As an independent contractor, you may be wondering what kind of insurance you need to protect yourself financially. The answer will depend on the type of work you do – for example, whether you work at a desk performing data entry or digital marketing services, you work on other people's property providing home maintenance, or you offer construction services.
There are many types of independent contractors who all need independent contractors liability insurance and other coverage to match their specific risks. Some of the professionals that need contractors insurance include:
Getting the right independent contractors liability insurance in place can protect you from lawsuits, mishaps and third party property damage that can devastate your business.
Normally, you will need a few different categories of coverage for complete liability protection:
The specific independent contractors liability insurance coverage you need will be unique to your business. By working with a knowledgeable agent, you can ensure that you don't have critical gaps in coverage that could leave you exposed to expensive legal claims.
The contractors general liability coverages can often be bundled with a few other coverages to create a business owners policy, or BOP. This serves two purposes. It expands the policy to cover risks that small business owners face, and also typically results in a discount on the cost of your insurance.
Normally, this coverage will make sense for you if you have employees. A small business is basically defined as a business that has up to 100 employees and generates about $5 million or less in annual revenues.
Some of the additional coverages that can typically be bundled with a BOP include:
As an independent contractor, you may or may not need to have workers compensation insurance. Workers comp regulations are mandated state by state. If you are in business for yourself, and you do not have employees, you are most likely not required to buy workers comp. However, in some states you need to purchase workers comp even if you don't employ others.
If you are a contractor who employs other workers, your state will most likely require you to carry this insurance. This policy protects workers from job-related illness, injury or death. It will also reimburse workers for lost wages if they cannot go back to work. The benefit to you, as the employer, is that this coverage can help to prevent losses from employee lawsuits.
When you are looking for the right contractors insurance for your business, you will have many choices, including whether to buy professional liability insurance, also known as "errors and omission" insurance or "E & O."
E & O is a liability policy that protects you if you make a mistake that causes a financial loss to a client. Similar to general liability, it will provide legal defense and claims settlements, if necessary.
You may want or need this coverage under the following circumstances:
If you utilize subcontractors, it is a good idea to make certain they are insured with professional liability as well, as they might not be covered by your policy.
Putting together a business insurance plan to secure your business is an important step, particularly if your business is growing, you are adding new employees or taking on larger jobs and bigger risks. There are many options and possible coverage types, so it is important to get the help of a trained professional to customize coverage to your business risks.
Some of these trained professionals may be:
Obviously, you'll need to work with an insurance agent to buy a policy, but financial planners and lawyers can help you understand your risks before you go seeking insurance. If you have colleagues who are also independent contractors in a similar field, they may also have tips and tricks to share with you. There are lots of online resource guides for you to refer to as well, including:
Each of these will explain the different coverage options you have and give helpful tips for setting up your business in a safe and efficient way.