understanding your options, you can ensure your livelihood is protected against the unforeseen challenges of the trade.

Whether you’re an independent contractor or manage a growing construction team, having the right coverage is key to long-term success. Explore contractors’ insurance solutions designed for Ontario builders from Affiliated Insurance to secure the protection your business truly needs.

Why is Contractor’s Insurance Necessary in Ontario?

For many contractors, having the right insurance isn’t just a good idea—it’s a requirement. Most municipalities in Ontario will ask for proof of insurance before issuing permits for a project. Similarly, general contractors often require their subcontractors to carry adequate coverage before they can begin work on a site.

Beyond these legal and contractual obligations, contractor’s insurance provides vital financial protection. It shields your business from the high costs associated with lawsuits, property damage, and workplace injuries. Without it, a single accident could put your personal assets and the future of your business at risk. Essentially, it’s a fundamental part of a solid risk management strategy, giving you peace of mind and allowing you to focus on your work.

Types of Contractor’s Insurance Policies

Contractor’s insurance isn’t a single policy but a package of different coverages designed to protect against various risks. Here are the most common types you’ll encounter.

Commercial General Liability (CGL) Insurance

This is the cornerstone of any contractor’s insurance package. CGL insurance protects your business if you are found legally liable for third-party bodily injury or property damage. For instance, if a visitor is injured on your job site or your work accidentally causes damage to a client’s property, this policy would cover the associated legal fees, medical expenses, and repair costs.

Tools and Equipment Insurance

Your tools and equipment are the lifeblood of your business. This type of insurance, often called an “inland marine floater,” covers the cost of repairing or replacing them if they are stolen, lost, or damaged. This coverage applies whether your tools are on a job site, in storage, or in transit.

Builder’s Risk Insurance

Also known as “course of construction” insurance, this policy is crucial for contractors working on new builds or significant renovations. It protects the building and materials on-site from damage caused by events like fire, theft, or vandalism during the construction period.

Commercial Auto Insurance

If you use vehicles for business purposes—whether it’s a single work truck or a fleet of vans—your personal auto policy won’t provide adequate coverage. Commercial auto insurance is specifically designed to cover vehicles used for work, protecting you from liability in case of an accident.

Pollution Liability Insurance

For contractors who work with potentially hazardous materials (like asbestos) or are at risk of causing environmental contamination (such as a fuel spill), pollution liability insurance is essential. It covers cleanup costs, fines, and legal expenses related to pollution incidents.

Factors Affecting the Cost of Contractor’s Insurance

The price you’ll pay for contractor’s insurance in Ontario can vary widely based on several factors. Insurance providers assess your level of risk to determine your premium. Key considerations include:

Type of Work: The nature of your contracting work is a major factor. A roofer, for example, faces higher risks than a painter and will likely pay more for insurance.
Business Size and Revenue: Larger businesses with more employees and higher annual revenues generally have greater exposure to risk, which translates to higher premiums.
Claims History: A history of frequent claims can indicate higher risk, leading to increased insurance costs. Maintaining a good safety record can help keep your premiums down.
Location: Where you operate can influence your rates. Working in densely populated urban areas might carry different risks than working in rural settings.
Coverage Limits and Deductibles: Choosing higher coverage limits will increase your premium, while opting for a higher deductible can lower it.

How to Choose the Right Insurance Provider

Selecting the right insurance provider is just as important as choosing the right coverage. Look for a broker or insurer who specializes in construction and trades. They will have a deeper understanding of your industry’s specific risks and can help tailor a policy that fits your needs.

When comparing providers, consider their reputation, customer service, and claims handling process. Reading reviews and asking for recommendations from other contractors can provide valuable insights. Make sure you work with someone who is responsive and can clearly explain your policy details.

Tips for Saving Money on Contractor’s Insurance

While insurance is a necessary expense, there are ways to manage the cost:

Bundle Policies: Many insurers offer discounts if you purchase multiple policies (like CGL and commercial auto) from them.
Implement a Safety Program: A formal safety program demonstrates your commitment to risk management, which can lead to lower premiums.
Increase Your Deductible: A higher deductible means you pay more out of pocket in the event of a claim, but it can significantly reduce your monthly premium.
Review Your Coverage Annually: Your business needs can change. Reviewing your policy each year ensures you aren’t paying for coverage you no longer need.
Shop Around: Don’t settle for the first quote you receive. Compare prices and coverage options from several different providers to find the best value.

Claims Process: What to Do in Case of an Accident

If an incident occurs, it’s important to act quickly and follow the correct procedures.

Ensure Safety: Your first priority is to secure the site and attend to anyone who is injured.
Document Everything: Take photos and videos of the scene, gather contact information from witnesses, and write down a detailed account of what happened.
Contact Your Broker: Notify your insurance broker or provider as soon as possible. They will guide you through the claims process and tell you what forms to fill out.
Cooperate with the Adjuster: An insurance adjuster will investigate the claim. Provide them with all necessary documentation and be honest and thorough in your communications.

Frequently Asked Questions (FAQs)

Is contractor’s insurance mandatory in Ontario?

While there is no universal provincial law mandating it for all contractors, it is often required to obtain municipal permits, sign contracts with general contractors, or secure financing. For certain licensed trades, it is a legal requirement.

How much does contractor’s insurance cost in Ontario?

The cost varies greatly, but a small contractor might pay anywhere from $500 to a few thousand dollars per year for a basic CGL policy. The final price depends on the factors mentioned earlier, such as the type of work and business size.

What is the difference between being bonded and insured?

Being insured protects your business from financial loss due to accidents or liability claims. Being bonded, on the other hand, provides a financial guarantee to your client that you will complete the project according to the contract and pay your suppliers and subcontractors.

Protecting Your Business with the Right Insurance

For any contractor in Ontario, having the right insurance is a non-negotiable part of doing business. It provides a safety net that protects your finances, your reputation, and your future. By taking the time to understand your risks and secure the appropriate coverage, you can build your business with confidence, knowing you’re prepared for whatever challenges come your way.