Hiring an independent contractor might help you accomplish tasks, but it's crucial to know their insurance status. Any contract work that involves risks requires a contractor insurance policy. If you are looking to get some contract work done, here are some important points about contractor insurance.
When your business subcontracts with another firm, you may risk-bearing losses resulting from their mistakes. That's why it's important to check whether they at least carry small business owner insurance with liability coverage. You should also make sure whatever work you assign is protected by their coverage, or you must have coverage as a backup.
Professional liability insurance and general liability insurance are two crucial insurance coverages your contractors and partners must-have. Professional liability insurance covers mistakes and oversights your contractors make when performing professional services, including IT security work, consulting, or other related services.
General liability insurance is the most common form of small business coverage, as it pays for a wide range of legal disputes and damage resulting from accidents. It also includes product liability, which pays for complaints about product defects.
To ensure your contractors are adequately covered, check their insurance. Make sure they submit a certificate of liability insurance. It's also important for contractors to use appropriate language in contracts that require B2B entities to have liability coverage. Those that don't have the proper coverage will either admit it or act evasively about it. Either way, it's best to move on and develop relationships with entities that carry the appropriate coverage.
Any company you contract or subcontract with should have their own small business owner insurance. It assures that they have the right protection against accidents that may happen on the job site. You can add subcontractors to your small business insurance policy as "additional insureds." It might be a short-term solution until the other party buys the coverage.
Small businesses typically don't need to carry workers' compensation for independent contractors or temporary workers. It also depends on your state's insurance requirements, as each state has specific rules and definitions of an "independent contractor." Generally, Workers' compensation is required in all states for employers, even with one employee.
In some cases, a court might decide whether a certain job relationship involving independent contractors constitutes regular employment requiring workers' compensation. This scenario might be applicable for long-term relationships that are integral to both parties.
If you have any questions about your contractors insurance policy, contact us here at Humble & Davenport Insurance Brokers, Inc. Our team will assist you in customizing your insurance plan according to your needs.