Streetsmart insurance Blog
If you work as an independent contractor, you are essentially operating your own business. Like other business ventures, then, you will want to protect yourself with an insurance policy. However, the types of coverage you will be looking for are different than traditional business insurance. Your business is, by definition, not traditional, so you will need Contractors Insurance instead.
Buying Contractors Insurance can be an exercise in confusion, just by virtue of the fact that independent contractors do a lot of different things to make a living. You might be a freelance writer working for a range of different publications and companies. You could be a construction contractor, helping homeowners with their house renovations and other similar projects. You might be an accountant who helps businesses keep their books or prepare their taxes, but who isn’t technically an employee of that business.
Do You Need Contractors Insurance?
The big question you’ll have to ask yourself upfront is whether or not you even need Contractors Insurance. In some situations, this question will be answered for you. For instance, according to Angie’s List, most construction contractors will need to show proof of insurance in order to get licensed or registered with their state. Other professions that are inundated with independent contractors might also have licensing and registration policies that require insurance.
Even if state laws don’t require you to have Contractors Insurance, you might need it to appease your clients. Some businesses aren’t willing to hire contractors that don’t at least have general liability coverage. As a result, it might be a good idea just to get Contractors Insurance as a precaution, to make yourself more marketable to potential clients.
Choosing the Right Contractors Insurance Coverage for You
If you do decide that you need Contractors Insurance, know that there isn’t really a one-size-fits-all option. While some insurance companies do market Contractors Insurance on their websites, you might also have to work with your insurance company to piece together coverage that makes sense for your business. Here are some types of coverage that are common for independent contractors:
General Liability Coverage: Most general liability policies include two types of coverage: bodily injury and property damage. You need these types of coverage if there’s a possibility that 1) you could hurt or kill a third party while completing your work, 2) you could damage the property of your client or a third party while completing your work. For good reason, construction contractors need these types of coverage. A freelance writer who works almost exclusively behind his or her computer screen does not have the same liability risks.
Workers’ Compensation Coverage: If you have employees who work for your contracting business, you might need workers’ comp insurance to protect them in case they are injured or fall ill on the job.
Completed Products or Operations Liability Coverage: If you are an accountant, there is a possibility you could make a mistake and give your client costly advice. If you are a construction contractor, there is a possibility your work could prove faulty. This type of insurance protects you from any liability risks due to such errors, omissions, or mistakes.
Advertising Injury Liability Coverage: A freelance writer may not need bodily injury or liability coverage, but he or she does need advertising injury liability insurance. This type of policy protects you in cases where your services or advertising are cited for libel or slander. This coverage can also insure you against claims of copyright infringement. Do note that, sometimes, advertising injury policies are bundled with general liability coverage, so it’s a good idea to ask your insurer whether or not that is the case.
As you can see, shopping for contractors insurance can leave you with a lot of different angles and factors for you to consider. Based on the nature, size and industry of your contracting services, you might need completely different contractors insurance than a neighbor or friend who is also an independent contractor.
With this fact in mind, it’s not a bad idea to consult a lawyer and find out where your biggest liability risks lie. A legal professional will be able to help steer you toward the types of coverage that you need. In some cases, you might even be able to collaborate with your lawyer and an insurance company to design a contractors policy that makes sense for you. In any case, learning about your specific vulnerabilities is the most important thing you can do when buying contractors insurance. After all, you don’t want to end up in a situation where you are being sued for personal injury or libel and don’t have coverage against those claims.