Most contract work offers multiple advantages and disadvantages, with the main risk being the potential for a lawsuit. However, if you are a contractor, it’s essential to have the appropriate insurance coverage. Similar to small business owners, you might be sued in court and liability claims could be costly which can lead to your company closure if you don’t have insurance. This is where independent contractor insurance comes to place.
Independent contractor insurance is a form of general liability insurance for individuals who are freelancers, gig workers, carpenters, painters, plumbers, and other occupations. In addition, general liability insurance is a small business coverage that covers claims for bodily injuries and property damage to someone. Furthermore, issues like reputational harm, copyright infringement, and advertising injury can be covered by this coverage.
What is an Independent Contractor
An independent contractor is an individual who can work for themselves and in a variety of professions, providing their services to customers or companies as a non-employee. Generally, they handle their payroll taxes like Medicare and Social Security taxes. However, these workers do not receive benefits like health insurance and coverage for their medical expenses.
They have some control over their work because of their status as independent contractors, which permits them to manage their services on their own. Additionally, independent contractors are often employed as part-time workers but usually have multiple customers at once, fulfilling each of them as required.
Furthermore, many independent contractors can decide their time frame and rates for each project by the hour. Some contractors work a standard full-time job with their contract work as a side gig to increase their income. Particularly in the gig economy of today, independent contractors can work remotely, but some are required to work on-site.
What Does Independent Contractor Insurance Cover
Generally, independent contractor insurance offers professional liability insurance, which covers your lawsuit expenses when a customer files a claim against your advice or negligence that leads them to financial loss. Most times, this could be considered as errors and omissions insurance. In addition, general liability insurance is another typical coverage that covers your business against claims of bodily harm, property damage, and reputational damage.
How Much Does Independent Contractor Insurance Cost
Under independent contractor insurance, general liability insurance offers an average monthly cost of $42. This might happen if you are sued for something relating to bodily injury or reputational damage to a third party which might be well worth the cost. Moreover, the average expense of a lawsuit leading to in reputational harm is $50,000, while the expense of a slip and fall accident is $20,000.
An independent contractor’s general liability insurance premium is determined by various factors such as;
- The risk to the business.
- Coverage amount.
- Deductible amount
- The address of your company.
- Duration you have been in business.
Advantages of Being an Independent Contractor
Being an independent contractor enables a person to have the ability to gain the freedom to manage their own time. Also, you can also decide what projects to take on, the amount of money you accept, and where and how the work is done.
Disadvantages of Being an Independent Contractor
As an independent contractor, you may face legal action for work-related injuries, property damage, or financial losses. Moreover, if you were an employee, this lawsuit would probably be brought against your employer.
Who Needs Independent Contractor Insurance
Many contractors might be wondering when is independent contractor insurance mandatory. It’s an excellent choice to have additional liability insurance coverage to complete your protection.
Here are a few more insurance kinds that can cover you and your company:
- Independent builders.
- Plumbers.
- Electrical contractors and carpenters.
- Painters.
- Contractors for repairs.
- Cleaning offerings.
- Independent authors and editors.
- Designers of graphics.
- Professionals from salons and freelance hair stylists.
- Trainers for horses or dogs.
How to Save On Independent Contractor Insurance
The best part about independent contractor insurance is discovering the appropriate balance between the cost and coverage. In addition, here are some advice that can help you to reduce insurance costs without sacrificing coverage:
Examine your options for coverage
Signing with the first insurance company is not a good idea. Look around and evaluate quotes. Additionally, you will be able to determine the best coverage and rates for your needs after researching the market.
Bundle coverage
It is more economical to bundle various insurance coverage, such as general liability and commercial property insurance. Also, rather than making monthly payments, you should consider purchasing annual insurance. And paying annually is typically less expensive.
Modify coverage limits
If you want to modify your coverage limits, it’s necessary to know the kind of coverage you need. In addition, carefully ensure that your coverage limits are appropriate for your line of work by assessing your requirements.
Lastly, it would help if you inquired about your discounts. Many options are accessible in terms of safety precautions, a claim-free past, industry affiliations, and more. Furthermore, you can get advice from an insurance broker to help you identify more affordable options.