Does an Independent Contractor Need Business Insurance?

As an independent contractor, your clients often depend on you to complete important tasks on strict timelines. Whether you’re the sole party working on a smaller project or enlisted to help with a key component of a larger job, errors and delays can have dire ramifications for all parties involved. Insurance can play a key role in offsetting the financial consequences of such situations and understanding your specific needs as an independent contractor is essential.

What is Business Insurance?

Business insurance is a general term used to describe various coverages and policies available to commercial entities. Given the many industries and types of companies throughout the nation, the contents of business insurance may vary significantly. For contractors and those in the construction industry, essential policies may include various types of liability coverage and property coverage.

Am I Required to Have Coverage?

Independent contractors may often be subject to less stringent insurance-related obligations than larger construction firms and businesses with employees. However, you should still be aware of certain obligations, including the following:

• Legal requirements—Commercial auto insurance is typically required by law for any business that uses automobiles, including independent contractors. Even when using your personal vehicle and only relying on it to transport you to a job site or carry equipment and materials, you must have coverage. Additionally, workers’ compensation insurance may be required if you employ others in your business. If you’re a sole proprietor, you’re typically exempt from such mandates.

• Client requirements—Although not required by law, your clients may be mandated to buy certain types of insurance. For example, professional liability insurance and general liability insurance are often needed to be eligible for contracts. Without such coverage, prospects may feel insecure about doing business with you. Additionally, many clients may require you to purchase surety bonds as a means for them to recoup losses if you’re unable to complete work as promised.

We’re Here to Help

Even if you aren’t subject to formal requirements regarding insurance, retaining the right coverage can make all the difference in the aftermath of accidents, errors and other unexpected situations.

At Thornburg Insurance Agency in Huntington, West Virginia, we can help you understand your obligations and secure coverage accordingly. Contact us today to get started.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.