Does An Independent Contractor Need Insurance?

The majority of independent contractors ought to think about getting general liability insurance. Like any small business owner, a 1099 contractor may be held accountable for endangering another person or their property. Insurance against general liability can aid in reducing these risks.

What Kinds of Independent Contractors Need Insurance?

Most independent contractors need some form of insurance. Some require additional specialty insurance in addition to liability and errors and omissions coverage. In general, the following types of contractors need some type of insurance to protect themselves, to work legally in some locations, and to give clients peace of mind.

What Insurance Do Independent Contractors Need?

In order to fulfill the contractual obligations to your customer, you could additionally need general liability insurance. In addition, the sort of contract job you conduct will determine what insurance you need to get. For instance, a self-employed accountant should disclose any errors and omissions just in case they end up costing their client money.

Musicians who utilize their own instruments and sound gear may require business property insurance to cover them in the event that their stock is stolen, damaged, or destroyed.

General Liability Insurance for Independent Contractors

General Liability Insurance for Independent Contractors

If someone accuses you of damaging someone else’s property or causing injury to them, general liability insurance will defend you. Additionally, it can defend you from accusations of libel, slander, and reputational injury. General liability insurance might assist in defraying your legal expenses, for instance, if you clean houses and are accused of destroying someone’s furnishings.

The business that engages you as a contractor could, in some circumstances, be allowed to include you in its general liability insurance plan. In others, the employer could insist that you have a policy of your own and request to see a certificate of insurance prior to hiring you.

Professional Liability Insurance for Independent Contractors

This insurance defends you in the event that a client or customer holds you accountable for a mistake. Clients may file lawsuits against you for subpar performance, whether you work as a graphic designer, real estate agent, or any other sort of contractor that offers services.

This covers claims like:

  • Mistakes or oversights in performing your service.
  • Breach of contract.
  • Professional negligence.
  • Failure to deliver a service on time.

“Errors and Omissions” Insurance for Independent Contractors

While general liability insurance offers comprehensive coverage for many situations, it does not offer coverage for alleged professional negligence. You will need errors and omissions insurance for that. Just like the contractors who work with physical equipment and interact with clients in homes, work settings, and other locations, an independent contractor who provides advice could be held liable if something goes wrong. 

Errors and omissions insurance (E&O) is ideal for accountants, interior designers, financial planners, and other independent contractors who serve in an advisory or consultant capacity. If the client experiences damage or losses due to your advice and sues you, this type of coverage will pay for the damages and your legal expenses.

If you are interested in more articles like this, here’s one about structural engineering.

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