Liabilities are common in daily activities. In the current market situation, even independent contractors should consider protecting themselves from different liabilities that would affect their businesses in case they occur. As an independent contractor, your protection is as essential as the business, which you can achieve with insurance policies.
If you’ve been wondering whether to acquire independent contractor insurance, educating yourself will adequately help the decision-making process. Firstly, let’s understand some independent contractors who are eligible for insurance:
- General animal trainers.
- Pet groomers, breeders, sitters, and walkers.
- Artists like writers and designers.
- Business, carpet, or home cleaners.
- Repair contractors.
- Interior designers.
- Construction contractors.
Several insurance policies are in store for you and your business. Most companies offer a combined approach, with three or four coverage at an affordable price. The contractor insurance policy will protect your work and provide reasonable premiums.
Check out this list of insurance every independent contractor should look into:
General Liability Insurance
As the name suggests, general liability insurance protects an independent contractor from several unforeseen accidents and incidents that could occur while on duty. Fatal or minor accidents are typical of a contractor’s frequent activities. An insurance company will compensate for the victim’s bodily injury and damages caused by the independent contractors’ machinery or operations.
However, general liability insurance doesn’t cover employees’ injuries and losses from professional errors. The independent contractor might require to pay for the loss or consider other insurance policies in such cases.
Errors and Omissions Insurance
As highlighted earlier, general liability covers the contractor, excluding professional negligence, where errors and omissions insurance comes in. Independent contractors interact with clients, physical equipment, and various work issues. They can be held accountable for mistakes that occur while on duty.
Errors and omissions insurance covers professions like financial managers, interior designers, accountants, and any other independent contractor who offers consultancy or advisory services. For instance, if a customer suffers a loss or damage after receiving advice from the above professionals, they might sue them and claim compensation. Errors and omissions insurance will handle the case.
Worker’s Compensation Insurance
Worker’s compensation insurance is crucial in nearly all professional fields worldwide. It covers costs for employees harmed while on duty. The charges include medical bills, loss or damage to the victim’s personal property, and other reasonable expenses.
As an independent contractor, you require worker’s compensation insurance for your employees, although it’s not necessary when you work alone. Failing to get compensation insurance for your employees could lead to fines and other statutory actions that are an additional expense to the business.
Disability insurance covers independent contractors that fail to work for a particular time due to a disability. The compensation is made weekly, but the insurance needs a waiting time frame after the accident for the rewards to mature. The insurance company’s premiums depend on the chosen waiting time frame, the contractor’s weekly salary percentage, and the level of risk the contractor’s profession carries.
Commercial Auto Insurance
When an insurance company provides a personal auto policy, it doesn’t agree to cater for damages that occur while on a work-related trip. Some will even terminate the contract if you attempt to place a claim for such an incident. You require a commercial auto policy if you or your employees frequently use a vehicle for business issues.
Still, insurance isn’t necessary if the parties involved commute to work. The costs covered by commercial auto insurance include bodily injuries, property damage, collision coverage, defence costs, roadside assistance, under or uninsured motorists, and rental reimbursement.
Performance Bond Insurance
This insurance applies when an independent contractor fails to meet the required standards in their specified field. For instance, a contractor who is fresh to the market is meeting new clients and is uncertain if they will meet the target. Performance bond insurance will cater for any expenses in case the client complains of low work standards or results.
The costs covered by the policy include the payment of completing or re-doing the contractor’s under-performed project. Many clients are confident in working with independent contractors with performance bond insurance.
Every industry has an insurance policy that covers it adequately. For instance, Errors and Omissions insurance is best suited for financial planners, while Malpractice insurance best suits doctors. As an independent contractor, you can get industry-specific insurance as per the industry you’re based in. The policy covers costs like risks and abrupt economic deterioration of the industry.
Essentially, it would be best to stay on research and compare insurance options before finalizing a purchase. The saying goes, “when the deal is too good, always think twice.” You might need to engage a reputable contractor insurance broker for professional guidance.