5 Reasons Why Independent Contractors Need Business Insurance

As an independent contractor, you’re used to doing things your way. Accepting jobs on a case-by-case basis allows you the freedom to piece together the direction of your career on your terms. Signing a contract with a client means that they trust you to get the job done, and can’t micromanage how you go about completing your end of the deal. But independence also means that you are completely responsible for your own financial situation. Without adequate protection, one client liability lawsuit could bankrupt your small business.

How can you look out for your operation? Business insurance for independent contractors includes a host of protective measures that can cover legal fees, damages, and medical bills in the event of an accident in your line of work. CoverHound’s here to help you navigate the process of finding the right commercial insurance policies for your independent contracting outfit, no matter what kind of work you tackle.

May Win You Contracts

Steady contracts are the lifeblood of an independent contractor’s financial stability. Could you bounce back from losing opportunities due to a lack of insurance? Probably not. Nolo advises business owners to ask for certificates demonstrating a proof of general liability insurance and workers compensation insurance before they sign any agreements with independent contractors. By having the proper type and amount of coverage, you may increase your chance of clinching contracts you desire.

Accidents Resulting in Damage or Injury

Whether you’re a construction worker visiting high-risk worksites, a security guard working the night shift, a landscaper, or part of any other career that falls outside the normal bounds of “employee,” there’s no way to totally prevent an accident on the job. Commercial general liability insurance pays damages resulting from bodily injury, property damage, and personal and advertising injury up to your policy’s limits, per the Insurance Information Institute (III). Your policy may also cover medical payments for individuals injured because of your business operations, regardless of fault. This could prevent a costly, drawn-out lawsuit.

Covering Your Own Property

Choosing a Business Owners Policy (BOP) is a smart way to make the most of business insurance for independent contractors because it bundles general liability with property insurance. In the event of a natural disaster, fire, theft, or vandalism, property insurance generally covers your building and equipment. As the III explains, you can choose a policy that pays out actual cash value (including depreciation) or replacement cost (what it would take to replace or rebuild).

Of course, property isn’t always tangible. If you keep electronic records with clients’ personal or payment information, you’ll need more than just a BOP to fully protect them. Cyber insurance can help you deal with the fallout of a data breach, including costs from lawsuits and notifying affected parties.

Insuring Your Business Vehicle

We’ve discussed accidents and disasters that can happen on your property and at third-party sites. But what about on the road? Commercial auto insurance is a key component of business insurance for independent contractors. It’s important for you and for your client. As Chron writes, “Commercial auto coverage protects not only the 1099 contractor but also the hiring entity in the event an accident occurs while the contractor is driving as part of the job he was hired to do.”

Workers Compensation Benefits

If you have employees, you’ll need workers compensation in place in case they experience injury or illness on the job. In turn, your business will be protected from costly lawsuits alleging that workplace conditions led to the illness or injury in question.

Learn more about business insurance for independent contractors when you explore CoverHound today!