Explaining the need to carry adequate liability insurance is like preaching to the converted for some, but imagine this:

You hire a subcontractor to work for you. That subcontractor causes damage to the building they are hired to work on, to the extent that the building has to be evacuated. As a result of the subcontractor’s negligence, the following claims may occur.

- A tenant is injured during the evacuation

- The building is damaged

- Tenants contents are damaged

- Neighbouring businesses are forced to shut down or relocate during the repair to the damaged portion of the building, resulting in a loss of earnings

- Adjacent buildings are damaged

A commercial general liability policy covers these types of claims, but what if the subcontractor you hired didn’t have liability insurance? Then, most likely, all of the claimants mentioned above, will look to your policy for compensation.

There is also the possibility that if the subcontractor does not have their own commercial general liability, they are likely not insured through WSIB. Failure to obtain a clearance certificate from a subcontractor is an offence and subject to a fine. Employers who contract with other companies will be held responsible for the injury costs of the other company’s injured workers if the other company is unregistered or in default with the WSIB.

So how can you protect yourself and your business:

- Never hire uninsured subcontractors

- Always ask for certificates of insurance BEFORE the start of the work to be performed

- Set minimum standards for liability limits to be carried by the subcontractors.