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The Basic Insurance Needs of Independent Contractors

Independent contractors often run substantially smaller operations than large or specialty contracting firms. As a result, the principal operator might feel that they need substantially lower commercial insurance benefits. On one hand, this is true, because smaller businesses often need lower amounts of insurance coverage. However, they still need as diverse a set of benefits as almost any business.

Because you are an independent contractor, you will bear a brunt of the risks associated with numerous liabilities present in both your own and any other business. To name a few, property damage, injuries, liability lawsuits, commercial vehicle accidents might all prove devastating to your operation. These could cause significant challenges not only for your sustainability, but also for your corporate reputation in the face of client challenges.

No matter how big or small a contracting operation you have, you must have appropriately tailored insurance benefits in place. The more comprehensive and customized your benefits, the better you will be able to withstand the challenges that might come with any nuber of hazardous events.

What Insurance Do You Need as an Independent Contractor?

Independent contractors often function as businesses within themselves. Therefore, it’s up to the owner to acquire appropriate property & casualty insurance benefits that they can use to their advantages.  While the precise coverage that a contractor might need can vary considerably, among the most purchased are:

  • General Liability Insurance: Commercial general liability insurance provides coverage if you cause bodily injury or property damage to someone else, like a client (even when the accident was unintentional). It can also cover personal injuries like libel or slander, or advertising injury and copyright infringement. Additionally, the policy will often extend to product liabilities and completed-operations liabilities, which to contractors are two critical benefits.
  • Property Insurance: Whatever commercial property assets you might own, you need to insure against unexpected hazards. Property insurance can cover the physical structure of your business, in addition to covering equipment or other furnishings. Usually, your policy will pay for items if they’re damaged in unexpected hazards like fire, weather, theft, vandalism and more.
  • Business Interruption Insurance: If you have to suddenly halt operations due to a problem, this coverage make certain you continue to pay your bills despite the sudden drop in income.
  • Commercial Auto Insurance: Contractors travel often, visiting clients’ homes and transporting equipment. What most don’t know is that a personal auto insurance policy is unlikely to cover them if an accident occurs while the vehicle is being used for work. A commercial auto insurance policy is required for businesses by most states. A basic policy includes at least liability coverage, and it can be accentuated with benefits like comprehensive, collision and uninsured/underinsured motorist coverage.
  • Builders Risk Coverage: As a contractor, you have to safeguard property under construction. It’s your responsibility until the owner takes possession. Builders risk coverage provides compensation if a building under construction is damaged or destroyed due to fire, wind, hail, theft, vandalism, etc. This coverage can also insure machinery and equipment stored on the property.

How To Get The Right Coverage

As an independent contractor, you probably have relatively limited financial resources available to support your commercial insurance options. The good news is that in many cases, you will qualify to combine several essential benefits through a business owners policy (BOP). BOPs allow small business owners to package foundational benefits (usually property, liability and business interruption coverage) in one place and at one price.

Still, you can and should carry additional benefits alongside your BOP. Besides builder’s risk and commercial auto coverage, consider investing in:

  • Inland Marine Insurance: Your equipment and supplies may not be covered when taken off your property. If you’re moving equipment to and from work locations, you should have inland marine insurance. This covers damage or loss of your equipment while it’s in transit.
  • Hired/Non-owned Auto Insurance: Some contractors choose to lease vehicles or hire subcontractors with their own vehicles. Hired and non-owned auto insurance provides coverage to vehicles used for work that are not owned by the business.
  • Equipment Breakdown Insurance: Contractors use a lot of tools, equipment and machinery in order to get a job done. While property insurance covers it against outside perils such as fire and hail, machinery breakdown insurance helps replace or repair equipment that has been damaged due to sudden mechanical, electrical or other internal issues.
  • Income Protection Insurance: Working independently often means that it’s hard to take time off. If you’re injured or ill and unable to work, income protection insurance will help supplement the income that disappeared because you couldn’t work.

Of course, the cost of a commercial insurance portfolio will vary considerably based on factors like your claims history, credit history, the location of your business and the types and amounts of coverage that you buy. However, by working with your insurance agent to precisely note where your coverage needs lie, you will be able to customize your plan to your advantage. We are here to help you do so.

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