When an independent contractor working for your business makes a mistake, your business could be held accountable. For adequate protection, both your business and your contractors should carry professional liability insurance.
Why do your independent contractors need professional liability insurance?
Professional liability insurance covers the legal costs of lawsuits over work mistakes, including:
- Failure to deliver promised services
- Negligence in providing professional services
- Poor, incorrect, or incomplete work
- Errors and oversights
Since independent contractors working for your business are often just as likely to make these types of mistakes as employees, your contractors should have professional liability coverage.
When is an independent contractor liable for a mistake?
If you hire an independent contractor to complete work for a client and the contractor makes a mistake that causes financial damages, the client might sue both your business and your independent contractor.
For example, if an event planner hires a caterer who serves contaminated food at a client’s event, the client could name both parties in a professional liability lawsuit. If an independent contractor doesn’t have professional liability coverage, the business that hired the contractor might be forced to take on their costs in a professional liability dispute. To protect your business, your contractors should have professional liability insurance to pay for their own legal costs, including any settlements or judgments.
If you decide to sue your contractor for the damage their mistake caused to your business, it will also be difficult to collect a settlement or judgment if the contractor doesn’t carry professional liability insurance.
How does an independent contractor get professional liability coverage?
Your contractors can carry their own professional liability policy. A contractor can compare quotes for leading carriers and purchase professional liability insurance with Insureon's online insurance marketplace. To make sure a contractor is covered, request a certificate of insurance from the provider. To ensure your contractors carry this policy, you can include it in the terms of a contract.
Save money by comparing quotes with Insureon
Complete Insureon’s easy online application today to compare professional liability insurance quotes from top-rated U.S. companies. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.