The Five Building Blocks of Independent Contractor Insurance

An independent contractor as the name implies usually works separately and independently and cannot obtain coverage under a corporation’s insurance umbrella. Therefore the independent contractor will require independent contractor insurance. Corporations have ways of deferring costs in a lawsuit but independent contractors may not have planned that far ahead and they should strive to protect themselves properly.

Five Areas of Coverage Needed

Preventing your personal assets from being taken is the purpose behind obtaining independent contractor insurance. The coverage you obtain should consider all aspects of protecting your work life but should also protect your personal financial stability as well.

All independent contractors should have general liability insurance. Many clients will ask that you have this before you begin working with them. Most will ask for at least $1 million in coverage, some ask for more. General liability premiums are based on a risk assessment and include coverage for bodily injury to others, property damage and personal injury liability to name a few of the important coverages found in the insurance contract.

1. Commercial auto insurance is something many contracts require an independent contractor to have. The commercial auto insurance policy provides protection while at the jobsite and while transporting or picking up supplies. Adding non-owned and hired auto is an important coverage to consider addressing also if you have employees or hire trucks as part of your operations.
2. Professional liability insurance can be a consideration for independent contractor insurance. Although generally required in particular types of industries like architecture and engineering this insurance can reassure potential clients when a contractor is involved in design layout or construction management.
3. Bonds can play a big role in protecting client and contractor. They come in several formats, one that protects the client and one that protects the independent contractor. One known as a performance or completion bond assures the contractor will complete the work on time and to the satisfaction of the client. Licensed contractors are also required to carry a license bond or otherwise post the bond amount in cash with the state license board.
4. Pollution liability insurance, an important and often overlooked part of independent contractor insurance will protect contractors from lawsuits in a variety of situations. Mold, mildew, fire damage restoration and asbestos removal all come under the pollution liability policy. Ask your broker to review your exposure to these risks.