Last Updated: February 16, 2024, 11:45 am by TRUiC Team


Does My Business Insurance Cover Independent Contractors?

As a business owner, you may rely on independent contractors. While independent contractors are not employees, they are still working on behalf of your business and are therefore exposed to risks that could impact your business. 

In this guide, we will help you understand whether your business insurance covers independent contractors and what types of policies can provide coverage.

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Does Business Insurance Cover Independent Contractors?

The answer is that it depends on the type of insurance policy you have and the nature of your business. In general, if you have a policy that provides coverage for employees, it may also provide coverage for independent contractors who work on behalf of your business. 

However, there are some nuances to consider.

For example, if you have a general liability insurance policy, it may provide coverage for any bodily injury or property damage that an independent contractor causes while working on behalf of your business. 

However, if the independent contractor causes damage intentionally or engages in criminal activity, your general liability policy may not cover those damages.

On the other hand, if you have a workers' compensation insurance policy, it typically only covers employees, not independent contractors. 

This is because workers' compensation insurance is designed to cover medical expenses and lost wages for employees who are injured on the job. 

Since independent contractors are not technically your employees, they are not covered by your workers' compensation insurance. The independent contractor would need their own workers’ comp policy.

Types of Business Insurance that Cover Independent Contractors

While not all types of business insurance cover independent contractors, there are policies that can provide that coverage. Here are a few to consider:

General Liability Insurance

General liability insurance can provide coverage for bodily injury or property damage caused by an independent contractor who is working on behalf of your business. 

This type of insurance can help protect your business from lawsuits and other claims that may arise as a result of the independent contractor's actions.

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, can provide coverage if an independent contractor provides faulty or inadequate work on behalf of your business. 

This type of insurance can help protect your business from lawsuits and other claims that may arise as a result of the independent contractor's errors or omissions.

Commercial Auto Insurance

If an independent contractor uses their own vehicle for work-related purposes, they may not be covered by their own personal auto insurance policy. 

Commercial auto insurance can provide coverage for any accidents or damages that occur while the independent contractor is using their vehicle for work-related purposes on behalf of your business.

Umbrella Insurance

Umbrella insurance is a type of policy that provides additional liability coverage beyond what is provided by your primary insurance policies. 

If you have independent contractors working on behalf of your business, it may be a good idea to consider an umbrella policy to provide additional protection.

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FAQs

It depends on the type of business insurance policy you have. Some policies may provide coverage for independent contractors, while others may not. You should review your policy carefully and talk to your insurance agent if you have any questions or concerns.

Some types of business insurance policies that may cover independent contractors include general liability insurance, professional liability insurance, and workers' compensation insurance (if they have their own policy). However, coverage can vary depending on the specific policy and the nature of your business.

Business insurance can help protect your business by providing coverage for certain types of risks and liabilities that may arise from working with independent contractors. For example, if an independent contractor is injured on the job, workers' compensation insurance may cover their medical expenses and lost wages.

In most cases, independent contractors are responsible for obtaining their own insurance coverage. However, some clients may require that independent contractors have certain types of insurance coverage before working with them. You should consult with your legal and insurance advisors to determine your specific requirements.

When working with independent contractors, it's important to consider factors such as their experience and qualifications, their availability, and the nature of the work they will be performing. You should also consider whether the independent contractor is properly licensed and insured and whether they have a track record of providing high-quality work.