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Independent Contractor Business Insurance
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Why do independent contractors need business insurance?
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.
What types of insurance do independent contractors need?
These insurance policies cover common risks faced by 1099 contractors.
General liability insurance
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.
BEST FOR
- Slip-and-fall accidents
- Accidents that damage client property
- Accidental copyright infringement
Professional liability insurance
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).
BEST FOR
- Mistakes that cause a client to lose money
- Missed deadlines
- Accusations of negligence
Workers’ compensation insurance
Workers’ comp shields independent contractors from work-related medical bills that health insurance might deny. Most states require it for businesses with employees.
BEST FOR
- Work-related medical expenses
- Disability benefits
- Lawsuits from employee injuries
Errors and omissions insurance
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.
BEST FOR
- Errors that cause a client to lose money
- Accusations of negligence
- Missed deadlines
Cyber 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.
BEST FOR
- Data breach notification costs
- Data breach investigations
- PR costs for reputational harm
Business owner's policy
A BOP bundles general liability coverage and commercial property insurance at a discount. It protects against the most common lawsuits and business property damage.
BEST FOR
- Slip-and-fall injuries
- Accidents that damage client property
- Stolen or damaged business property
Commercial property insurance
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.
BEST FOR
- Fires
- Storm damage
- Theft
Commercial auto insurance
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.
BEST FOR
- Auto accident injuries
- Property damage caused by your vehicle
- Vehicle theft and vandalism
Fidelity bonds
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.
BEST FOR
- Employee theft or fraud
- Illegal funds transfer by an employee
- Client contract requirements
Looking for different coverage? See more policies.
How much does independent contractor insurance cost?
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
Find business insurance requirements in your state
Select your state to learn about insurance requirements for your small business.
Common questions about insurance for independent contractors
Why is insurance important for independent contractors?
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.
How do I get a certificate of insurance?
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:
- Fill out our easy online application.
- Compare free quotes from top-rated insurance providers.
- Buy a policy and download a certificate of insurance.
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.
Does my profession affect what type of insurance I need?
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.
How can I save money on business insurance?
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.
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