Do Contractors Need Liability Insurance? A Guide For Western Canadian Trades

You load up the truck, double check the tool bag, grab a coffee, and you’re off to the job site. The day looks promising. But here’s something most contractors don’t plan for when they head out in the morning: what happens if something unexpected goes wrong?

Picture this. A ladder slips and cracks a customer’s window. An extension cord snags someone’s foot and suddenly you’re helping them up off the ground. Maybe a hammer slips from your belt and puts a dent in a brand new hardwood floor. These things don’t happen every day, but when they do, the costs can sting. That’s exactly why liability insurance exists.

What Liability Insurance Actually Does

Liability insurance is your safety net. It won’t stop mistakes or accidents from happening, but it’ll protect you when they do. It covers big and unexpected costs from property damage, injuries to other people, or even a lawsuit that shows up long after the project is finished.

Without coverage, those costs come directly out of your pocket. Replacing a floor, fixing a damaged roof, or covering hospital bills can drain profits and put your business at risk. For contractors such as roofers, plumbers, electricians, and general handymen who work hard to build a reputation and steady income, liability insurance is one of the smartest tools you can carry especially when you consider the types of emerging legal risks contractors face.

Who Needs It?

The short answer is almost everyone. If you work with tools, ladders, paint, or wires, liability insurance is made for you. That includes
• General contractors
• Electricians and plumbers
• Roofers, painters, and renovators
• Landscapers, cleaners, and even worksite offices
• Framers, drywall installers, HVAC technicians, and flooring specialists

In fact, more and more clients across Western Canada expect contractors to show proof of insurance before work even begins. Having that certificate can mean the difference between winning a job and losing out to someone else. It’s like showing up in proper work boots, you might not always think about them, but everyone feels better when they’re there. If you are just starting out in the trades, you might also find our blog on starting your own small business in Canada helpful for getting your operations off the ground.

Is Liability Insurance Required by Law?

Not always. There’s no single law across Canada saying every contractor must carry coverage. But here’s the catch. Cities may require it for permits, larger contractors often insist on it from subcontractors, and homeowners are starting to ask for it too. In Saskatchewan, the Financial and Consumer Affairs Authority even advises homeowners to check a contractor’s insurance certificates, including proof of general liability and workers’ compensation coverage. If you have employees, registering with your provincial workers’ compensation board is also a must.

So while you might not face a government fine for working without coverage, you could easily miss out on contracts, lose credibility with clients, or even find yourself personally responsible when things go wrong.

How Much Does Liability Insurance Cost?

Here’s the good news. Basic liability coverage is usually far more affordable than contractors expect. In Western Canada, many small businesses can secure coverage for only a few hundred dollars per year. Higher risk trades such as roofing will pay more, but even then, the yearly cost is often less than the price of a single small job.

The final premium depends on several factors. The size of your business, the type of work you do, your previous claims history, and the amount of coverage you choose will all affect the price. Still, the math is simple. Paying a manageable yearly premium is a small price compared to writing a cheque for tens of thousands after an accident.

Real World Examples

Imagine you’re an electrician and an overloaded circuit sparks a fire in a customer’s garage. Or a landscaper laying fresh sod when a sprinkler line bursts and floods the basement before anyone notices. Maybe a drywall contractor accidentally punctures a hidden pipe or a painter spills a gallon of stain on brand new carpet. Different trades, same reality, accidents happen and the damage can climb into the tens of thousands. Liability insurance steps in so you don’t have to cover those costs out of pocket.

These scenarios aren’t about fear, they are about being realistic. Accidents happen even when you’re skilled, careful, and professional. Insurance lets you keep moving forward without one mistake undoing years of effort.

Beyond Liability Insurance

Liability insurance is the foundation, but many contractors also choose to add other protections. Tools and equipment coverage keeps your gear safe if it’s stolen or damaged. Builder’s risk insurance protects projects that are still under construction. Professional liability coverage can help if you provide design or consulting advice that leads to a costly mistake and If your business relies on vehicles to haul tools and materials, learn more about what commercial car insurance is and who needs it in Western Canada.

Think of these as the walls and roof built on top of the foundation. Liability insurance holds everything up, and the additional coverage creates a stronger structure around your business. 

The Big Picture

Liability insurance is about more than meeting a requirement. It protects what you’re building, gives clients peace of mind, and keeps your business steady when accidents happen. Like any good contractor, it solves problems so you can stay focused on the work that matters. For a deeper look at why this matters, check out our blog Why Liability Insurance is Important for Small Businesses in the Canadian Prairies for more information.

When you load up your truck tomorrow, think about your true essentials: your hammer, your saw, and your insurance. Three simple things that keep every project moving forward with confidence. Looking for guidance? A trusted broker can help you sort through your options and make sure your business is properly protected.

Please note that the information in this article may not accurately reflect your insurance policy from Sandbox Mutual Insurance or another insurance company. Please refer to your policy or talk to your broker about your specific coverages.