Best Independent Contractor Insurance

Being an independent contractor has perks like flexibility and independence, but it also has risks. As an employee of someone else's company, you're covered by your employer's business insurance policies. But once you become self-employed, you're considered a business owner. If you cause harm, like property damage or injury, to a client or third party, you're responsible for the costs as an independent contractor.

You should have some sort of insurance if you are self-employed. General liability, professional liability, commercial property, and other types of insurance can protect you if you are faced with a claim of negligence that caused physical and/or financial harm. Having independent contractor insurance can help you maintain your fortunes so you can continue conducting business as usual.

What is independent contractor insurance? What does it cover? How do you buy coverage? What factors determine policy premiums?

This article explores these and many more questions to help you get the best independent contractor insurance.

What Is Independent Contractor Insurance?

Independent contractor insurance shields self-employed workers from the hazards that arise when running a business. It comprises various types of small business insurance, such as general liability insurance, errors and omissions insurance, and more.

Do Independent Contractors Need Insurance?

For most independent contractors, obtaining a minimum level of liability insurance coverage is vital. In specific professions, such as legal and medical fields, some states mandate that independent contractors possess professional liability insurance. Even if it is not a prerequisite in your industry, insurance is essential to safeguard your personal finances, particularly for sole proprietors. Liability insurance is key to avoiding the risk of losing your personal or business assets in a lawsuit.

As a 1099 contractor, you should secure suitable insurance coverage. Liability claims can be costly. Plus, you can get sued just as quickly as any other small business owner. Without coverage, if a client or customer files a lawsuit against you, you might have to bear the costs personally, which may cause a significant financial strain.

Who Needs Independent Contractor Insurance?

Anyone who has to file a 1099 United States tax form should have appropriate coverage. Some positions that could benefit from independent contractor insurance include:

• Carpenters
• Cleaning services
• Dog trainers
• Electrical contractors
• Freelance writers and editors
• Graphic designers
• Horse trainers
• Independent construction contractors
• Independent hair professionals
• Mobile Bartenders
• Painters
• Photographers
• Plumbers
• Repair contractors

What Does Independent Contractor Insurance Typically Include?

General liability insurance

General liability insurance can protect you against claims of physical injury, property damage, and reputational harm, among others. General liability insurance can help you cover costs that could drain your assets, possibly leaving you in dire straits. In other words, if you own this type of coverage, then you have protection against claims that you caused harm to a client or customer. For instance, if you are a handyman and accidentally drop heavy equipment on a customer's foot, they could sue you for damages. Your general liability insurance should cover any related damages and legal fees.

Professional liability insurance

Independent contractor insurance often includes professional liability insurance, which can cover your legal expenses if a client accuses you of giving them poor advice or service that results in them taking a financial loss.

How Much Does Independent Contractor Insurance Cost?

Since there is no universal liability policy for independent contractors, you should get in touch with an insurance agent or broker to get quotes for independent contractor insurance. Rates vary based on several factors, including:

Your industry

Your risk exposure plays a huge role in what you will pay for independent contractor insurance. High-risk industries like construction typically have higher rates than digital marketing.

Your location

Insurance companies may vary their rates for specific coverage based on where you work. Moreover, if you operate in multiple regions, you may require more coverage.

Experience

Generally, the longer an independent contractor has been in operation, the more experience they have in managing risks and avoiding potential accidents or incidents that could lead to insurance claims. On the other hand, if an independent contractor is new to their industry or has a limited history of operations, the insurance company may consider them to be a higher risk due to their lack of experience.

Policy details

If you want more coverage, then you will have to pay more.

Prior claims history

If you frequently file claims, an insurance provider may decide that insuring you might lead to increased costs on their end. Making you pay higher rates can help offset those expenses.

How Do I Get an Independent Contractor Insurance Quote?

Acquiring independent contractor insurance quotes can save you money by matching your insurance requirements to the best policy. You can contact an insurance provider, agent, or broker. You can reach out to them through their websites, phone calls, or in-person visits. A simple online search can offer a valuable list to begin your search.

How Do I Pick the Best Independent Contractor Insurance?

Check availability

It should go without saying that you should seek insurance providers that offer coverage in your region since not every issuer caters to your location. Before asking other questions, ask the issuer if they provide coverage in your area.

Look for what fits your situation

Choosing the best independent contractor insurance usually means selecting the one that best aligns with your requirements and budget. You can evaluate your coverage needs and financial plan to choose the best coverage and provider for your needs.

