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What is demolition insurance?

Demolition insurance or insurance for demolition contractors is a specialized coverage designed to handle the risks associated with tearing down commercial or residential buildings or structures. In Canada, anyone involved in demolition, whether you're a contractor or a property owner, is required to have this type of insurance as part of their trade. Demolition projects come with their own set of challenges, including heavy machinery, explosives, and a high risk of accidents. This insurance provides protection, ensuring that you aren’t personally liable for these potential risks. Demolition insurance makes sure you're not left personally liable if anything goes awry.

What demolition insurance includes

Demolition insurance is an umbrella term for a group of policies to address the hazards of demolition. Typically, it includes:

• General liability insurance: This covers any damages to third-party properties or injuries to people caused by the demolition. For example, if debris falls and hits a neighbouring building, this insurance will pay for the necessary repairs.
• Pollution liability insurance: When demolishing, especially when demolishing older buildings, there's always a chance of releasing hazardous materials like asbestos or lead into the environment. Pollution liability will cover any cleanup costs, and any legal claims related to environmental contamination.
• Equipment insurance: Demolishing buildings requires expensive machinery, and the damage or loss of this equipment can be costly. Equipment insurance ensures you won’t bear those financial losses alone, if your equipment is stolen, lost or damaged. Do note that it does not cover wear and tear.

Recommended add-ons for demolition insurance

While standard demolition insurance offers strong protection, there are also some additional coverages that you should consider. These add-ons can further protect your business and your project:

• Professional liability insurance: This is also known as errors and omission insurance, it covers any financial loss caused by a mistake or negligence during planning or while executing. For instance, if you miscalculate and cause damage, this insurance can cover the costs.
• Builders’ risk insurance: If you're demolishing a structure to make way for new construction, this coverage protects the site and materials during construction.
• Inland marine insurance: This insurance is especially important for demolition contractors. This insurance will protect your transport demolition equipment such as bulldozers and excavators while they are in transport to and from job sites.

Common types of demolition insurance claims

Demolition insurance exists because accidents happen. As a demolition contractor, some of the most common claims you may face include:

• Property damage: When demolishing in a dense area such as a part of downtown, a dense neighbourhood or larger cities, it’s extremely easy for debris or vibrations from the demolition to damage the neighbouring structures or houses. Which makes this one of the most frequent claims that demolition contractors make.
• Contamination: Older buildings often contain asbestos, which is now known to be carcinogenic. Contractors must legally remove it during demolition. Other hazardous materials, like lead or mold, can also be uncovered. If mishandled, these can lead to costly lawsuits or cleanup. Demolition insurance covers such claims, protecting contractors from financial risks.
• Equipment damage or theft: Demolition contractors rely on specialized equipment, which can be expensive to repair if it’s damaged, or replace if stolen from the job site. Equipment insurance would cover the costs of repairs or replacement in cases such as these.

How much does demolition insurance cost?

The cost of demolition insurance varies widely, depending on several factors. As a demolition contractor, your premiums will depend on:

• Project size: If you usually work on larger demolition jobs, you will likely have a higher insurance premium.
• Location: Demolitions in densely populated or high-value, especially in areas like downtown Toronto or Vancouver, are typically more expensive to insure.

On average, demolition insurance costs between $1,500 and $10,000 per year, depending on the size and scope of your projects. Larger commercial demolitions could see even higher premiums. Always factor in these costs when bidding on a demolition job.

How to get the cheapest demolition insurance quote

You don’t have to break the bank for good demolition insurance. Here are some ways you can lower your premiums:

• Shop around: Since each insurer has their own going rates, you can compare quotes from different companies to find the best package.
• Bundle your insurance: Many insurers usually will offer discounts if you bundle your demolition coverage by adding add-ons like commercial auto insurance or commercial property. Your premium will be higher overall, but you will have better coverage for a better price.
• Higher deductibles: Choosing a higher deductible lowers your premium. This is because you will have to pay more in case of an accident before your insurance kicks in, which saves your insurance company money and makes you less risky to insure. Just make sure you can cover the deductible in the event of a claim.
• Maintain a clean record: The safer your job sites are, the more likely you’ll receive lower insurance rates. A strong safety record can help you negotiate better premiums.

Demolition insurance in Canada: what you need to know

In Canada, demolition insurance is not just a nice-to-have; it's often required by law for demolition contractors.

Regulations: These vary by province, so it’s crucial to check your local requirements. For example, in places like Toronto or Vancouver, where property values are high and buildings are closely packed, the local government might impose stricter insurance requirements and coverage amounts, to protect surrounding properties.