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Independent Contractor Insurance Policy Information

Independent Contractor Insurance

Independent Contractor Insurance. Being an 1099 independent contractor can be liberating, but it is not without its own risks, just like a small business.

If you work as an independent contractor in, you must protect yourself financially; the IRS views independent contractors as small business owners, and as a small business, there are inherent perils involved that can leave you liable and on the receiving end of lawsuit from a disgruntled client or injured customer.

Although the type of work that you do determines your exact risk level, having the right independent contractor insurance protection in place can prevent personal financial loss, impeding your success.

Independent contractor insurance protects your 1099 business from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked 1099 independent contractor insurance questions:

What Is Independent Contractor Insurance?

Independent contractor insurance, also known as freelance insurance, is a type of insurance designed for independent contractors who are not employees of a company and do not receive the same benefits and protections as regular employees.

This insurance provides coverage for accidents, injuries, or property damage that may occur while performing work for clients. It can also protect against lawsuits and liability claims from clients, protecting the independent contractor's personal assets and financial security.

Coverage may include general liability, professional liability, and workers' compensation insurance, among others.

How Much Does Independent Contractor Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small 1099 independent contractors ranges from $27 to $49 per month based on location, industry, payroll and experience.

What Type Of Insurance Do Independent Contractors Need?

1099 Tax Form

Whether your job entails entering data or offering digital marketing services, doing plumbing work, or providing carpentry work in a client's home, you face risks everyday as an 1099 independent contractors. There are several types of coverage that can help to mitigate those risks, and investing in this coverage is a good way to ensure your business stays healthy and productive.

Although a general liability policy is a good place to start for independent contractors, there are other types of independent contractor insurance you should consider, including:

  • Errors and omissions coverage. Contractors often provide advice and consultation services. If this describes some of the services that you offer in your role as an interior designer, financial planner, landscape architect, accountant or other job, then you need to protect yourself from losses a client may experience as a result of your advice or recommendations. This insurance protects you from claims of errors and omissions.
  • Bodily injury and property damage coverage. Protect your business from claims of bodily injury and property damage with this type of coverage. If you are a contractor who works with heavy tools and machinery, such as an electrician, plumber or remodeler, then you should be concerned with accidents that might occur from compressed gas, defective machinery or power tools. This coverage protects you from these unexpected accidents and events.
  • Liquor or product liability. If you serve food or drinks at events, then product and liquor liability insurance is important. If a client is injured or becomes ill from eating or drinking items you provide, then you can fall back on this insurance for any claim that is lodged.
  • Medical and disability coverage. This type of coverage provides medical coverage to you as an independent contractor, since most contractors do not have their own health insurance or disability insurance. If you become ill or hurt, this is coverage that you will appreciate owning.

Who Should Buy Independent 1099 Contractor's Insurance?

There are several types of 1099 independent contractors who need to consider contractor's insurance. Some of them are:

  • Construction workers working independently
  • Independent painters, electricians, carpenters and plumbers
  • Repairmen
  • Dog or horse trainers
  • Hair stylists and manicurists
  • Writers and editors working as freelancers
  • Web designers
  • Graphic designers

What Type Of Liability Insurance Do Independent Contractors Need?

Independent contractor insurance for 1099 contractors is a type of insurance that protects the contractor from third-party damage losses and lawsuits that might otherwise leave their businesses financially devastated. The policy chosen should cover:

  • General liability. A general liability policy provides coverage for both bodily injury and property damage. For instance, if you or a sub-contractor falls and gets hurt while roofing a home, this policy would cover the medical costs associated with the fall. If you cause damage to a client's lawn while repairing the roof, it will also provide coverage for repairs.
  • Advertising personal injury coverage. If you cause damage to someone's reputation through false advertising, slander or libel, this coverage protects you from claims.
  • Completed product/operations. If your failure to complete a project causes damage to the client, this coverage will pay for associated claims.

