What Type Of Insurance Should An Independent Contractor Carry?

No matter whether you have a specialty or offer general contracting services, it’s important to carry the right type of insurance to protect yourself and your business. There are several different policies and coverages available, but it can be hard to tell which ones are best for your business. 

Common Coverages for Contractors 

Some of the most common and necessary insurance policies for contractors include: 

General Liability 

General liability insurance covers accidents of bodily injury, property damage and personal or advertising injury caused by the contractor’s everyday work activities. For example, if a client trips over a piece of equipment, the resulting injury and its medical expenses will be covered under the contractor’s general liability insurance. This insurance will also cover claims of property damage, libel, slander, and copyright infringement. 

Commercial Property 

Whether you have a physical location or not, commercial property insurance can protect your business by insuring the physical assets from fire, wind, hail, lightning, smoke, theft and vandalism. 

Professional Liability 

While general liability insurance covers acts of non-professional negligence, professional liability insurance covers accidents of professional negligence. This means it covers costs related to an accident directly tied to the specialty or service offered by a contractor. For example, if you install a sewer system and faulty screws cause it to burst later, the client can then sue for professional negligence in order to receive compensation for the damages. Professional liability insurance can help with the damages and possible legal fees. 

Commercial Auto Insurance 

Most contractors use vehicles to travel between clients. Even if the vehicle you use is a personal one, you may need commercial auto insurance. On average, personal auto insurance policies don’t cover accidents that occur while the vehicle is being used for work purposes. This is why contractors purchase commercial auto insurance. This insurance provides a lot of the same coverages as a personal policy, but it is geared specifically for a work vehicle. 

Combining Coverages 

In order to save money and simplify your policy, you can often combine coverages. A common bundle used by contractors is a business owners policy, which combines general liability and commercial property insurance into one comprehensive policy. These policies are also flexible, where you can add different coverages according to your business’ needs.