What Insurance Coverages Should Be Required for an Independent Contractor?

Independent contractors might need several types of insurance.
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The path to working independently starts with identifying clients who may be interested in the services of an independent contractor. Once potential clients are identified, the contractor needs insurance protection to work with these businesses. Businesses, organizations or government agencies that hire independent contractors don't want to be liable for the contractor's actions that result in accident or loss, so the contractor must provide its own insurance coverage.

General Liability

Commercial general liability insurance is a catch-all insurance that protects against different claims that arise during the course of business. It includes coverage for slips and falls, bodily injury, personal injury and property damage. It safeguards an independent contractor's livelihood, and it also can protect the company for which the contractor does work.

Workers' Compensation

Contractors don't need workers' compensation insurance if they have no employees. Those who do have employees, however, will need workers' compensation insurance. The reason that companies need proof of workers' compensation insurance coverage is so they are not liable in the event that a contractor's employee is injured while working their premises.

Professional Liability Insurance

The nature of the work might require an independent contractor to carry professional liability insurance, also known as errors and omissions insurance. This type of policy comes in handy for independent contractors such as freelancers, realtors, financial investors, paralegals and more. It protects against the losses a client claims as the result of the work performed by the contractor.

Automobile Insurance

Independent contractors who use their cars in their business will also need to have automobile insurance. Meeting the statutory requirements for auto insurance in the state in which the contractor is located is usually all that is required.

Umbrella or Excess Policy

An umbrella or excess insurance policy helps cover damages that exceed the amounts of other insurance coverage. Each insurance policy sets the limits and amounts of coverage. An excess or umbrella policy extends those limits. Some businesses require an umbrella or excess policy from an independent contractor.

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