Insurance Essentials: Contractor insurance is vital during recessions

Journal of Commerce | Jon Hogg | October 12, 2022

Amidst the spectre of a looming recession, builders and contractors are understandably looking for ways to lower their operating costs. However, reducing your insurance coverage, particularly during a recession, is not wise.

Regrettably, curtailing construction site theft is not a new dilemma.

It’s estimated the cost of construction theft in Canada was an eye-watering $1 billion in 2021. Everything at a construction site is up for grabs, from power tools to bulldozers to raw materials. The pandemic worsened a bad situation, as the Canadian Home Builders’ Association Edmonton Region told Global News.

Construction professionals and contractors understand they need an insurance policy that includes tools and equipment coverage to protect their investments in case they fall prey to thieves or vandals at their jobsites.

However, amidst the spectre of a looming recession, builders and contractors may be understandably tempted to lower their operating costs by trimming or outright slashing their insurance policies down to the box crib, or so to speak. But reducing your insurance coverage, particularly during a recession, is not wise. Whether Canada officially dips into recession or not, challenging economic environments tend to fuel thefts and break-ins.

Don’t reduce your insurance. Review it

A better way to go is to ensure you’re adequately protected but not paying for coverage you don’t need.

Start by reviewing your existing policy — every policyholder and additional insurers should do so every time you purchase a policy. Don’t rely on skimming over your certificate of insurance document. Instead, take the time to read your policy thoroughly.

On that note, there’s nothing wrong with contacting your broker to ask for a policy review and have them explain the details of your coverage, limits, deductibles and exclusions. Furthermore, choose an experienced contractor insurance broker to partner with and advise you since they’ll understand the nature of your work and the types of projects you’re tackling.

Another option is to consider a wrap-up liability policy if yours is a large project that involves several contractors and subcontractors. It’s not always applicable, but a wrap-up policy is typically purchased by a general contractor and includes coverage for your additional insureds: subcontractors, project managers, and consultants. There are many benefits to having a wrap-up policy, including they tend to cost less than each contractor or subcontractor all buying individual policies.

How to prevent theft at your jobsite

Regardless of your best efforts to deter thieves from ripping off your tools and equipment stored at a jobsite, at home, or in a storage facility, theft will still happen. But that doesn’t mean you need to make it easy for them. Here are a few ways to prevent theft of your tools and equipment:

  • Lock it up like Fort Knox. Lock everything up you can in secure jobsite boxes and remove the wheels and use hydraulic locks on equipment.
  • Set up climb-resistant fencing. A lot of jobsites don’t have perimeter security, making it easy for a crook to wander onto the property and get their hands on whatever they want. Get a fence installed with few entrances and ensure the ones that have lockable gates or doors.
  • Install security cameras and lighting. A lot of construction sites are dimly lit and lack security cameras keeping watch. If possible, get infrared, 24/7 monitored surveillance cameras installed and set up high-powered, battery-operated motion-activated lighting. Place signage around the worksite alerting potential thieves they’ll be seen if they step foot onto the property.
  • Hire security guards. Hiring security guards to monitor and record everyone who comes and goes around the clock is a wise deterrent. Maintain a list of who is permitted to enter the jobsite and the equipment they can use and have them sign in and out with security guards (no exceptions).
  • Label your equipment. Label all your tools, equipment, and machinery by etching or engraving your company name on everything or using microdot identification. Use radio frequency identification (RFID) technology or affix GPS tracking devices to vehicles and heavy equipment.
  • Keep an updated inventory. Keep track of everything you own and track the items and equipment you bring to every jobsite. Record the make and model or serial numbers, purchase dates, photos, and descriptions of every item.

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