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I’m an Independent Contractor, Do I Need Liability Insurance?

When you’re liable for something, that means that, legally, it is your responsibility. Most people are not concerned with liability in their day-to-day lives — but business owners should be. Your business can actually be liable for quite a lot, from a customer injury on your business property to the advice your business gives clients or patients.

Independent contractors aren’t immune to this liability, which is why liability insurance is a must.

What is liability insurance?

There are several different kinds of liability insurance, but the most common liability insurance for self-employed individuals is general liability insurance. It provides coverage if your business is responsible for third-party bodily injury, property damage, or reputational harm. Some companies require that the businesses they work with have a “certificate of insurance,” which is proof of a liability policy. It becomes important if someone files a claim against your business, since legal fees can be expensive.

Liability insurance benefits can usually be used to pay for legal defense fees, witness fees, judgements, settlements, or other court-related expenses. If the case involves an accident or injury, general liability can cover medical payments of the injured party.

Why do you need liability insurance when you’re self-employed? Do you need it at all?

If you’re self-employed or an independent contractor, your clients may require that you have liability coverage. They don’t want to be liable for your work or services, and it’s well within their rights to refuse to work with you without proper liability coverage. If you rent an office, the property owners of the building may also require that you have liability insurance.

But even if no one is requiring you to take out a liability policy, you likely want the protection. Why? You’ve worked hard to build your own business. You had to learn skills, build up your clientele, and probably take some big risks to get where you are now. But now that you’ve secured your own business, why risk it? You can’t always control when accidents or mistakes occur. Going to court can suck up a lot of your business’ funds and your own time. Liability insurance helps protect it all.

If you’re a self-employed individual, consider one of the following insurance types:

General liability

As previously mentioned, general liability is one of the most common liability insurance options out there. It protects your business from third-party lawsuits resulting from property damage, bodily injury, or reputational harm.

If clients or customers visit your office (even if the office is a simple desk in your home), you should consider general liability insurance. Clients or customers can slip on a wet floor, or they can miss a step going down the stairs and injure themselves.

If your work involves driving a vehicle to meetings or appointments, or visiting commercial or residential premises, the property damage coverage of general liability can come in handy. Property damage includes buildings (both interior and exterior) and the items inside them (such as computer monitors or furniture).

In seconds, a small accident can lead to steep legal and medical fees that rapidly dismantle what you’ve built.

Other liability options available

There are different liability risks associated with different professions. You can find the best liability insurance based on the industry you work in and the size of your business by speaking with an insurance expert.

Professional liability insurance

Consultants, accountants, architects, real estate brokers, and lawyers all have something in common. Their advice and services can have a large impact on individuals and organizations. In these professions, it’s not uncommon for small errors to escalate into major problems with grave consequences. Sometimes, these problems result in client lawsuits. There are often factors — such as the work of other professionals or natural, unpredictable changes in the market — that are outside of your control. It’s important to protect yourself where you can.

Professional liability insurance, also called errors and omissions insurance, helps pay for defense costs, settlements, and judgements if a dissatisfied client files a lawsuit against you. This insurance is designed to cover claims of negligence, malpractice, misrepresentation, oversights, missed deadlines, and more. Professional liability insurance is essential for any business that advises individuals or other businesses, or that provides services that could impact the well-being of others. 

Business auto

When driving your personal car for business purposes, personal car insurance isn’t designed to cover you. That’s what business auto insurance is for. Business auto insurance becomes even more crucial if the vehicle is owned by your business.

This type of insurance is more comprehensive than personal auto insurance, and it can cover cars, trucks, and vans that are leased or owned by your business. The assumption with business auto insurance is that a vehicle is necessary in order to do your job. So if your vehicle is inoperable, business auto insurance helps cover the cost to rent another car. It can also cover the loss of income experienced because of an inability to use the vehicle.

Business property

If you rely on your work building, equipment, or inventory in order to do your job, you should consider business property insurance. It covers loss of income or revenue if your property or equipment is damaged or stolen. In the result of a fire or natural disaster in your office building, business property insurance replaces a portion of your income while you wait for repairs.

If your location is more likely to experience natural disasters or intense weather, or if you’re worried about vandalism or theft, take out a business property insurance policy.

Are you interested in general liability, professional liability, or other business insurance? Learn more about our products here, or give us a call.

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