Certain types of contractors, particularly those involved in labor-intensive industries like energy and construction, must carry specialized insurance at all times. Contractors insurance in Alberta is designed to cover liabilities, workers’ compensation and certain inherent risks. While risk insurance is usually optional, liability and worker’s compensation coverage are mandatory.
Before you begin to compare contractors insurance in Alberta, there are two key things to consider. First, it’s important to understand the distinction between an employee and a contractor to ensure you’re fully aware of your rights and responsibilities. Also, if you need to carry contractors insurance in Alberta, you should familiarize yourself with the different types of coverage and determine how much protection your business requires.
Contractors Insurance Alberta: Employees vs. Contractors
Provincial employment law is very clear on the difference between an employee and a contractor. While this distinction is made primarily for tax purposes, it can also influence your insurance needs. More and more, companies across Canada are choosing to outsource work to contractors rather than hire full-fledged employees.
Generally speaking, you are considered a contractor if:
- You are hired to perform a specific task within a discrete time frame
- You work independently within the bounds of a formalized understanding of when and how the job is to be completed
- You use your own tools or equipment to perform the work
- You cover operating costs while the work is being completed, with the expectation of being reimbursed through your negotiated compensation
- You assume risks due to work delays, damage to equipment or loss of compensation
When purchasing contractors’ insurance in Alberta you will have three main options:
- Liability insurance. This mandatory form of coverage protects you and your assets from perils like property damage, accidents and third-party claims. It can also include errors and omissions coverage for the unintended result of improperly negotiated or incomplete contracts. In the case of construction contracts, liability protections also safeguard you against problems resulting from design flaws and other planning issues that may inhibit your ability to complete the work according to the contract you negotiated. Additional forms of liability coverage also protect your equipment, including rented equipment, and contractor employees that do not carry their own insurance.
- Workers’ compensation. As a contractor, it is your responsibility to provide your own workers’ compensation coverage, for yourself (if you are the only contractor) and for your employees (if you maintain your own workforce). The workers’ compensation program offers wage and benefits reimbursements to workers who are injured on the job.
- Risk insurance. Also known as builders’ risk insurance, this type of optional coverage is usually used in construction. It provides temporary protection to a home or a piece of property which is being built or renovated, covering it during the work period. Builders’ risk insurance typically covers perils like fire, theft, natural hazards and vandalism.
If you’re not sure which type of coverage you need, or if you’re uncertain about the coverage limits you require to protect yourself and your interests, you should discuss your situation with an experienced insurance industry professional.
Tips for Hiring Contractors
Before you hire a contractor to perform any work on your behalf, you should ensure that the contractor is carrying valid coverage that relieves you of any liability or responsibility for their risks and perils. Experts suggest following these important steps:
- Confirm that the contractor is carrying all required forms of insurance before any work begins, and request copies of their insurance certificates as proof.
- Ask for a copy of the contractor’s license, if you’re hiring someone in a regulated industry (such as construction or home renovations).
- Ensure that the contractor’s insurance policy covers the essentials, including fire, injuries, property damage, and damage to neighbouring buildings.
It is also recommended that your contractor provide insurance that covers the costs involved with the temporary relocation of tenants or residents while construction or repairs are being completed.
Contractors Insurance Alberta: Trust Lane’s for All Your Insurance Needs
If you have any questions about contractors insurance in Alberta, don’t hesitate to turn to Lane’s Insurance. Lane’s Insurance is a full-service Alberta-based brokerage, offering a comprehensive selection of insurance products at competitive rates, along with value-added service and claims support.
Lane’s Insurance also offers a large library of online informational resources. Please feel free to browse it for further information, or contact Lane’s Insurance directly if you have a situation you’d like to discuss with an experienced insurance representative.