What if You Get Sued? Does Your Toronto Contractor's Business Have Liability Insurance?

September 18, 2025 / 5 mins read

Toronto contractors can face liability claims from clients or suppliers that involve injury or property damage. Do you have enough business liability insurance to help financially protect your contractor’s business against lawsuits?

Without any or enough business liability insurance, your Toronto contractor’s business could face financial difficulties if you get sued. Can you afford that?

Western Financial Group, a 100% Canadian company, can help you navigate your business, car, and home insurance during this period of economic uncertainty.

Wherever your small business is located in Toronto, the Greater Toronto Area (GTA), or elsewhere in Ontario, a Western Financial Group business insurance broker will get you commercial coverage that uniquely protects what you do.

Western is a trusted, national insurance brokerage that has partnered with Canada’s top insurance companies to provide commercial insurance. We’ll work with our insurance partners to find the best business coverage rates for your Toronto contractor business.

We make the process easy by getting insurance quotes for you to choose from and giving you policy coverage options that suit your Toronto business’s specific needs.

Who should get contractor insurance?

The following are examples of trades in Toronto’s construction industry that need contractor’s insurance:

Welders
Painters
Electricians
Plumbers
Carpenters
Roofers
Drywallers
Masonry
Excavation
Deck and fence builders
Landscapers
Excavation
HVAC
Pavers
Snow removal

Why do Toronto contractors need liability insurance?

Liability insurance for Toronto contractors provides financial protection should you or your employees be named in a lawsuit.

You need to have insurance coverage tailored to the specific risks in your construction work and the equipment you own.

Liability insurance is an essential part of your Toronto contractor insurance coverage.

Here are the liability coverages that you need to help protect your construction business from lawsuits.

Commercial general liability (CGL) insurance

The most important type of insurance you need for your Toronto contractor company is commercial general liability. If you were sued, commercial general liability insurance would help cover the legal costs to defend the claim against your business in court, as well as costs to cover damages to compensate third parties.

What kind of risks does commercial general liability insurance cover?

Commercial general liability covers risks such as:

Injury to another person who is not your employee
Damage to someone’s property, damage to rented property.
Medical bills if someone is injured, legal and settlement costs of liability lawsuits filed against you.
CGL insurance also helps cover the costs of liability lawsuits related to slander and libel.

Professional liability insurance

Professional liability insurance helps protect Toronto contractors against claims of negligence when they are performing their duties. It’s also called errors and omissions insurance.

In the case of a negligence claim, for example, a Toronto contractor with this type of insurance would have its policy pay for some or all of the claim costs.

Cyber liability insurance

If your computer system is hacked, cybercriminals can sell the information. Without cyber insurance, you will have to pay out of your pocket for the cost of restoring your computer system. You may also be liable for damages to third parties whose information has been stolen and you may have to pay for notification expenses to inform customers that they were affected.

How can Toronto business owners save on their insurance with Western?

Western Financial Group helps business owners save on their insurance with the following:

Bundle and save: They’re generally available when you bundle liability, commercial auto, and property insurance.
Multiple quotes to suit your needs: Western is a national insurance broker that partners with Canada’s leading insurers. We’ll get you multiple business insurance quotes to suit your needs and to help you save money.
Cost: Depends on factors such as services provided, location and size, deductibles, revenue, and any past claims. We’ll get you the best price possible to help you save on your business insurance.

What other types of insurance are needed for Toronto contractors?

Tools and equipment insurance

This type of insurance provides financial protection for any transportable tools or equipment that Toronto construction businesses use to complete their work projects.

Tools and equipment insurance can provide reimbursement to repair or replace tools if they are lost, damaged, or stolen. Insured events apply to tools and equipment that are vandalized, stolen, lost, or damaged by fire or flood.

Any item valued at less than $1,500 is considered a tool. Anything valued above $1,500 is considered equipment.

Commercial property insurance

Whether you rent or own your Toronto contractor business location, commercial property insurance can provide financial coverage for physical loss, such as a fire, or damage to your business property and its contents.

