General Liability Insurance for Independent Contractors

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The benefits of contracting can come with some notable risks. Although a good contractor can make excellent money doing a job they love, the nature of the work can create liability concerns that are difficult to mitigate without particular types of insurance. Perhaps the most common type of insurance for contractors, and the one contractors should consider early on after starting their business, is General Liability.

What is General Liability Insurance?

As stated, General Liability is one of the most commonly purchased types of insurance. General Liability is designed to help mitigate the liability risks that can occur as a result of third-party claims. For a contractor, these will often be claims associated with customers or clients, and will more often than not be directly related to either property damage or bodily injury.

That said, General Liability covers more than just property damage and bodily injury claims raised against your business. This insurance is also designed to cover personal and advertising injury claims, and can also cover instances of data loss, financial loss from customers if your contracting work results in a loss for the customers and even situations where you are unable to provide contracted services to a client fully.

General Liability is a valuable insurance policy as it covers many of the primary liability concerns associated with the work and services you provide.

When General Liability is Needed

You’ll find that General Liability is generally needed from the start of your business. However, there are specific criteria you may meet that might make it even more valuable for you. If your business:

  • Handles heavy equipment around customers’ property
  • Provides contracting work where progress interruptions may occur due inclement weather
  • Performs subcontracting work that requires a Certificate of Insurance
  • Frequently has customers come onto your property

...then you will likely need to purchase this type of insurance.

When customers come onto your property, they may accidentally be injured while on the site. Something as small as a slip and fall incident may result in a customer filing a claim against your business for an injury. General Liability will help mitigate this risk by covering the legal expenses and medical expense payouts if this occurs.

Particularly of concern for contractors is the possibility of damaging a customer’s property. Depending on the nature of your contracting work, this may be more or less likely to occur, and it can be costly. For example, if a worker leaves an oily rag in a customer’s garage, it may catch on fire on a hot day, causing damage to your customer’s property. Your business would be held liable for the damages. Depending on the extent of the damage, this could be extremely costly, and potentially put an uninsured contractor out of business.

There may also be times you are unable to meet agreed-upon deadlines for the work you’re contracted to perform. Issues such as inclement weather can shut down all operations and put significant delays on projects. If that happens, the client may claim that contracted work was not performed.

Additionally, there is a good chance that some customers will require a Certificate of Insurance. Especially if your business provides subcontracting work to others, those businesses and organizations may require a Certificate of Insurance as proof that you are properly insured, allowing their organization to have a fallback in case of a third-party claim. Most organizations that use subcontractors prefer not to assume the risk themselves, even if they do trust the contractors they’re using to perform the work.

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Which Contractors Need General Liability?

Most contractors will need to purchase General Liability coverage at some point. Whether your contracting work is in construction or IT, there’s a chance that you’ll need to produce a Certificate of Insurance at the very least to perform the work. And if your business is one in which the work you perform carries a significant amount of risk for bodily injuries or property damage, acquiring General Liability is a great way to mitigate risks.