Do Independent Contractors Need General Liability Insurance?

Do Independent Contractors Need General Liability Insurance?

Do independent contractors need general liability insurance? Well, every business, however small or big, must have liability insurance, including individual contractors!

General liability insurance helps you with the legal costs of claims against you regarding bodily injury, 3rd party property damage, advertising injury, etc.!

These claims can land into your life anytime, unannounced, and prove fatal for your business!

Thus, sufficient liability coverage is a boon and one of the best investments you can make for your business!

But still, let’s know why independent contractors specifically need general liability insurance?



Why Do Independent Contractors Need General Liability Insurance?


#1: The Obvious, It Protects Your Business

Lawsuits don’t discriminate! They can be filed against anybody, including independent contractors.

Thus you need a general liability policy. It protects you and your business from lawsuits involving bodily injury, property damage, and advertising injury! The policy covers the legal costs and damages resulting from the lawsuit.


#2: Your Clients Might Need It

Your clients might need a liability policy before they sign a contract with you! This policy protects them and you from any mishappening by you or your work.


#3: Sometimes, The Law Demands It

In some niches like construction, you are bound by law to produce a liability policy before starting a project.

And in most cases, it is better if both you and your client possess a liability policy.

Thus, whatever you are, an accountant/auditor, app developer, bookkeeper, concrete contractor, carpenter, electrician, engineer, or anybody else, you need a liability policy to protect your business.

And just like any other businessman, you are equally likely to be sued for damages to a third party. Independent contractors have faced lawsuits in the past and are as vulnerable as anybody else!



What Are The Various Ways To Get General Liability Coverage?

As an independent contractor, you have two ways to acquire a general liability insurance policy.


#1: Buy A Policy Of Your Own

You can buy your policy from a good insurance provider. And it would help if you request your insurance provider for a certificate of insurance. You can use this certificate as proof of your insurance to your clients.

This option is more cost-effective for your clients and provides you with better protection too!


#2: Get Added As An ‘Additional Insured’ On Your Client’s Insurance Policy

The other option is to get yourself added as an ‘additional insured’ on your client’s policy.

Your client can add more contractors to their policy as additional insureds.

This option is more expensive for your clients, but depending on the situation, they can add you to their policy for the tenure of the job or longer!

Elaborating more upon the additional insured feature, it works both ways. Meaning that you can add your clients as additional insureds, or you can get added as an additional insured on your client’s policy.

Independent contractor insurance varies significantly from industry to industry. So, practices differ too!

The contract requirement often states how things will go, i.e., who adds who.

Since the practices vary from profession to profession, contact your agent to know what suits you better, getting added as an additional insured or adding the company on your policy!



How Much Would General Liability Insurance Cost You?

General liability insurance doesn’t cost you a fortune. It costs you roughly $42/month.

But the premium price depends on a lot of many factors, like,

  1. Amount of coverage
  2. Your industry and its associated risks
  3. Your location
  4. The number of employees you have
  5. Your claims history
  6. The insurance provider
  7. Whether you buy insurance online or offline, etc.


What Does General Liability Insurance Cover?

So, let us know what an independent contractor would get out of this coverage?


#1: Bodily Injury

If you injure anybody while performing your job, you might get sued! General liability insurance, in this case, will take care of all the legal costs and medical bills.


#2: 3rd Party Damage

If you damage the property while doing your work, the insurance will cover the legal costs and repair charges.


#3: Advertising Injury

If you say that your competitor’s brand is less competent than you on a TV channel, your competitor can sue you for harming their reputation. Such advertising injury can prove fatal to your business. But insurance to the rescue. It will cover all your legal costs.


#4: Product Liability

Say you did not do your job well, or your product malfunctioned, causing the client trouble or financial loss, you can be sued in court! But worry not, insurance can take care of such lawsuits and resulting settlements and judgments.



What Other Policies Can An Independent Contractor Need?

There is a lot more than general lawsuits that an independent contractor needs to protect his business! Let us see some other policies that can come of help.


#1: Commercial Auto Insurance

Commercial auto insurance can be a great idea if you own a car and you or your employees use it frequently for business purposes.


#2: Workers Compensation

If any of your workers get sick or injured at work, this insurance will cover his medical and stuff. You need it even if you have only a single employee, and it is mandatory by law in most states. Difference Between General Liability And Worker’s Compensation Insurance.


#3: Professional Liability Insurance

Also called errors and omissions insurance, this helps you cover lawsuits arising due to faulty work. Say you miscoded a website; this insurance will cover the lawsuit charges, settlements, and judgments.


#4: Commercial Property Insurance

Your owned or rented tools and office space are protected under this insurance.


#5: Business Income Insurance

Also known as business interruption policy, it helps you cover your income loss if you cannot operate your business due to a peril covered under the policy terms and conditions. For example, a fire burns down your office, you can keep incurring business income through this insurance.


#6: Cyber Liability Insurance

If you are an eCommerce store and have sensitive details like your customers’ credit card, you might want to have this insurance. Because if some information gets stolen, this insurance will protect you!

You can also buy a Business Owner’s policy which can club various policies in one package. This clubbing can cut some of your premium costs as well!



In A Nutshell…

The answer to our fundamental question, do independent contractors need general liability insurance or not is, a big YES!

Misfortune comes unannounced. And if anything has to happen, it is better to be prepared. Because being prepared is better than risking your business to a hefty lawsuit.

Insurance gives you the confidence and peace of mind that helps you make your business a success!

So, I wrap up with this, and if you have any questions or suggestions, please drop them in the comments box! Also, let me know which business policies you have bought!

Let’s discuss!

I am all ears!