Employee or Independent Contractor?

Independent Contractor Liability Insurance

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From Nav,  Susan Guillory offers excellent advice for independent contractors on the need for and types of insurance an independent contractor needs. Susan writes:

If you run a business as an independent contractor, you need to protect your business, yourself, your employees, and your customers. That’s why having a business insurance policy (or three) is a necessity: it ensures (pun intended) that, should your business encounter any issues, you don’t go into the hole to cover them financially.

Here, we’ll look at different types of commercial insurance you should consider, as well as address who needs business insurance coverage as a contractor.

What Kind of Insurance Do I Need as an Independent Contractor?

There are actually several types of commercial insurance policies you should consider, and some you may be required to have by local government authorities.

General Liability Insurance

Every small business should have general liability coverage, which covers property damage or bodily injury caused by your business. It also protects you in case of a lawsuit. For example, if you are sued by a client because they fell on a staircase you constructed, a general liability policy may cover those legal expenses incurred in the lawsuit.

General liability may cover legal fees, as well as costs for property damage claims on a job site, and medical expenses.

Commercial Property Insurance

This type of insurance policy covers property damage or theft, whether that’s a building, computers, or the equipment you use to do your job, such as tools if you’re a plumber.

Commercial Auto

You likely have a vehicle you use to go to jobs and run errands for your business. Did you know that your personal auto policy may not cover accidents during work hours? That’s why you need a commercial auto policy for you and your employees driving company vehicles.

Business Owners Policy

A business owners policy, also known as BOP, combines general liability insurance coverage and property damage coverage, often for a lower price than you’d pay for both of these policies individually.

Workers’ Compensation Insurance

If you have employees, you may be required by your state to carry workers’ comp coverage. This covers medical bills and expenses for your employees, should they become injured on the job.

Why Do Independent Contractors Need Insurance?

Working as a contractor, you are not an employee of someone you work for, and therefore, you carry more risk for your business. Let’s say you are a builder and you complete building a new home, and then the owner of the home sues you because there’s a crack in the foundation. Without insurance, you could rack up tens of thousands of dollars (or more) in legal defense fees that you can’t afford. With liability coverage, however, those fees may be taken care of, providing you peace of mind and conserving your cash.

If you work as a subcontractor with another contractor on a project, you may be required to provide a certificate of insurance that proves you have coverage. This minimizes the risk that contractor takes on by bringing you onto the project.

Read the full story at Independent Contractor Liability Insurance

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