As an independent contractor, it is important to make sure you are protecting yourself and ensuring your self-run business is safe in the case of fraud, non-payment, and other important scenarios that are bound to come up in your area of work.
Just like a regular business, independent contractors are also subject to liability claims relating to their work, which makes having proper insurance protection essential. Without insurance, these claims could potentially be enough to end your small business.
This is why we recommend that all 1099 contractors look into the insurance needs of their personal business, and it is why we strive to help business owners understand what they need in order to be professional and stay protected.
What Does Insurance for Independent Contractors Consist Of?
General liability insurance and other forms of insurance are important insurance packages to have that can cover your liability in the case of most disagreements. It can help with claims relating to:
- Reputational Damage. This can come in the form of malicious slander, libel, or other forms of mal-intentioned actions towards your business.
- Copyright Infringement. This type of insurance can help keep your logos, ads, and other copyrighted material protected.
- Errors and Omissions. This protects in the case of simple human errors that inevitably occur. Just like normal contractors who work with physical equipment and interact with clients in homes and work settings, an independent contractor who provides services could be held liable if something goes wrong.
What Types of Businesses Need General Liability Insurance?
There are a variety of independent contractors who need this essential type of insurance that covers your liability. These include:
- Freelancer writers & designers
- Plumbers
- Carpenters
- Hair Stylists
- Dog trainers
- Consultants
These same businesses also typically need E&O insurance as well to protect themselves further in the case of a claim of negligence.
How to Get General Liability Insurance
There are two main avenues by which independent contractors can obtain the insurance they need:
Clients can often add contractors to their list of those covered by the company insurance plan. This is a great choice if available because it provides easy access.
From an independent insurance provider. This gives you more control over what type of policy you have, but it is up to you to find the best one for your needs. In this scenario, always make sure to get proof of insurance.
Risks that Independent Contractors Face
If you do not have insurance as a 1099 contractor, you could face severe loss of funds or reputation. If you are sued without insurance and you end up losing, you are wholly responsible for paying these debts yourself.
Not only that but being uninsured can also scare away professional clients who want to work with someone who is serious about staying protected and who takes themselves seriously. When it comes to insurance, do not be the contractor who cuts corners and ends up paying for it in the end!
Benefits of Insurance for Independent Contractors
There are a lot of benefits that come along with being insured as an independent contractor. Some of these include:
Covers the Cost of Legal Defense
When you are sued and have to go to court, you will have to pay legal fees on top of any of the damages you are held responsible for. Having a properly designed insurance plan ensures that you are not personally responsible for these costs.
Financial Security
The last thing you want for your personal business is to lose everything due to a single lawsuit. IC insurance can ensure that you never lose your business because of a legal dispute.
Professionalism
As we mentioned, having insurance ensures that you are handling your business professionally. Some states and even some clients will only work with contractors who have insurance, as this demonstrates your commitment to what you do while also instilling confidence in your quality of work.
While the type of insurance packages you need will vary based on the type of services you provide, understanding the different types of coverage and how they can help is an essential part of being self-employed.
Try to reach out to an experienced insurance provider and learn more about what your needs are and the risks you potentially face. JMG Insurance is a Connecticut-based insurance agency that specializes in matching clients with the perfect insurance plans for their needs.
They have become a trusted insurance provider for businesses and independent contractors due to their excellent customer service and their ability to make insurance easy to obtain for their clients.
