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For a small general contractor, one unexpected issue can put a lot of pressure on the business. A stolen trailer, damaged tools, a job site injury, a customer dispute, a weather-related delay, or a liability claim can quickly become expensive, especially when you are running a lean operation with only one or two employees.

For contractors in Atlantic Canada, including Newfoundland and Labrador and Nova Scotia, the right insurance program matters. Coastal weather, changing job sites, mobile tools and equipment, subcontractor relationships, and customer contract requirements can all affect the type of coverage a business needs.

At Munn Insurance, we work with small contractors, builders, and trades businesses to help identify coverage gaps before they become costly problems. Here are seven common insurance mistakes small contractors should watch for.

1. Thinking commercial general liability covers everything

Commercial general liability, often called CGL insurance, is an important part of a contractor’s insurance program. It can help protect your business if you are held responsible for bodily injury or property damage to a third party.

However, CGL is not designed to cover every risk a contractor may face. Depending on the policy, there may be exclusions or limitations related to faulty workmanship, professional advice or design work, pollution, tools and equipment, completed operations, or certain contractual obligations.

For many contractors, CGL is only one piece of the puzzle. Your business may also need coverage such as:

• Builders risk or course of construction insurance
• Contractors equipment coverage
• Professional liability
• Pollution liability
• Commercial auto insurance
• Wrap-up liability for larger projects

Before starting a new project, review your operations with your broker so your coverage reflects the work you actually perform.

2. Assuming personal insurance will cover business use

Small contractors often use a personal truck, trailer, garage, shed, or home office as part of the business. That can create a problem if the insurance policy was not designed for commercial use.

A personal auto policy may not properly respond if the vehicle is being used for contracting work. A home insurance policy may have limited or no coverage for business tools, materials, equipment, or customers visiting the property.

This is especially important for owner-operators who keep tools at home, tow equipment to job sites, or use the same vehicle for both personal and business purposes.

To avoid this mistake, talk to your broker about how your vehicles, tools, storage space, and home office are being used. Your coverage should reflect the way you actually run the business.

3. Signing contracts before reviewing insurance requirements

Many construction and trade contracts include specific insurance conditions. These may outline the types of coverage required, minimum liability limits, certificate requirements, additional insured wording, waiver provisions, or other insurance obligations.

A common mistake is signing an agreement before confirming whether your current policy meets those requirements. If there is a mismatch, it can lead to delays, extra costs, contract disputes, or coverage issues if a claim occurs.

This is especially important when working with property owners, general contractors, municipalities, developers, or larger commercial clients in Newfoundland and Labrador or Nova Scotia.

Before signing a contract, ask your broker to review the insurance section. That step can help confirm whether your policy aligns with the contract and whether any changes are needed before work begins.

4. Undervaluing tools, equipment, and mobile property

Tools and equipment are essential to getting the job done. For many contractors, they are also among the most expensive items to replace after a loss.

The problem is that equipment values can become outdated quickly. Replacement costs may rise, specialized tools may be added over time, and mobile equipment may move between job sites without the policy being updated.

If your limits are too low, a claim payment may not be enough to replace what was damaged, stolen, or lost.

To avoid this issue:

• Keep an updated list of tools, equipment, and serial numbers
• Review replacement values regularly
• Tell your broker when you buy or lease major equipment
• Confirm whether items are covered at your premises, in transit, and on job sites
• Review deductibles and theft prevention requirements

For contractors working across Newfoundland, Labrador, Nova Scotia, or other parts of Atlantic Canada, it is also important to confirm where your equipment is covered geographically.

5. Overlooking builders risk or course of construction coverage

A project under construction can be exposed to fire, theft, vandalism, wind, water damage, and other losses before the work is complete. Builders risk, also known as course of construction insurance, is designed to help protect the project while it is being built or renovated.

Contractors sometimes assume the property owner, developer, or general contractor has arranged this coverage. In some cases, that may be true. In other cases, the responsibility may fall partly or entirely on the contractor.

If no one has properly arranged coverage, a loss during construction can create a serious dispute over who is responsible for the damage.

Before work begins, confirm:

• Who is responsible for arranging builders risk coverage
• Which parties are named on the policy
• What property, materials, and work are covered
• Whether coverage applies to materials on site, in storage, or in transit
• What deductibles, exclusions, and project limits apply

A quick review before the job starts can help prevent confusion after a loss.

6. Hiring occasional help or subcontractors without checking coverage

Small contractors often bring in extra help when a job gets busy. That might include a casual labourer, a part-time employee, a subcontractor, or another trade.

Before bringing someone onto a job site, it is important to understand how that changes your risk. If a helper is injured, damages property, causes a delay, or does work that leads to a claim, your insurance program may be affected.

Subcontractors should have their own insurance, and you should confirm what coverage they carry before work begins. You may also need to consider how employees, payroll, certificates of insurance, and workplace safety requirements apply to your business.

To avoid this mistake, tell your broker when you hire employees, use subcontractors, or bring in temporary help. That conversation can help ensure your insurance matches how your jobs are staffed.

7. Failing to update coverage as the business grows

A contractor’s insurance needs can change quickly. A policy that worked when you were doing smaller jobs on your own may no longer be enough once you take on larger projects, hire employees, use subcontractors, purchase more equipment, or add vehicles.
Growth is a good thing, but it can also increase your exposure. If your insurance program is not updated, your business may be left with gaps.

Review your coverage whenever your business changes, including when you:

• Hire new employees or subcontractors
• Take on larger or more complex projects
• Add new services or trades
• Purchase vehicles, trailers, tools, or heavy equipment
• Work in new areas of Newfoundland and Labrador, Nova Scotia, or Atlantic Canada
• Enter into new contract arrangements
• Increase annual revenue or payroll

An annual review with your broker is a good starting point, but you should also reach out anytime your operations change significantly.

Final thoughts

In construction, small details can have big consequences. The same is true for contractor insurance. A missing endorsement, outdated equipment limit, unclear contract requirement, or overlooked project policy can create major problems when a claim happens.

At Munn Insurance, we help small contractors, builders, and trades businesses across Newfoundland and Labrador and Nova Scotia review their risks, understand their coverage, and build insurance programs that support the way they work.

If it has been a while since your contractor insurance was reviewed, now is a good time to take another look.

Need help reviewing your contractor or trades insurance? Contact Munn Insurance today at 1-855-726-8627 to speak with one of our contractor insurance experts or visit us online at www.munninsurance.com.