Should My Business Policy Cover Independent Contractors?
Independent contractors, vendors and other third-party workers can help your business grow. Sometimes, however, their help can spawn a new set of problems.
Your business insurance policy may already be comprehensive. Still, many policies don’t extend coverage to these workers.
Should My Independent Contractor Have Insurance?
When you hire someone to work, they might make a mistake. If they make a mistake, it might cost you money. Let’s look at an example. If you hire a construction worker, their work might result in a slip-and-fall accident. The injured party might decide to sue your business.
Thus, you should only hire insured contractors. If they fail their job—or, if they can’t deliver the service they’ve promised—you can recoup some expenses.
What Insurance Should I Have?
Even if your contractor has insurance, you should still have your own coverage.
It’s a good idea to maintain adequate personal liability insurance. This is also called errors and omissions insurance. This insurance covers oversights and mistakes contractors make when conducting professional services.
Secondly, you should make sure your business has general liability insurance. This policy covers a slew of accidents, including physical injuries and property damage. If you contractor accidentally causes harm, your liability policy might protect those affected.
Finally, you should make sure you have product liability coverage. If your contractor makes, installs, or repairs one of your products, any harm caused by that product may make them liable.
Can My Policy Cover Contractors?
In general, your contractor should be responsible for their own insurance. In some cases, however, you might need to cover them. Subcontractors can often be added onto your existing policy, if need be. This tip is particularly useful if you’re installing something for another client. Still, be careful about adding too many subcontractors to your policy.
It’s also a good idea to check your state’s worker’s compensation laws. Sometimes, independent contractors and temporary workers will need coverage on a worker’s comp coverage plan. Temporary help is a gray area. Only hire and maintain it with appropriate oversight.
When in doubt: Ask your business insurance provider for advice. The realm of independent contractor hiring can be nebulous. So, it’s a good idea to brush up on your current business insurance policy. Take care with every contractor addition. Always put your business’s financial safety first.