These are standard independent contractor insurance coverage types for contractors. Your policy should be tailored to your own unique needs and the risks that you take as an independent contractor and the liabilities that you face.

It may be the case that a standard business owner's policy is sufficient for your needs. This policy, also referred to as a BOP, offers property damage and bodily injury coverage and may also offer business income protection or commercial vehicle insurance as well.

You should also consider worker's compensation insurance. This is required by some states if you have a certain number of employees, but working as an 1099 independent contractor, you may want to look into purchasing your own worker's compensation policy to cover medical bills and other expenses if you become ill or injured due to perils on the job.

What Does Independent Contractor Insurance Cover & Pay For?

Independent Contractor Insurance Claim Form

Independent contractors can be sued for a variety of reasons, just like any other business entity. It's important to understand the potential legal challenges contractors may face, and how insurance policies can protect them. Here are some examples:

1. Professional Negligence: An independent contractor might be sued if a client alleges that the contractor's work was negligent or did not meet the agreed-upon standards. For example, a freelance web developer could be accused of delivering a website that does not function properly.

Insurance Solution - Professional Liability Insurance: Also known as Errors and Omissions (E&O) Insurance, this policy can help cover legal expenses if a contractor is sued over the quality of their work or professional negligence. If the web developer mentioned earlier had E&O insurance, it could help cover legal defense costs and any potential settlements or judgments against them.

2. Physical Damage or Injury: Contractors often work with tools or in environments where accidents can happen. For instance, a contractor might inadvertently cause damage to a client's property, or someone might be injured as a result of their work.

Insurance Solution - General Liability Insurance: This insurance can protect contractors against claims for property damage or bodily injury. If a contractor accidentally damaged a client's property, general liability insurance could help cover the repair costs and any associated legal fees.

3. Worker's Injuries: Independent contractors who hire other subcontractors or employees could be sued if one of these workers gets injured on the job.

Insurance Solution - Worker's Compensation Insurance: This insurance can cover medical expenses and lost wages for injured workers. In many states, businesses are required to carry worker's compensation insurance. Even independent contractors might need this insurance if they hire others to help with their work.

4. Breach of Contract: If an independent contractor fails to fulfill the terms of a contract with a client, they could be sued for breach of contract. This might occur if a contractor fails to complete a job on time, or if the completed work does not meet the agreed-upon specifications.

Insurance Solution - Commercial General Liability Insurance: While this insurance may not directly cover a breach of contract claim, it can cover the associated legal expenses and any damages awarded if the breach resulted in bodily injury or property damage.

These are just a few examples of the many potential risks independent contractors face. It's essential for contractors to understand their specific risks and to work with an insurance professional to get the right coverage. Insurance can't prevent lawsuits, but it can help protect contractors' financial wellbeing if they are sued.

Independent Contractor Insurance - The Bottom Line

Work with a knowledgeable insurance agent to determine which policy coverages are right for you. Your agent can assess your risks and help you find the best policy while comparing rates to find an affordable option that you can easily budget.

Additional Resources For Small Business Insurance

Protect your company and employees with the right commercial insurance policies. Read informative articles on small business insurance coverages - and how they can help shield your company from legal liabilities.

Small Business Commercial Insurance

Businesses need commercial insurance to protect their assets, employees, and customers. It helps to cover the costs of potential accidents, lawsuits, and other unforeseen events that can result in financial loss.

For example, if a customer slips and falls on a wet floor in a store, the business could be held liable for their injuries. Commercial insurance can help cover the costs of medical bills and legal fees associated with the incident.

Additionally, businesses often have valuable equipment and inventory that need to be protected from theft or damage. Commercial insurance can provide coverage for these items in the event of a disaster, such as a fire or natural disaster.

Furthermore, businesses often have employees that can be injured on the job. Workers compensation insurance can provide coverage for medical bills and lost wages for injured employees.

Overall, commercial insurance is a necessary tool for businesses to protect their assets, employees, and customers. Without it, businesses could face significant financial loss in the event of an unexpected occurrence.

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