General liability insurance for independent contractors. A complete guide.

General liability insurance for independent contractors introduction

You may run a smaller operation as an independent contractor, but having the right insurance and protection for your business is vital.

Liability claims can bankrupt a small business that doesn’t have the right insurance. Without commercial general liability insurance, you will have to pay out of pocket to protect your business.

This guide about general liability insurance for independent contractors will make sure you know your insurance options.

We will cover why you need to consider getting insured and the following topics.

Table of contents

General liability insurance for independent contractors
Which types of independent contractors require general liability insurance?
How can independent contractors be held liable?
What does general liability insurance cover?
How can an independent contractor get general liability coverage?
Steps for contractors to get general liability insurance
Why do independent contractors need general liability coverage?
Other types of insurance for independent contractors
General liability insurance for contractors cost
General liability insurance for independent contractors FAQ

General liability insurance for independent contractors

Without general liability insurance, most independent contractors in the construction industry won’t be able to get construction jobs.

That’s because prospective clients require construction contractors to have general liability insurance before hiring them.

Some locales may require it as well. Independent construction contractors are often required by the area in which they work to carry general liability insurance.

Business liability insurance is well suited for independent construction workers because they also interact with clients and visit job sites.

As an independent contractor, you want your business protected in all potential working situations.

Which types of independent contractors require general liability insurance?

Here are some of the types of independent contractors who need to consider general liability insurance:

Painters
Plumbers
Electricians
Carpenters
House and carpet cleaners
Independent construction contractors
Graphic designers
Freelance photographers
Freelance writers and editors
Independent PR consultants
Independent marketing consultants
Independent business consultants
Independent hair stylists and salon professionals

How can independent contractors be held liable?

All independent contractors can be held liable, but different industries bring different risks.

Commercial general liability insurance for independent contractors covers many different risks for this reason.

For example, a graphic designer faces significantly different risks than a technician hired to install electricity.

The graphic designer could be accused of copyright infringement, while the electrician faces the risk of potential damages to property while working or an injury to the homeowner.

Beneficially for both, general liability insurance for independent contractors addresses both of these issues.

What does general liability insurance cover?

Even when it’s not required, contractors may purchase general liability insurance to protect their business against common risks of their trade.

Independent contractors are liable for alleged claims, much like any other business. Therefore, independent contractors should be adequately covered.

General liability insurance for independent contractors covers the following:

Harm to reputation caused by slander or libel
Advertising injury, including copyright infringement
Bodily injuries or property damages to third parties when your business was at fault.

Unlike bigger businesses, independent contractors usually don’t have the resources to deal with these types of lawsuits.

General liability insurance ensures any legal defense costs, court judgments, or settlements are taken care of.

How can an independent contractor get general liability coverage?

There are primarily two ways for an independent contractor to get commercial general liability coverage.

1. Contractors can purchase their own general liability policy

As a contractor, you can purchase commercial general liability insurance from an agency and business insurance provider.

To show your prospective clients that you are covered, you should request a certificate of insurance from your agent.

This option is usually more cost-effective and potentially attractive for your clients.

2. Clients can add contractors to their policy as additional insured

Being added as an additional insured to your client’s policy means their insurance covers you. This could last for the duration of your contract or longer.

Businesses can add multiple contractors to their general liability policy.

It’s typically an expensive option for clients to include you as an additional insured in their policy. However, depending on the circumstance, they may choose to do so.

NB: If you or your client is faced with a lawsuit, both options will protect against reputational harm, property damage, or third-party bodily injury.

Steps for contractors to get general liability insurance

It’s straightforward to get general liability insurance coverage as an independent contractor.

You can obtain a commercial general liability policy in a few steps.

1. Apply online

Getting a commercial general liability insurance policy begins with submitting an application.

Here are some tips to help prepare you for the online application process.

You should set aside time to complete the application without interruption.

Have your business information ready, such as your contracting business, the location and size of your work environment, payroll, and revenue.

If you’re unsure how to answer a question, you can contact an agent.

2. Speak with an agent

An insurance agent will typically contact you after you’ve submitted your application to choose your policy with you.

At this point, you can ask your agent questions about independent contractor insurance.

You might want to enquire about insurance packages, premiums, types of policies, and what’s covered by them.

3. Sign the policy

After you’ve chosen your insurance policy, you will typically be sent the necessary documents by email.

You should sign and submit these documents and make your first premium payment to begin your coverage immediately.

