Renovation contractor: why you should have civil liability insurance

Are you a new renovation contractor? Although it’s likely you’ll focus most of your efforts on doing quality work for each of your clients, to make a mistake is only human and no one is immune to the unforeseen circumstances that may arise over the course of a project.

For these reasons, it’s essential to take out general liability insurance and professional liability insurance. So, now let's take a look at what exactly this type of insurance is and how they can protect you.

Liability insurance

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From the outset, we should specify that civil liability insurance is divided into two categories: general liability and professional liability. But what are the nuances between the two and what exactly do they cover?

The difference between general liability and professional liability

In the case of general liability insurance, claims are one’s which are caused by events of an unforeseeable nature that have resulted in physical injury or damage to property.

With regard to professional liability claims, these aren’t directly linked to the existence of a particular event in which injury or property damage has occurred, but rather to financial losses.

General liability insurance

General civil liability insurance covers material damage as well as bodily injury, excluding however financial losses caused by any oversights or errors. In addition, it’s important to be aware that coverage can extend to damage caused by your personal activity as well as any damage caused by a product of which you’re the creator.

On another note, this type of coverage also extends to defamation, whether oral or written, as well as any medical costs that’re incurred due to personal injury.

Also, general liability insurance also covers any consequences of mistakes that are made within your company, as well as those made by your collaborators or employees if you have any.

It's good to know that this type of insurance legally obligates your insurer to come to your defence in the event of a claim against you, up to the amount for which you’ve obtained coverage. The costs of your defence as well as those relating to the settlement of the dispute are also covered.

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The importance of having general liability insurance

As defence costs can be particularly high, deciding to opt out of liability insurance is definitely a risk to avoid. This is especially true since you may be held liable for material damage even if you aren’t directly involved in the incident which caused the damage.

Whether an incident happens through the fault of one of your employees or it simply happens through distraction, you’ll still be held responsible.

Professional civil liability

For its part, professional liability insurance covers oversights or errors for which you’re legally responsible when it comes to your professional duties, as well as anything resulting from not providing a service as you were supposed to.

Second, it’s possible for you to be sued for an oversight or even a suspected mistake. Even if there’s doubt as to your responsibility in the situation, you’ll still be required to defend yourself.

The importance of having professional liability insurance

As you can be held liable for the actions, errors or omissions of others, professional liability takes on paramount importance if you’re dealing with subcontractors.

Even if you’ve never had reason to invest in this type of insurance, and no recourse has been brought against you, know that a single lawsuit can easily take several thousands of dollars from you. 

In the same vein, we should note that your insurer will favour insuring you if you’ve not been involved in a lawsuit.

Still hesitant? Remember that if your business is small, a single lawsuit can throw all your plans to a halt, which would be disastrous considering any effort put into starting a business.

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Watch out for contracts!

While it may seem like the perfect tool to protect against legal action, it should be noted that a contract doesn’t entirely eliminate the possibility of being sued. While some risks could be reduced, the protection offered by a contract, however well-drafted, doesn’t equal that offered by adequate liability insurance.

Liability insurance: a security guarantee for your customers too

Even if you decide to take out general liability insurance and professional liability insurance to protect yourself in the event of a lawsuit, remember that these protections also apply to your prospective clients. Indeed, they won’t be held responsible for an accident that took place during a renovation project carried out in their home.

As mentioned in our article Why You Should Get Liability Insurance for Your Home Renovation Project, customers are even advised to check that you have third-party liability insurance which will exempt them from liability if something goes wrong. If you take responsibility head on, everyone's a winner!