A self-employed tradesperson in Canada needs four separate things, and no single policy does all four. You need commercial general liability for damage and injury you cause, a tool and equipment floater for your own gear, commercial auto for the work vehicle, and registration with your provincial workers compensation board. These are different products that pay for different things. The most expensive mistake is assuming one of them covers the others.
The four layers, in plain English
Think of your protection as a stack. Each layer answers a different question.
- Commercial general liability (CGL): pays a third party when your work injures someone or damages their property. It does not pay for your own tools (see Commercial General Liability).
- Tool and equipment insurance (an equipment floater, a type of inland marine): pays to replace your own portable tools when they are stolen, lost or damaged, wherever they are. CGL will never do this (see Tool and Equipment Insurance).
- Commercial auto: covers the work vehicle itself and your liability while driving for business. A personal auto policy expressly excludes business use, so the work van or truck needs a commercial policy.
- Workers compensation (WSIB in Ontario, WorkSafeBC, WCB in the Prairies, CNESST in Quebec): the mandatory provincial scheme that covers workplace injury. It is not optional private insurance, and in construction it is mandatory for most operators.
On top of the stack, some jobs add more: builders risk and bonds on bigger contracts, and a new-home warranty enrolment if you build homes for sale.
Workers compensation is not regular insurance
Workers compensation in Canada is a public, provincial monopoly. There is no private market to buy instead. Every province runs its own board, and in construction the duty to register is broad. Ontario's WSIB, for example, deems most construction contractors, including sole proprietors and single-director corporations, to be mandatory registrants. Even where you are exempt as a sole operator with no employees, general contractors increasingly demand a clearance certificate before they let you on site. Buying optional coverage is often the only way to get work. Your provincial board sets the rules and the rates.
What a contract will demand
On most commercial and many residential jobs, the contract dictates your insurance. Expect to be asked for:
- A minimum CGL limit, usually $2 million per occurrence, sometimes $5 million or more on larger work.
- The hiring party named as an additional insured on your CGL.
- A valid workers compensation clearance certificate.
- A certificate of insurance proving all of the above before you start.
If you cannot produce these, you do not get the job. Getting the cover in place is part of being able to bid at all.
Cost: ranges, not quotes
Premiums depend on your trade, revenue, claims history, province and the limits you pick. As an indication only, a basic $2 million CGL policy for a small contractor often falls in the few-hundred to roughly $1,000 a year range, and a basic tool floater can start near $125 a year, but higher-risk trades such as roofing, demolition and excavation pay multiples of this. Treat any number you see online as a starting benchmark, not a quote. Only a licensed broker who knows your operation can price your actual risk. The Canadian commercial insurance market moved into a softer cycle in 2025 and 2026, so premiums on many lines have eased, but your own claims record still drives your price more than anything else.
The certificate of insurance, and what it must say
Before you set foot on most sites you will be asked for a certificate of insurance (a COI): a one-page summary your broker issues proving your policies exist, their limits and their endorsements. Read the contract's insurance clause first, then make sure the certificate matches it exactly. Common requirements are a $2 million (or $5 million) CGL limit, the hiring party named as an additional insured, primary and non-contributory wording, a waiver of subrogation, and proof of valid workers compensation coverage. A mismatch, even a missing endorsement, can hold up your start date or, worse, leave you in breach of contract if a loss happens. Give your broker the contract clause, not a paraphrase, and let them build the certificate to it.
Build the stack in the right order
For a small Ontario contractor building new homes, the layers go on in sequence: obtain your HCRA builder licence and enrol each home with Tarion (the registration gate), carry at least $2 million CGL with completed operations, register with WSIB, add commercial auto plus a tool floater with explicit overnight theft cover, add professional liability (errors and omissions) for any design-build scope, and provide a performance bond and a labour and material payment bond on public contracts of $500,000 or more. The same contractor in British Columbia swaps a BC Housing licensed builder and approved warranty insurer for Tarion and the HCRA, and WorkSafeBC for WSIB; every other layer is structurally identical.
Common mistakes
- Thinking CGL covers your tools. It does not, ever. This is the single most common and costly gap. Your own property needs its own floater.
- Running a work van on a personal auto policy. A business-use exclusion can void the whole claim after an accident.
- Skipping workers compensation as a sole operator. Even when not strictly mandatory, no clearance certificate often means no work, and a deemed-employer problem for whoever hires you.
- Buying on price alone. The cheapest policy is usually the one riddled with exclusions you will only discover at claim time.
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