Independent contractor insurance protects 1099 employees from risks associated with running a business. It can apply to several types of business insurance, including policies that protect contractors from liability risks and replace damaged property.
You’ve probably dealt with construction insurance if you’re a contractor, including warranty, workers’ compensation, and liability insurance. Subcontractors may require such policies, and permit and building inspectors often do as well.
Many companies now work with independent contractors. These are non-permanent employees who provide a full range of services and generally cost less than permanent employees.
Independent contractors operate as a separate entity from your business, and they are not directly employed by you but work for your company.
So what happens if a mistake is made? Does general liability insurance cover damages caused by independent contractors?
When do independent contractors need liability insurance?
As an IT contractor, your clients often ask you to carry general liability insurance. Otherwise, they will take their business elsewhere.
Clients require such insurance because they need to prove that you can cover their legal costs. They want to know that they won’t have to pay if they suffer loss or damage from your business. However, your customers aren’t the only ones who benefit. General liability insurance can also protect you from these costs.
When a client requests insurance, the policy usually specifies the type and amount of coverage that must be purchased. For general liability insurance, clients typically request a minimum of $1 million in coverage.
How to Obtain Insurance for Independent Contractors?
you can use the following steps to ensure independent contractors.
- Identify the risks. Consider the risks involved in your line of business. What lawsuits, accidents, or disasters could affect you?
- Determine the type of insurance required. Insurance should protect you against these risks.
- Check to see if your homeowner’s policy provides additional coverage. If you operate a home-based business, you can add business insurance to your home insurance policy. Read your policy carefully to see what coverage is available, and contact your insurance agent if you have any concerns about the adequacy of the coverage.
- Decide how to proceed with the purchase. If your insurance needs are complex, you may need the help of an insurance broker. Otherwise, deal directly with different providers online or use the insurance marketplace to get quotes.
- Compare providers. Get insurance quotes from different providers before choosing one. You can compare premiums and policy limits, underwriting, and insurance company ratings.
- Buy insurance. Once you’ve decided on an insurance policy, you need to know how to pay and how to claim if you need to.
Reasons to buy liability insurance
Like other small business owners, the self-employed can hold liable for damages. Liability insurance is necessary for the self-employed for the following reasons.
It protects you and your business
Self-employed people have the same legal obligations and responsibilities as large businesses. You could be sued for damage to clients’ property, personal injury, or advertising damage. General liability insurance can help cover legal fees and damages caused by lawsuits.
Customers expect you to have it
Clients may require you to carry general liability insurance before entering into a contract with you. Without this insurance, you can hold liable for alleged malpractice or accidents resulting from you or your work.
This may be required by law
Government regulations may require independent contractors in certain trades, such as construction, to carry general liability insurance. It is best for you and your client to carry separate liability insurance in most cases.
Conclusion
Independent contractor insurance is mandatory for contractors working on 1099 contracts. Without proper coverage, unintentional mistakes or unforeseen circumstances could cost you, your business, or your clients millions of dollars in lawsuits, judgments, and settlements that could severely impact your ability to conduct business.
your business or your clients millions of dollars in lawsuits, judgments, and settlements that could severely impact your ability to conduct business.
As an independent contractor, general liability insurance may not be a priority. However, it can protect you from costly legal fees if something goes wrong.
Author Bio
Lily Poole is a Property and New York Contractor Insurance officer by profession. Moreover, She has pretty well experience in the insurance and accounting field and has an impressive profile in the training and development industry.
