It may sound like a fantasy to be your own boss and set your own hours. You choose your clients, set your own working hours, and create your own timetables. It makes it simpler for you to balance your work with your personal activities, including engaging in your hobbies and passions and spending time with your family and friends.
Alternatively, it also involves a greater burden of responsibilities. You must find consumers, manage hours, set an agenda, and manage your finances appropriately. Every independent contractor needs independent contractor business insurance when handling their money if they want to minimize risks and maintain financial stability.
Business Insurance for Contractors
As a contractor, your clients rely on you to carry out their construction plans, adhere to deadlines, and guarantee that all micro and macro projects are completed. These kinds of responsibilities expose your business to specific hazards.
You may protect your professional assets and people from unforeseen activities with contractors’ business insurance. You can feel confident in the knowledge that you are protected in the event that one of your clients chooses to sue you or if your asset sustains damage as a result of a covered risk.
What Does An Independent Contractor Actually Do?
A freelancer who works for a third party as a non-employee to complete a specific assignment is known as an impartial contractor. Due to their non-employee status, independent contractors cannot rely on their employers to provide insurance for them or include them in their existing business insurance plans.
This applies to numerous work perks, including health insurance and agency-sponsored retirement obligations.
Contractors’ Commercial General Liability Insurance
General liability insurance is unquestionably the most crucial sort of protection in contractor business insurance. All firms, regardless of size, often have this kind of coverage.
The Hartford offers a brief summary of the ways that this insurance can shield you against covered damages as an independent contractor. For instance:
- If a consumer enters your business, trips, and falls, injuring themselves, general liability insurance might assist in paying for their medical expenses.
- If one of your staff members accidentally damages a client’s property, general liability insurance can help with the expense of repairs.
- General liability insurance might assist in defraying legal costs if someone else makes a claim against you for defamation or libel.
Cost factors for Contractor General Liability Insurance
The price of general liability insurance is influenced by some factors, including:
- The Extent of Your Business’s Activities: This is a reference to the number of locations and your entire company volume.
- The Nature of Your Business: For instance, an independent caterer would pay more for liability insurance than an independent video editor due to the increased risks involved with regularly delivering food to large crowds of people as opposed to performing a position where there’s little to no potential for causing physical harm to clients.
- Several Years of Expertise: The longer your firm has been in existence, the less risky you are to insurance companies.
- No of Employees: Your contracting firm becomes larger as you add more personnel, which entails greater risk.
- Location: If your company is located in a high-risk zone, such as one with a lot of crime, your insurance premiums may be higher.
- Claims history: Low insurance premiums might result from a history of few or no insurance claims. On the other hand, frequent prior claims may result in higher insurance premiums.
Why Does An Independent Contractor Need General Liability Insurance?
In all forms of commercial business insurance, general liability is the policy that receives the most claims. The Hartford examined a million cases and discovered that general liability covered around 40% of small company claims.
Here are three arguments in favor of having this coverage in case you still need them:
- It protects you and your business: Independent contractors are subject to the same legal requirements and liability risks as bigger businesses. For causing physical harm, property damage, or advertising harm, they may be held liable. A lawsuit’s associated costs and damages are aided by general liability insurance.
- Your presence is required by our clients: Before they enter into a contract with you, your clients could demand proof of your general liability insurance. They could be held liable for suspected misconduct or accidents brought on by you or work without this insurance.
- It may be required by law: Independent contractors in some areas, including construction, may be required by state rules to hold general liability insurance. It’s usually preferable if you and your customer both have individual general liability insurance policies.
Average Total Costs of Contractors’ Business Insurance
General liability insurance for independent contractors costs, on average, $29 per month or $344 annually. Incorporated into a business owner’s policy (BOP) for industrial property insurance, independent contractors pay an average of $42 per month or $500 annually.
Ninety percent of independent contractors, according to Tech Insurance, spend less than $50 per month, or $600 annually, for commercial preferred liability coverage. However, the actual costs will be entirely dependent on the type of coverage you choose. Different occupations carry different levels of danger. Furthermore, it’s important to understand that the total cost of coverage will always rely on factors such as:
- Credit Rating
- Previous Court Cases
- A Criminal Record
- Number of Hired EmployeesÂ
- Years of Experience
Do I Need Contractors Business Insurance If I Have Builders Risk Insurance?
It varies! Both builder’s risk insurance and contractors’ liability insurance provide coverage for the same range of risks, types of damages, and parties engaged in a construction project.
But unlike contractors’ liability insurance, which is often purchased by the contractors themselves, builders’ risk insurance is typically purchased by the project’s owner.
Additionally, building recovery or enhancement projects can be covered by contractors’ business insurance, but new projects without an existing physical structure may not be. On the other hand, it is possible to purchase builders’ risk insurance without a building being in place.
How Can You Locate an Agent for Contractors Business Insurance?
It’s crucial to make sure your insurance choices support your financial objectives. A knowledgeable contractor’s insurance agent can help you through the complexities of insurance products by thoroughly outlining their advantages and coverage. It may indicate that you haven’t discovered the appropriate fit if you experience stress to make a decision straight away.
It might be difficult to find the best contractor’s business insurance agency, especially one close.
These agents have unique traits that are suited to the various requirements of their clients. When looking for an agent, keep in mind that a good one does more than just sell policies. Therefore, it is your responsibility as a discriminating buyer to exercise due care in choosing an agent who can meet your coverage needs.
Consider the following actions when choosing a Possible Agent for collaboration:
- Spend some time becoming acquainted with their selection of goods and services.
- Ask for and carefully review references to obtain an understanding of the person’s working style.
- Examine their history of providing exemplary customer service.
- Examine the variety of insurance choices they provide.
- Learn more about the insurance providers they represent.
It’s important to note that when you work with agents listed on United Finance Insurance, you can trust that they are among the best in their field and in your neighborhood. The necessity for the aforementioned screening procedures is eliminated by their knowledge and professionalism.