An independent contractor taking notes at home while on a phone call

4 Things to Know About Insurance for Independent Contractors

Mar 9 2021

Unlike regular employees, independent contractors or freelancers work for themselves rather than for a company. They usually have the freedom and flexibility to take on paid contract work for multiple organizations. Excellent examples include healthcare professionals lawyers, accountants, or digital nomads.

This article will tell you how insurance for independent contractors can be a total lifesaver for you in different situations. 

Let’s get started!

Independent contractors sharing a co-working space

1. What Kinds of Independent Contractors Need Insurance?

Most people are skeptical about getting insurance coverage for themselves or, worse, consider it as non-essential until something terrible happens that they wished they had prepared for right from the start. 

If you are a freelance professional and wonder if you need independent contractors insurance, try answering these questions below.

  • Do you handle marketing or advertising for clients?
  • Do you do business and receive clients in your office?
  • Do you work with high-powered equipment, dangerous chemicals, and heavy materials?
  • Do you do any repair, maintenance, construction work with risks from a high place?
  • Do you go into client’s homes to do your job?
  • Do you deal with electricity in your day-to-day tasks?
  • Do you handle any projects in which your mistakes can lead to injury or property damage?
  • Do you create and/or sell any products?
  • Do you work with hair or skin in a way that can lead to chemical or physical injury?
  • Do you prepare food and beverages? 

 If you answered “yes” to two or more of the above questions, an insurance for independent contractors can, without a shadow of a doubt, benefit you!

2. Independent Contractors Insurance Covers Potential Losses 

Working as an independent contractor comes with a lot of perks. You have more control over your work-life balance and choose exciting projects on top of having a promising income potential. Hence, it’s not surprising that there are about 3.11 million self-employed individuals across Canada; this is nearly 10% of the current population in the country. 

However, despite its undeniable benefits, there are also a few disadvantages to being an independent contractor. The biggest one is perhaps the fear of bearing losses alone, resulting from losing clients, unexpected expenses, accidents, and other potential liabilities.

Even if you are in a working setup where clients or larger businesses hire you for specific projects on a contractual basis, there’s little to no chance that they’ll get insurance on your behalf. With independent contractors' insurance, you can rest assured that, no matter what happens, you have a safety net in place to protect you and your life’s work.

3. Commercial General Liability Insurance Is a Must 

Independent contractors, small businesses, and larger companies all bear the same legal obligations and liabilities. For example, as an independent contractor, you can be held legally responsible for damages such as the following:

  • Bodily injury inflicted on a third-party individual (e.g. customers or clients)
  • Third-party property damage while providing services
  • Third-party property damage or injuries because of defective work (e.g. a faulty plumbing repair leading to water damage)
  • Reputational/advertising injuries (e.g. copyright infringement, slander, or libel)

All of the above examples can lead to costly lawsuits and settlements. Ultimately, whether or not damages are ruled as your legal responsibility to which you need to pay settlement, you will still need to defend yourself, and good legal defence can cost a lot. For instance, in Canada, the average cost of hiring a lawyer is $150 - $500 per hour

For this reason, even independent contractors are advised to get commercial general liability insurance for their business or practice. It’s probably the best insurance for independent contractors. Commercial general liability insurance for independent contractors will cover legal fees, medical fees, and repair/replacement fees associated with the third-party injuries and third-party property damage. 

An independent contractor for home renovations 

4. Other Types of Insurance for Independent Contractors 

We can look at commercial general liability insurance as fundamental and beneficial insurance for all types of businesses. However, if you want to take it to the next level, there are other types of insurance for independent contractors that can work for you. Here are some examples.

Professional Liability Insurance or Errors & Omissions Insurance 

As an independent contractor, whether or not you are a licensed professional, it pays to have this type of insurance if you are open to risks of getting sued for negligence and errors. This is a must for nurses, personal support workers, architects, accountants, plumbers, electricians, and other independent professionals.  

Home-Based Business Insurance Plan 

You can think of this type of insurance as “commercial property insurance” for home-based businesses. This insurance policy covers office equipment and any inventory you may have as an independent contractor. It also covers lost income due to business interruption if any covered damage, theft, or vandalism were to happen to your home. 

Tools and Equipment Insurance 

If you are an independent contractor who depends on high-powered tools and machinery for your business, this is for you. This insurance policy covers you in the event that your tools and equipment are lost, stolen, or damaged. The coverage can even be extended to borrowed, rented, and leased tools and equipment. 

Car Insurance 

If your business or practice relies on you having a car to get around, transport equipment, and other commercial purposes, these may not be included in your existing personal car insurance policy if undeclared. Hence, it’s important to make sure that your car insurance covers business activities. 

5. Insurance Bundles Can Save You Money 

As an independent contractor from any industry, it’s natural to be conscious of overhead expenditures, such as rent, utilities, and insurance fees. Though having complete coverage may seem like a considerable expense, it can save you from higher costs when faced with unforeseen events. Furthermore, experienced insurance brokers like those in our team here at KASE can put together cost-effective insurance bundles just for you. 

Get the Customized Insurance You Need 

Identifying your risks as an independent contractor can be pretty overwhelming for anyone, but it isn’t something you need to face alone. Our experts here at KASE Insurance can help you gain more insight on this topic and customize a comprehensive insurance bundle that fits your needs to a tee. In addition, insurance champions can remove unnecessary riders from your plan, saving you money while getting the most benefits out of your coverage. 

Want to know more about insurance for independent contractors like you?  Contact KASE Insurance now!

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