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Independent Contractor Insurance: Make it Your Own

Jason Metz

Independent contractors can be electricians, graphic designers or residential painters, just to name a few. Depending on your business, there are several coverage types to customize for independent contractor insurance.

A business owners policy (BOP) is a solid start. This typically includes business general liability insurance, business income insurance and business property insurance. Then you can add customizable coverages.

Basic independent contractor insurance coverage types

Commercial general liability insurance – Independent contractors liability insurance covers your business in case of injury or property damage lawsuits. For example, you could accidentally damage a client's property.

Business interruption insurance – If a problem covered by the policy, such as theft or fire, causes you to temporarily close or relocate business, this helps cover expenses. It can also help replace some lost business income.

Commercial property insurance – This covers your building and its contents. It typically also covers outdoor fences and signs. Contents might include tools, equipment, computers and office furniture. Some independent contractors run their business out of their homes. You may want to think about contacting your home insurance agent about an "in-home business endorsement." Keep in mind, the endorsement might have lower policy limits than a business policy.

Additional independent contractor insurance coverage types

Depending on your business and the services you provide, it's a good idea to speak with a business insurance agent to identify the insurance types that best cover potential problems. Here are some common coverage types for independent contractors.

Professional liability insurance
This covers you in case of lawsuits claiming you did not provide promised or expected services. For example, a client might say you did not complete a job to their expectations. Also known as errors and omissions insurance, this typically includes the cost of a legal defense, judgments and settlements, even if the claim has no merit.

Commercial auto insurance
This covers the vehicle you drive for work. For example, you might drive to appointments or transport work to a client. Personal auto insurance typically doesn't cover accidents while working.

Equipment breakdown insurance
If your business relies on key pieces of equipment, such as power tools or computers, this helps cover the cost to repair or replace broken equipment. It also helps replace some lost income if business was interrupted.