Insurance Essentials: Handyman, renovation or general contractor insurance — Choosing the right coverage

There are distinct differences between what a handyman or handyperson, renovation contractor and general contractor is. Likewise, insurance that protects these professionals from financial loss varies significantly. Here’s what you should know.

As another year winds down, your insurance policy may be coming due or is up for renewal. But what type of insurance is best suited to what you do? 

Many contractors may refer to themselves as a “handyman,” but there are distinct differences between what a handyman or handyperson, renovation contractor, and general contractor is. Those distinctions help define what type of insurance you need and how much you’ll pay. 

What type of professional are you?

In general, each profession can be defined as follows:

• Handyman or handyperson — A profession by many names, a handyman or handyperson is skilled at providing a wide variety of repairs, usually at residential properties. Whether repairs or general maintenance work, these professionals do exterior and interior work, from incidental plumbing or electrical jobs like changing a faucet or installing a ceiling fan to painting, drywall repairs, and fixing door frames and patio decks. Many treat this type of work as a side hustle. Data from Statista suggests as of April 2019, 48 per cent of Canadian homeowners spent an average of $2,000 on home repairs and 24 per cent spent between $5,000 and $20,000.
• Renovation contractor — Renovation contractors are expert craftsmen specializing in rehabilitating or transforming commercial or residential properties. These knowledgeable tradespeople provide gut-and-replace project services to small-scale renovations, such as kitchen makeovers, basement finishing and bathroom renovations to home and commercial property additions. It’s a potentially lucrative line of work.

Statistics Canada data shows spending on residential renovations jumped by 66 per cent from February to June 2021. And according to the HomeStars 2022 Reno Report, Canadian homeowners spent an average of $13,000 on renovation projects, up from $8,260 in 2021.

• General contractor — A general contractor oversees complex building projects in commercial and residential construction. Their responsibilities are vast, from creating and managing budgets and hiring subcontractors to collaborating with architects and managing relationships with property owners.

As of September 2022, Statistics Canada’s total investment in building construction data finds investment declined by 0.6 per cent to $20.9 billion. Regionally, eight provinces saw non-residential construction investment increase by 1.6 per cent to $5.4 billion in September versus August, with Ontario leading the way.

What insurance does each profession need?

There’s a lot of crossover regarding the insurance coverage each professional requires. Where the differences are is often based on the amount of coverage or policy limits they need.

For example, a comprehensive handyman insurance policy includes general liability, commercial property, tools and equipment, pollution liability, cyber liability and commercial auto insurance coverages. A general liability policy with a coverage limit of $2 million for a handyman typically costs around $591 annually.

Renovation contractor insurance includes much of the same coverages as a handyman policy. Often, the general liability annual premium starts at $630 for a $2 million coverage limit.

General contractor insurance also features similar coverages as handyman and renovation contractor policies, plus a whole lot more. It’s easy to see why since general contractors may need professional liability, builder’s risk insurance and possibly additional coverages for things like leased, rented and borrowed equipment, tenants’ legal liability and legal expense insurance.

The cost and coverage limit for a basic general liability policy for general contractors is usually the same as the other two professions. However, the total cost depends on the work you personally do versus the work that is subcontracted as well as the coverage and limits you select and your chosen insurance provider.

How to find the coverage you require at a fair price

Construction industry professionals of all walks know they are required to carry insurance and they understand the value of it for shielding them from costs associated with accidents, theft, other damages and lawsuits.

Prioritizing protection over cost is vital to ensure your business thrives, but that doesn’t mean you need to settle for one insurance provider’s policy and price.

Turn to a business insurance broker to shop your rate across multiple providers before you renew your policy or buy a new one. In light of the economic turmoil, we may see in the months ahead, finding ways to lower your insurance bill without compromising on protection by partnering with an experienced licensed broker is the expert guidance you need.

Jon Hogg is a licensed broker and team lead, digital solutions, contractors at Zensurance, Canada’s leading source for small business insurance. Get a free quote for your insurance needs by visiting Zensurance.com/DCN.