General liability insurance for independent contractors

Like any other small business owner, an independent contractor can be sued and held liable for damages.

Commercial general liability insurance is essential for independent contractors because:

Independent contractors can be sued and held liable for damages, just like other small business owners. Without insurance, you would have to pay out of pocket to defend yourself in court and also pay for damages. With a general liability insurance policy, those expenses are covered.

Different industries bring different risks. A 1099 worker hired for a photo shoot faces significantly different risks than one hired to remodel a bathroom. For example, the photographer could be accused of copyright infringement, while the remodeler faces the risk of potential injury to the homeowner.

General liability insurance addresses both issues. Learn more about what general liability insurance covers.

There are a few ways for an independent contractor to get general liability coverage:

You can get your own general liability policy. You can purchase commercial general liability insurance from a business insurance provider or agency. To show a client that you are covered, request a general liability certificate of insurance. This option is usually more cost-effective for your clients.

Your clients can add you to their general liability policy as an additional insured. Being an additional insured means you are covered by their insurance for the duration of the job or longer. A business can add multiple contractors to its general liability policy. It’s typically more expensive for clients to include you in their policy as an additional insured. However, they may decide to add you, depending on the situation.

You are covered under a blanket additional insured endorsement. Your clients or the general contract could have a blanket additional insured endorsement on their policy, which extends coverage to a type of worker or a group of people, without naming you specifically.

These options provide protection if either you or your client is faced with a lawsuit over third-party bodily injury, property damage, or reputational harm.

An additional insured is anyone besides a policyholder who is covered by an insurance policy. An additional insured has less protection than the policyholder, but still gains crucial coverage, such as:

Defense coverage. If a third party sues the additional insured over work done for the business, the general liability insurance policy can address the claim. The additional insured can receive coverage for lawyers’ fees, court costs, and settlements or judgments.

Coverage for certain third-party lawsuits. An additional insured may be covered when sued over bodily injury, property damage, and advertising injury.

Business owners can add an additional insured to their commercial general liability insurance policy. Independent contractors can also add business owners to their policy. So is the business owner or the subcontractor responsible for adding the additional insured? It depends largely on the scenario, and practices vary by industry.

Independent contractors typically have insurance obligations in their work contracts that they have to fulfill. These contract requirements will often state whether the company needs to be added as an additional insured.

Independent contractor insurance varies significantly across industries. Ask your Insureon agent about the cost and benefits of getting your own insurance coverage versus being added to your client’s policy.

In addition to commercial general liability insurance, independent contractors may need other types of small business insurance since general liability coverage does have exclusions.

Other policies to consider include:

Every state requires this coverage for vehicles that are registered to a business, or the ability to compensate someone in case of an auto accident. In the event of an accident, an independent contractor's commercial auto policy would cover the legal bills, medical expenses, and property damage.

For the self-employed and independent contractors, your personal auto insurance might not cover you when you drive your own vehicle for business use. If you drive your personal vehicle for work, you should consider hired and non-owned auto insurance (HNOA) to make sure you're protected.

Commercial property insurance offers financial protection for your workspace and its contents, and is often required by landlords to sign a lease. If you own or rent a workspace, or if you have expensive equipment, inventory, and other business assets, commercial property insurance would help pay for the repair or replacement if your business property is stolen, damaged, or destroyed.

If you intend to buy both general liability and commercial property coverage, you can reduce your insurance costs by bundling them into a business owner’s policy (BOP). It combines both coverages under one policy, and usually has lower insurance premiums than buying each policy separately from the insurance company.

Errors and omissions insurance, also known as E&O or professional liability insurance, can offset the cost of a lawsuit if a dissatisfied client sues you over your work. Those who offer professional advice and services buy this coverage in case a client accuses them of making a mistake, missing a deadline, or failing to deliver on a contract.

Workers' compensation insurance covers medical costs and lost wages from work-related injuries and illnesses. It’s required in most states for businesses that have employees. Some independent contractors are required to have this coverage to work in riskier professions, such as roofing and building trades.

People who work for themselves and don’t have any employees generally aren’t required to have workers’ comp insurance, but it's still a good idea to carry coverage. Health insurance can deny claims for work-related injuries, which means you could end up facing medical bills and lost income while unable to earn a living.

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If you have questions or need advice, you can speak with an insurance agent