As a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Written By Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Jason Metz Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others mak.
Lead Editor, Insurance Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
Les Masterson Deputy Editor, InsuranceLes Masterson is a deputy editor and insurance analyst at Forbes Advisor. He has been a journalist, reporter, editor and content creator for more than 25 years. He has covered insurance for a decade, including auto, home, life and health. Before cove.
| Deputy Editor, Insurance
Updated: Jul 7, 2023, 3:08am
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Contract work has many advantages, but it also comes with a few risks. One of the biggest dangers is that you can be sued.
Liability claims are expensive and a big one can crush a small business that doesn’t have insurance as a safety net. If you don’t have general liability insurance, you’ll need to pay for pricey claims against your independent contractor business with your own money.
One way to obtain some of these types of coverage is to purchase a business owners policy, commonly known as a BOP. This type of policy bundles general liability insurance, commercial property insurance and business interruption insurance. You can typically add other types of coverage to your BOP, such as commercial auto insurance and workers compensation insurance.
General liability insurance costs an average of $42 a month, according to Insureon. That could be well worth the cost if you’re sued for a problem like an accidental injury to someone else or reputational harm. The average cost of a slip and fall accident is $20,000 and the average cost of a reputational harm lawsuit is $50,000, according to The Hartford.
The cost of general liability insurance for an independent contractor depends on several factors, including:
Once you have coverage, you can request a general liability insurance certificate from your insurance company. This is an official document that lists all the coverage types and limits on an insurance policy. Your insurer should provide it to you at no additional cost.
A general liability insurance certificate includes:
Your client may request a general liability insurance certificate when liability or large losses are a concern on a job. Once you have the certificate of insurance, you can share it with your client and you’ll be ready to get to work.
An alternative to buying general liability insurance is for a client to add you to their own business liability policy as an “additional insured.”
An additional insured is anyone in addition to the policyholder who is covered by an insurance policy. Being an additional insured means you’ll be covered by the client’s insurance for the duration of the job.
A client could choose to add multiple independent contractors to a general liability policy but this would be costly. It’s more cost-effective for the client for the independent contractor to have their own general liability insurance policy.
Having your own business liability insurance policy as an independent contractor allows you to take on jobs from a wide variety of clients.
You can buy general liability insurance for independent contractors from any insurance company that sells business insurance. Forbes Advisor evaluated 28 companies that offer commercial liability and property insurance to find the best small business insurance companies.
Compare Free Quotes From Top Insurers at Simply Business. Get a Policy in Under 10 Minutes.
As a 1099 worker, you may be required by state law to have general liability insurance or your client may require you to have it. For example, if you are an independent contractor who performs electrical work, your client may require you to have it before you start the job. As a 1099 contractor, you can be sued as easily as any small business. If this happens and you don’t have general liability insurance, you will likely be on the hook for all legal costs, settlements and judgments.
Many factors affect the price you pay for independent contractor liability insurance, including how much coverage you buy. Some businesses are riskier to insure than others. For example, if you provide services to the public, there may be a greater risk of being sued. This can be reflected in a higher premium cost for general liability insurance. The insurance policy’s deductible also plays a role in your overall cost. Even factors like where your business is located and the number of years you have been in business might impact your cost.
The insurance needs of these two types of contractors are often the same. They both need general liability coverage, but contractors may have their own specific coverage needs. For example, they might need builders risk insurance, which covers property and raw materials during a construction project.
There are many ways in which an independent contractor can be held liable. For example, a plumber who damages a client’s property could be sued. Another example is a freelance writer who is sued for copyright infringement. Independent contractor liability insurance pays for your legal costs, judgments and settlements stemming from accidental injuries to others, accidental property damage to others and other types of problems like advertising injury, reputational harm and copyright infringement.
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Lead Editor, InsuranceAs a former claims handler and fraud investigator, Jason Metz has worked on a multitude of complex and multifaceted claims. The insurance industry can be seemingly opaque, and Jason enjoys breaking down confusing terms and products to help others make well-informed decisions.
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