Legal expense insurance ideal for construction companies on a “LIEN” budget

Robert Chiarantano
Robert Chiarantano

By Robert Chiarantano, senior account executive, RDA Insurance

In an industry where contractors hire sub-contractors who work with sub-sub-contractors, the climate is ripe for defaults on payments.

With huge contracts in play and overlapping projects at various stages of development, high legal costs are deterring many companies from pursuing money they are owed. This means that money is frequently left on the table. And these forfeitures can be significant; $10K here, $50K there, can really add up.

The average hourly rate for a lawyer in Ontario is around $360 per hour. It is no wonder, then, that construction companies are reluctant to go after money they are owed, as many consider the extensive costs of legal remedies to be akin to throwing good money after bad.

Fortunately, this practice is beginning to change. With the introduction of legal expense insurance to the Canadian market, policies for businesses are helping companies ensure they are no longer forfeiting money to which they are rightly entitled.

Complete Mechanical Contractors Ltd. and Capital Drywall Ltd. are two Ontario companies who’ve jumped on legal expense insurance. Beyond ensuring they are able to pursue outstanding monies without incurring huge legal fees, their policies with legal expense insurance provider DAS Canada include unlimited access to legal advice, enabling them to mitigate issues before they require escalation, saving both time and money for all parties.

Let’s say, for example, that a policy holder who owns a general contracting business completes 50 per cent of a job contract. Said contract, signed by the contractor, indicated that a payment of $10,000 would be made when the work was half complete.

Should the property owner renege on the contract and refuse to make the interim payment, the contractor may decide to place a lien on the property. In such an instance, a legal expense insurance policy would cover the legal costs associated with the debt recovery. Without this coverage, the contractor may be unable to afford the administrative costs of placing the lien, much less pursuing it in the legal realm. Legal expense insurance enables the policy holders to pursue payments they are rightly owed. 

Legal expense insurance now makes it affordable for companies to pursue legal remedies. Additionally, DAS Canada’s access to its legal advice hotline enables policyholders to call and speak directly with lawyers who are experts in the legal field required.

This access means possibly preventing a legal dispute before it starts, saving time, money and headaches for all parties involved.

Robert Chiarantano is a Senior Account Executive with RDA Insurance in Vaughan, Ontario. With over 20 years of experience, Robert is RDA’s top producer. To speak with Robert about how to best protect your construction business, contact him at (800) 479-6450, or e-mail him at