A Complete Guide to Independent Contractors Insurance

Independent contractors face many risks, which is why, as an independent contractor in Ontario, purchasing insurance coverage is essential. It covers your business from third-party bodily injury or property damage claims.

Independent contractors need an insurance policy that offers them complete coverage, including liability, property coverage and more.

At James Campbell Insurance, we offer independent contractors a cost-effective way to compare policies and find the right coverage for their business needs. As a result, they can rest easy knowing that their businesses are adequately insured.

This guide will help you better understand the types of insurance coverage independent contractors need to succeed and protect themselves.

Who is an Independent Contractor?

An independent contractor is an individual or self-employed professional who works for multiple clients and has no exclusive contract. Independent contractors can set their prices, work when they choose, and decide how much or little time to devote each day.

Independent contractors are not limited to a particular industry. Some examples of independent contractors include electricians, window and door installers, concrete contractors, engineers, architects, and accountants.

Unfortunately, independent contractors face risks as they’re not covered by traditional employee benefits or employer liability policies. For this reason, they need insurance to mitigate any risks.

What is Independent Contractor Insurance?

Independent contractor insurance includes a liability policy that protects independent contractors from financial loss caused by accidents or lawsuits related to their work or negligence.

Contractors’ policies typically cover the cost of property damage and repair, legal liability arising from errors made during services rendered, and sometimes, can offer medical expenses incurred due to injuries sustained while on the job.

When Do You Need Independent Contractor Insurance?

The most common reasons for needing independent contractor insurance may arise as a result of the following:

You Are a Sole Proprietor. Liability is not covered an employer’s policy, therefore you will require your own.
You Work for Multiple Employers Simultaneously as a Subcontractor. If this is the case, you still require your own liability coverage as well as property coverage.
If you Hire Subcontractors. You need to ensure you have your own liability policy and that each subcontractor you hire has their own liability policy as well.
You Handle Projects Where Your Mistakes Can Lead to Injury or Property Damage. In this case, you will need insurance to cover the costs of damage or medical bills from a third party lawsuit.

Types of Independent Contractor Insurance Coverage

Commercial General Liability (CGL)

Commercial general liability insurance protects your business from lawsuits and other claims of damages caused by accidents, whether intentional or not. If someone sues your business, CGL insurance typically covers compensatory damages awarded against you and any legal defence costs.

General liability insurance covers legal costs and damages related to injuries sustained by third parties as a result of your business operations, which include:

Bodily Injury Liability: This occurs if there are physical injuries or damage to any person resulting directly or indirectly from the work done by the independent contractor.
Property Liability: Refers to any negligent acts that cause damage to a third party’s property.
Third-Party Legal Liability: This insurance covers repairing or replacing someone else’s property that you rent or occupy.
Medical Payments/Bills: Limited coverage for medical bills for injuries to third parties caused by the business’s operations, including emergency medical expenses, hospitalization costs, etc.

Commercial Property Insurance

If you run a business that requires you to lease, rent, or own facilities where your business operates out of.

This insurance policy provides you with financial coverage if there is physical damage/loss of property and its contents due to an external disaster, like fire or theft.

Tools and Equipment Insurance

An independent contractor must have the right insurance policies to protect your essential work equipment and tools. A tool floater is essential if you are transporting tools to and from a job site. Contractor’s equipment is required for any large piece of equipment you own or lease that you would want covered in the event of a loss. This can be added as a scheduled or blanket coverage.

Insurance can reimburse you if your tools or equipment are lost, stolen, damaged by fire or flood, or vandalized. Any item worth less than $1,500 is considered a tool. Anything valued above that amount is equipment.

Automobile Liability Coverage

This insurance covers cars, trucks, and other vehicles used in business operations.

In addition, it covers the cost of vehicle repair, property damage and some medical payment of the drivers and passengers involved.

Importance of Independent Contractor Insurance

Provides Coverage for Building and Equipment: The most important thing you’ll need to know about independent contractor insurance is that it covers your business property. Suppose something happens to a building, equipment, or even just the contents of your shop. In that case, your coverage will help pay for repairs or replacement for the lost or damaged property.
Protects Against Liability Claims: Independent contractor insurance protects against liability claims by third parties.
Protects Against Loss of Income: Independent contractor insurance helps protect from loss of income as a direct result of an insured peril.
Protection Against Natural Disasters: This protection is also essential because it protects your property against accidental damage caused by natural disasters like hurricanes or earthquakes.

Get Your Insurance Today

When it comes to independent contractors, it is essential to understand the type of independent contractor insurance suitable for your industry and business.

If you figure out where you stand on the spectrum between employer and contractor, consult an insurance agent to help you determine the type of coverage that would be right for your business. At James Campbell Insurance, we understand your unique needs and strive to help you find an insurance policy that fits your business.

To learn more about independent contractors’ insurance, call us at 1-833-459-1065 or contact us here.