Independent contractors face many of the same risks as larger businesses, but with less protection. Business insurance protects your personal assets and your business from legal fees, costly repairs, and medical expenses.
These insurance policies cover common risks faced by 1099 contractors.
General liability insurance covers the cost of third-party accidents, such as a client who trips and suffers a bodily injury at your office. It may be required for a commercial lease.
This policy covers legal costs when an independent contractor makes a mistake that negatively affects a client. It's sometimes referred to as errors and omissions insurance (E&O).
Workers’ comp shields independent contractors from work-related medical bills that health insurance might deny. Most states require it for businesses with employees.
E&O insurance protects independent contractors from legal costs related to mistakes, oversights, and missed deadlines. It's sometimes referred to as professional liability insurance.
Cyber insurance helps independent contractors recover financially from data breaches and cyberattacks. It's strongly recommended for any small business that stores personal information.
A BOP bundles general liability coverage and commercial property insurance at a discount. It protects against the most common lawsuits and business property damage.
This policy covers costs if an independent contractor's business property is stolen, lost, or damaged. Bundle it with general liability coverage in a BOP for a discount.
This policy covers costs when an independent contractor's business vehicle is involved in an accident. Each state has its own requirements for auto liability insurance.
Fidelity bonds provide reimbursement for a client if one of your employees steals from them, including theft by electronic funds transfer. They're sometimes required by client contracts.
Independent contractors often qualify for discounts on business insurance. Factors that affect your premium include your profession, business location, and the policy's limits and deductible.
Here are the average costs for top policies sold by Insureon:
General liability insurance: $42 per month
Professional liability: $61 per month
Workers' comp: $45 per month
There are several important reasons for independent contractors, subcontractors, and other self-employed individuals to carry insurance:
You may need insurance coverage to sign a contract or a lease. Clients and landlords may require you to carry insurance to protect themselves against potential losses. In some cases, they may ask you to list them as an additional insured on your policy.
You may need insurance to comply with the law. Depending on the laws in your state, you may need coverage for a business-owned vehicle, to obtain a license in your field, or to protect against work-related injuries.
You gain client trust by being insured. Even when it's not required, a certificate of insurance proves that your business can handle the cost of a lawsuit or accident. This helps attract clients and can give small business owners an edge over their competitors.
Insurance protects your business from catastrophic losses. Insurance helps your business withstand unexpected costs from customer accidents, fires, and other incidents that might otherwise prove devastating.
With Insureon, you can get usually get a certificate of insurance on the same day that you apply for quotes. It’s a simple three-step process:
A certificate of insurance will outline all your coverage options, such as policy limits, deductibles, and any endorsements. It serves as proof of insurance for clients, landlords, lenders, and anyone else who asks whether your business is insured.
Yes, the type of work you do can affect which insurance policies you need.
For example, the law in several states requires workers' comp coverage for construction contractors, even if they work alone, due to the high risk of injury. In some states, real estate agents and brokers are required to carry errors and omissions insurance. Plumbers and electricians may need a general liability insurance policy to obtain a license.
You may need to do a little research to find out which type of coverage your business needs, or simply ask a licensed insurance agent.
Insurance is usually affordable for 1099 contractors and low-risk small businesses. There are a few ways to find cheaper insurance:
Bundle policies. Many small business owners buy general liability coverage and commercial property insurance together in a business owner's policy, which costs less than purchasing each policy separately. It's sometimes possible to bundle other policies as well, depending on your profession.
Shop around. Compare quotes from different insurance providers to make sure you're not paying too much for insurance. Insureon provides an easy way to achieve this with our free online application.
Choose a high deductible. You can customize your insurance policy to save money, such as by choosing a higher deductible or lower policy limits.
Avoid claims. Finally, take steps to reduce your business's risks. Prompt cleanup of spills, the elimination of clutter, and bright lighting can help customers and employees avoid accidents, which helps keep your premiums low.