Search for financially stable providers

You can also consider the financial stability of potential insurance providers. If an insurer is unable to pay its debts, it may not be able to cover your losses in case of a claim. To check a company's financial status, you can visit the A.M. Best Company's website, which grades insurance issuers and helps customers make informed decisions.

Read customer reviews

Consider reading customer reviews when choosing an independent contractor insurance provider. Hearing from existing or former customers can give you valuable insight into how providers treat their clients. It is important to factor the public's view into your decision-making process along with other important factors to choose the best insurance provider for you.

How Can I Pay Less for Independent Contractor Insurance?

Get several quotes

To ensure you find the best independent contractor insurance policy at an affordable price, follow the tips mentioned earlier to get quotes from multiple insurance providers. You should not settle for the first provider you find because different providers offer different levels of protection at various prices. Researching your options and comparing quotes can help you choose the right coverage to meet your needs and budget.

Seek discounts

Insurance companies sometimes offer discounts to entice customers, such as paid-in-full, multi-policy, and prior insurance discounts. You may also want to inquire about bundle policies from potential providers to further lower your costs.

Pick your method and frequency of payment (if possible)

You might be eligible for discounts from your insurance provider if you pay your premiums using certain methods. For example, many providers offer discounts for using Electronic Funds Transfer (EFT). Additionally, you might be able to save money by paying your premiums in advance.

Know how much you can afford

Before choosing an insurance provider for independent contractor insurance, you should determine your budget. You should not commit to a policy you can not afford. Understanding your financial constraints can help you make an informed decision and choose the right provider.

Be persistent

Don't give up on buying insurance, as it can be a stressful task. Avoiding it, though, could come with a high cost. Seek guidance from insurance agents and brokers and educate yourself about your coverage requirements. Keep an eye on your insurance costs and be prepared to explore other providers if your rates rise. Remember: your insurance choices are ultimately yours to make.

What Other Types of Insurance Does an Independent Contractor Need?

Commercial auto insurance

If you drive for work, commercial car insurance is all but essential. It covers vehicles used for business purposes and can help protect you from liability claims if you cause an accident that injures someone or damages their property. This type of insurance can also cover legal fees and damages up to the policy limit.

Workers’ compensation insurance

If you consider yourself an employee of your business, you may want to consider getting workers' compensation insurance. This type of coverage can provide benefits to individuals who suffer from a work-related injury or illness. Accidents can occur despite your best efforts to be safe, and being able to cover your medical expenses, lost wages, and other costs can prevent you from having to use your personal funds.

Business interruption insurance

Business interruption insurance, also called "business income insurance," can help protect you from financial losses caused by a temporary disruption in your work. This coverage can include rent, mortgage, payroll, and lost revenue until normal business operations are restored. It is typically included in a Business Owner's Policy (BOP) and can also cover the cost of setting up operations at another location temporarily.

Commercial property insurance

Commercial property insurance, also called "business property insurance," helps defend your physical assets from unforeseen and damaging events. This type of coverage can protect your office equipment, inventory, furniture, and other materials essential to your business. Coverage typically includes losses due to fires, wind, lightning, theft, and vandalism. Refer to your policy for details on what is covered.

Cyber insurance

If you provide digital services and your clients experience a cyberattack and hold you responsible, cyber insurance can be useful. This coverage can help you pay for expenses such as informing affected customers, legal fees, and other expenses,

Get the Best Independent Contractor Insurance Today

If you are an independent contractor, then you must acknowledge the importance of guarding yourself against financial risks. Professional and general liability insurance are typically considered essential, while additional coverage such as a business owner's policy or business personal property insurance may also be necessary. Getting the best independent contractor insurance today can save you money tomorrow.

Best Independent Contractor Insurance FAQ

Does general liability insurance cover independent contractors?

General liability insurance can cover independent contractors.

What Is the difference between contractor insurance and independent contractor insurance?

Contractor insurance and independent contractor insurance both provide coverage for similar liability claims. They are basically the same. As with independent contractor insurance, general liability insurance for contractors can help protect against claims related to bodily injury or property damage.

What is a Business Owner's Policy (BOP)? Do I need one?

A Business Owner's Policy (BOP) is a package policy that combines several types of coverage into one policy. By bundling different types of coverage together, BOPs usually have lower insurance premiums than purchasing individual policies.

You do not necessarily need to purchase a BOP depending on how much insurance you want. However, buying one can save you money.

Can I add professional liability insurance to my general liability policy?

You can add professional liability coverage to your general liability policy by contacting your insurance provider. To ensure that you have the appropriate coverage, you should discuss your needs with them.