4. You’re insured

Once you have general liability insurance for independent contractors, you can start advertising yourself as an insured contractor.

You can download your certificate of insurance to verify proof of coverage for your future clients.

Why do independent contractors need general liability coverage?

In summary, for the following reasons, general liability insurance is essential for independent contractors.

This insurance protects you and your business. Like larger firms, independent contractors can be sued for causing bodily harm, damaging client property, or advertising injury. They have the same legal obligations and liability exposures. Therefore, general liability insurance helps cover financial losses.
Clients require you to have this coverage. Your clients may ask you to obtain general liability insurance before they work with you. This is because they could be held responsible for alleged claims caused by your business without this insurance.
It is advisable to carry it. It is sometimes mandatory for independent contractors in certain industries to carry general liability coverage, such as construction. It’s often advisable that both you and your client obtain separate policies.

Other insurance types for independent contractors

In addition to general liability insurance, independent contractors should consider the following business insurance types.

Workers Compensation. This insurance provides benefits to employees (if you have any) who get injured at work or become unwell due to work.

If you have one employee, it’s still necessary, and you should purchase a workers' compensation policy.

Professional Liability. Also called errors and omissions (E&Os) insurance, this type of insurance is required to protect you against professional business mistakes.

The risk level associated with your business affects the overall cost of your professional liability insurance coverage.

Commercial Auto. This insurance type is essential if you use a business vehicle. Auto coverage will protect you if you get in an accident when driving for work.

If you are renting a car to drive for work or using your own car for work, hired and non-owned auto coverage will cover you.

Commercial property insurance. This insurance type covers your assets, such as tools and other work equipment that you need to work. This includes owned and rented business materials.

Not only are owned properties covered. Commercial property coverage also protects rented office spaces.

Business income insurance. Also known as business interruption insurance, this insurance type helps you recover any lost income.

If you are ever unable to work or open your business due to a loss covered by the policy (such as a theft or a fire), business income insurance reimburses you.

Cyber liability insurance. This insurance coverage pays out if a client’s sensitive personal information, such as credit card and bank details, is stolen.

Contractors who accept credit cards should consider getting cyber liability insurance to protect their information from data breaches. Cyber liability insurance will protect your sensitive business information too.

General liability insurance for contractors cost

General liability insurance for independent contractors costs will fluctuate depending on a few factors. These are:

Type of work
Employee number
Business revenue
Location of business
Policy limits and deductibles
Your claims history.

General liability insurance for independent contractors FAQ

Can clients add contractors as additional insured?

Yes, clients can add contractors to their commercial general liability policy as additional insured.

You’ll have coverage as an additional insured, even if you aren’t a policyholder.

It may be possible to negotiate being added as an additional insured with your clients. However, sometimes a client may ask you to add them to your policy.

Your insurance status and relationship with the client will affect the details of your arrangements.

Who’s responsible for adding an additional insured?

As mentioned in this guide, business owners can add an additional insured to their policy, and independent contractors can add business owners to their policy.

So, who is responsible for adding the additional insured?

The answer to the question above largely depends on the scenario and the industry.

In most cases, a contract will often outline whether the company needs to be added as the independent contractors’ additional insured or vice versa.

To conclude, these are questions you can ask your agent and your prospective clients.

When do independent contractors need general liability insurance?

It is often a requirement that contractors carry general liability insurance to be hired.

Clients want proof that you can cover the cost of a lawsuit to protect them against your business costs if you are held liable for a claim.

General liability insurance will protect you from these expenses too, so contractors also benefit from this insurance coverage.

As noted, your contract will typically outline the type and amount of coverage you should carry. But any questions can be answered by an insurance expert.

Independent contractors insurance

To find the right policies to meet your needs, complete the following and get general liability insurance for contractors today.

Contractors insurance USA

For companies registered in the USA, you can receive quotations from Progressive Commercial.

Contractors insurance UK

For companies registered in the UK, you can receive quotations from Simply Business.

Contractors insurance Cyprus

For companies registered in Cyprus, you can receive a quotation from Pitsas Insurances by completing the quotation.

If you have more questions, contact our insurance experts and work with a licensed agent to determine your business needs.

We offer insurance coverage made specifically for independent contractors.

Pitsas Insurances can work with your financial budget to help you secure general liability insurance for contractors.

To find out more about how our team of insurance experts can help you, see here.