Canada’s underground infrastructure is aging—and demand for sewer and watermain upgrades is only increasing. From municipal projects to new residential developments, sewer and watermain contractors are at the centre of some of the most essential (and complex) infrastructure work in the country.
But with high-value contracts, environmental sensitivities, and the pressure of working around existing utilities, comes some serious risk. For contractors in this space, insurance isn’t just a checkbox—it’s the foundation of doing business.
Michael DiPinto, VP of Construction Insurance at Ferrari & Associates, has seen firsthand how one missing endorsement or exclusion can derail a project. “This isn’t surface-level work,” DiPinto explains. “When a watermain bursts or a sewer line contaminates a site, the fallout is massive—financially, legally, and reputationally.”
The Core Risks Facing Sewer and Watermain Contractors
While every job site is unique, the core exposures for sewer and watermain contractors often fall into five key categories:
- Property Damage – Contractors often dig near existing water, gas, and electrical lines. One wrong move with an excavator bucket, and the damage can total tens of thousands—or more. In 2021, a contractor in Southern Ontario accidentally severed a fibre-optic line, shutting down internet service to over 10,000 customers and costing the contractor’s insurer more than $400,000.
- Third-Party Bodily Injury – Trench collapses, slip-and-fall hazards around open cuts, and unsecured equipment create serious risks for workers, pedestrians, and site visitors. Lawsuits are becoming more common—and more expensive.
- Environmental Contamination – Disturbing old sewer lines can release harmful waste into the surrounding soil or groundwater. Without Environmental Liability Insurance, cleanup costs can bankrupt a small contractor.
- Equipment Theft or Damage – Heavy equipment is often left on-site overnight. Theft is common. Damage due to fire, flood, or vandalism can leave a contractor scrambling to replace assets mid-project.
- Project Delays and Financial Penalties – Infrastructure work is often tied to strict municipal timelines. If an insured event halts work and causes delays, contractors may face liquidated damages clauses that cost thousands per day.
What Insurance Coverage Do Sewer and Watermain Contractors Need?
These are some of the core coverages the Canadian Construction Documents Committee (CCDC) requires that sewer and watermain contractor have—and why:
Commercial General Liability (CGL) for Contractors
This covers third-party bodily injury and property damage. Most municipalities require $5M limits or higher. CGL is the frontline protection when accidents happen.
Real-World Example:
A contractor was trenching for a new sewer line in Guelph when a sinkhole developed near a pedestrian walkway. The injured pedestrian sued for $1.2M. The contractor’s CGL policy responded to both the legal defence and settlement payout.
Contractors Pollution Liability (CPL)
This policy covers environmental incidents, including gradual or sudden pollution, contaminated run-off, or accidental spills.
Why Contractors Pollution Liability Matters:
Standard liability policies often exclude pollution-related claims. CPL closes this gap, especially important when working around wastewater lines or contaminated soil.
Builder’s Risk / Course of Construction Insurance for Contractors
This provides property coverage for projects under construction, including materials, fixtures, and equipment while on site.
Real-World Example:
A fire broke out in a temporary site office on a Hamilton job site, destroying stored copper piping worth over $50,000. Builder’s Risk insurance reimbursed the full cost.
Sewer and Watermain Contractors Equipment Insurance
This protects owned and rented equipment from loss or damage due to theft, fire, vandalism, or even collision during transport.
Pro Tip:
Include rented equipment coverage if you frequently lease mini-excavators, shoring systems, or trench boxes.
Wrap-Up Liability for Sewer and Watermain Contractors
For larger jobs, especially municipal or multi-party projects, a Wrap-Up Liability policy can cover all parties under one policy—reducing disputes over who is liable.
Commercial Auto Insurance
Covers the vehicles used for transporting equipment and staff.
Surety Bonds for Contractors
Contract Surety (Bid Bonds, Performance Bonds, and Labour & Material Payment Bonds) are often required for public tenders and large-scale jobs
Risk Management Beyond Insurance
Insurance is critical—but it’s not the only solution. Proper training, strict site supervision, and documenting all utility locates through Ontario One Call or equivalent services help reduce claim frequency and severity. Michael DiPinto adds, “we work with contractors to make sure they’re not only insured but that they’ve got the risk management practices in place to reduce claims in the first place. It’s not just about the premium—it’s about protecting the business.”
Custom Solutions for Sewer and Watermain Contractors
Ferrari & Associates understands that sewer and watermain contractors face a unique set of challenges that can’t be solved with off-the-shelf insurance from any insurance brokerage. That’s why we have been tailoring each policy to our clients’ operations, projects, and risk tolerance for over 15 years.
Whether you’re a subcontractor handling residential connections or a lead on multi-million-dollar municipal sewer upgrades, our team ensures you’re protected at every depth—literally and figuratively.
Ready to dig deeper into the right coverage?
Let’s talk. Michael DiPinto and the Ferrari & Associates team are ready to help you build a program that matches the complexity of your work.
Call us or request a quote today.