Commercial auto insurance

Any vehicles used by your Toronto contractor business need to be covered by commercial auto insurance, including leased or rented vehicles and personal vehicles used by your or your employees for work. Your personal car insurance usually does not cover your work vehicles.

Commercial auto insurance covers medical fees, legal costs, and repair or replacement costs if your company's vehicles are involved in an accident. It also covers theft and vandalism.

Builder’s risk

Builder’s risk insurance is essential for protecting projects while they are being built or renovated. Builders risk insurance protects specific work sites from:

Fire, vandalism, theft
Weather-related damage during construction
Materials and equipment on-site or in transit
Structural damage or collapse
Project interruption costs due to insured event.

This type of insurance is a must have for general contractors and builders.

Business interruption insurance

This type of insurance supports you when your Toronto contractor business can’t operate due to a covered loss.

There are a number of losses that could force your construction company to shut down. Some examples are:

Damage to your equipment from fire or vandalism
A major reduction in revenue due to a client/supplier facing losses of their own
A disruption in your supply chain

Business interruption insurance can help with these expenses:

Payroll
Rent
Utilities
Property taxes
Alarm monitoring
Relocation of your business

How much does Toronto contractor insurance cost?

The following factors are usually considered when determining the cost of your business insurance: Location(s), services provided, number of employees, years of experience, annual revenue, and any past claims.

What do I do if I have a claim against my Toronto business?

Contact your broker immediately after any business-related mishap. Waiting to file a claim can confuse insurers about the severity of the damages to your business.
Know your policy so that when you contact your broker you are familiar with what will be covered or not.
Document the damage. Take photos right away and write down what happened.
Do not throw away damaged goods after taking photos. Keep the physical evidence so that your adjustor can see it.
Do not invite lawsuits. Don’t say anything that could be used against you, especially if you aren’t sure what happened.
Be honest about what your damaged property is worth. Damaged commercial property is generally valued according to its actual cash value or replacement value.

Here’s an insurance checklist:

Do you have the best Toronto business insurance rate that suits your work?
Do you have the right amount for your deductible and regularly review it to make sure it’s the right amount for you?
Are you or your employees using personal vehicles for work?

Western makes insurance easy for you

We get multiple insurance quotes for you to choose from and give you policy coverage options that suit your Toronto business’s specific needs at the right price for you.

Our experts are available now to help you navigate the business insurance journey to protect your Toronto business.

Why Western?

100% Canadian!

Get the best business insurance in Toronto

We’ll help you save money with competitive insurance quotes

Serving Canadians for over 100 years.

5 FAQs

Does Toronto contractor insurance cover subcontractors?

Subcontractors in Toronto typically need their own insurance, especially general liability insurance and tools and equipment coverage. Most contractor policies do not automatically extend to subcontractors unless they are specifically added as "additional insured."

As a Toronto contractor, can I get coverage for unique risks or special equipment?

Yes, Toronto contractors can add endorsements or separate policies for unique risks, such as installation risks, pollution liability, specific machinery breakdown, goods in transit, or protection for highly specialized tools. Insurers will often tailor policies or add-ons based on the contractor's trade and risk exposure. Western Financial Group can help contractors get customized business insurance for their specific construction trade.

Can business insurance policies for Toronto contractors be changed?

Yes, coverage, limits, or endorsements can be adjusted as the needs for your Toronto contractor business change. Your business insurance policy can be customized to fit your needs as a contractor.

Do I need contractor insurance if I have a construction bond?

Yes, you do. Having a bond does not replace the need for insurance if you are a Toronto contractor. A bond and insurance serve different purposes and protect different parties. A bond, such as a performance bond or payment bond, protects the project owner (client) and guarantees that the contractor will fulfill all contractual obligations. If the contractor defaults, the bond covers the losses, but the contractor must repay the surety for any claims paid out. On the other hand, contractor insurance directly protects the contractor from financial losses due to accidents, property damage, injuries, or lawsuits arising from their business operations.

Why should Toronto contractors get their business insurance with Western?

Western Financial Group customizes commercial insurance coverage to specific trades in Toronto’s construction industry. We provide access to a wide variety of insurance markets to make sure that contractors get a competitive insurance package with competitive pricing.