Independent Contractor Liability Insurance: Cost & Quotes From $11/mo

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15% of the American workforce are independent contractors. With so many workers choosing to be independent, liability insurance coverage for independent contractors is also becoming more vital to a functioning workforce. 

Risks and liabilities for these contractors can be costly to remedy.  Liability insurance for self-employed contractors protects against the disadvantages of working independently as a self-employed professional in the IT, construction, or any other industries.

Do you consider yourself as an independent contractor for construction and other projects? That said, you might want to have liability coverage just to be safe while installing cabinets, working on masonry, or installing solar panels. This article will examine liability insurance questions and concerns you need to know to make intelligent decisions about the right policy you need as a general contractor or any other type of contractor out there. These include:

• Definition of liability insurance for independent contractors

• Independent contractor liability insurance requirements

• The different types of liability insurance for independent contractors

• Cost of liability insurance for independent contractors

• Companies that offer the best independent contractor liability insurance 

What is Liability Insurance for Independent Contractors?

Liability insurance for independent contractors protects from liabilities and legal costs when independent professionals are accused of committing actionable harm to clients and other third parties.

 It is also sometimes called 1099 liability insurance, which gets its name from the 1099 contractor forms that self-employed workers fill out during tax time. The US Internal Revenue Service IRS defines a 1099 contractor as someone who is a business owner or contractor that provides services to other businesses while being self-employed. Liability insurance for 1099 employees protects against the various unique risks that come with operating their business. 

Examples of different types of liability insurance for individual contractors include things like:

• General liability insurance

• Public liability insurance

• Product liability insurance

• Personal liability insurance

• Employers liability insurance

• Professional liability insurance

• Cyber liability insurance

These policies each cover different aspects of liability that contractors can become exposed to. As the number of independent contractors grows in the economy, these policies have evolved over time to grant comprehensive coverage. 

Independent Contractor Liability Insurance Requirements

Independent contractor liability insurance is not legally required to do business in any US state. Despite this, there are situations in which you may be required to have a form of liability insurance when working for a client.

Independent contractor liability insurance requirements sometimes coincide with the obligations that self-employed workers might have in their contracts. Sometimes a company may require that an independent contractor have insurance coverage as part of their work for them. 

If requirements are met, companies may also add independent contractors to their insurance policies as additional insured. This is different from the named insured beneficiaries named on their Insurance policy.

General Liability Insurance for Independent Contractors

General liability insurance for individual contractors is an insurance contract where insurance companies will cover certain costs and risks that they might encounter through the course of work. General liability insurance for independent contractors covers business risks like customer injury, property damage, advertising injury, and lawsuit expenses.

Example Situations Where Independent Contractors Can Claim Their General Liability Coverage

A few example situations where general liability coverage for independent contractors can come in handy include:

• You are a self-employed photographer whose customer slips and falls during a photoshoot and requires medical treatment. General liability coverage could cover a legal bodily injury claim

• While working as a self-employed life coach, if a customer feels you misrepresented yourself, bring a legal suit of emotional distress from your advice. The legal fees could be covered under general liability coverage

What Does General Liability Insurance Mean in The Us?

In the US, general liability insurance refers to an insurance policy that protects the policyholder against legal fees from bodily injuries, property damage, or medical expenses that the policyholder might be responsible for.

What is the Minimum General Liability Insurance In California?

General liability insurance is not required in California by law. The California Department of Insurance oversees insurance requirements for insurers and businesses. However, it pays to have a $1 million general liability coverage as protection.

What Are the Limits To Liability Insurance in California?

Liability insurance in California offers limits starting at $100,000-$500,000 at the minimum. Comprehensive coverage amounts are available starting at $1 million-$5 million.

Professional Liability Insurance for Independent Contractors

This independent contractor insurance coverage is a form of insurance that protects against lawsuits over the quality of the contractor's professional work. This insurance is also known as independent contractor errors and omissions insurance because of what it covers.

This liability insurance for individual contractors is sometimes necessary for fulfilling client requirements that might ask for proof of insurance. Someone with this type of insurance also gets a leg-up in the job market because this guarantees the client can get something in case the project goes sideways.

You need professional liability insurance as protection against claims for breach of contract, negligence, violation of confidentiality, missed deadlines, inaccurate advice, and violation of dealing.

Example Situations Where Independent Contractors Can Claim Their Professional Liability Coverage

Here are some of the situations where this independent contractors liability coverage can help:

• You are a self-employed writer who has failed to deliver services that you promised to your client, which caused them large financial losses. This insurance would help pay for your legal defense.

• An independently contracted architect makes an oversight in building materials that cause damages to their client’s building. Professional liability would help cover the legal costs and reimbursement for the client’s losses

What is Independent Contractor Malpractice Insurance?

If professional liability insurance is designed for healthcare professionals, then this is called malpractice insurance. Independent contractor malpractice insurance is designed for personal assistants, private doctors, therapists, and other similar professions. Unlike the usual professional liability policy, malpractice insurance for independent contractors can be added with HIPAA coverage.

Public Liability Insurance for Independent Contractors

Public liability insurance for independent contractors is an older form of general liability insurance. The two types of insurance are extremely similar, but public liability insurance focuses on protecting the independent contractor against claims from the general public. Insurance companies will typically not offer public liability insurance anymore because it has been replaced by general liability insurance plans.

Public liability insurance also helps you cover a claimant’s medical treatment or reimburse a damaged property. This one doesn’t grant coverage against advertising and reputational injuries.

Example Situations Where Independent Contractors Can Claim Their Public Liability Coverage

Here are some of the situations where this independent contractor’s liability coverage can help:

• A self-employed plumber installs a toilet in a public restroom that breaks and causes people to slip. Public liability could help cover the costs of defending the plumber in court and any damage judgments

• An independent lawn mowing worker gets into an accident with lawnmowing equipment that affects the public. Thanks to public liability, any claims brought by the public would be covered

Product Liability Insurance for Independent Contractors

Product liability insurance for independent contractors protects against possible lawsuits resulting from product defects that can put the contractor in the crosshairs of a legal liability claim. Typically coverage options include things like design defects, manufacturing defects, improper warnings, and strict customer liability. Most insurance companies include some level of product liability coverage in their general liability policies.

Example Situations Where Independent Contractors Can Claim Their Product Liability Coverage

Here are some of the situations where this independent contractor’s liability coverage can help:

• A self-employed toymaker creates a toy that a customer has injured themselves with. The toymaker can use its product liability coverage to cover legal costs and liability judgments

• An independent board game designer creates a product that ships to customers. During the manufacturing process, a toxic material was used for packaging the product. Product liability would ensure that any medical liability claims and court fees would be covered by the board game designer should a customer choose to sue

Employer’s Liability Insurance for Independent Contractors

Employer’s liability insurance provides protection when an employee decides to sue after sustaining a work-related injury or disease. Insurance companies offer this as an add-on to a general liability policy or workers compensation insurance policy. You can also find carriers that automatically include employer’s liability insurance as an automatic coverage in their workers compensation insurance for independent contractors.

Example Situations Where Companies Can Claim Their Employer’s Liability Coverage

Here are some of the situations where this independent contractor’s liability coverage can help:

• An employee decides to sue for bodily injuries after falling from a height

• An employee decides to sue for lost wages and suffering after falling ill due to chemical exposure

• An employee decides to sue for psychological trauma after a grotesque work-related accident

Cyber Liability Insurance for Independent Contractors

Cyber liability insurance for independent contractors and protects self-employed workers from costs resulting from a cyber-attack, data security breach, or other internet-related incidents. Freelancers are often easy targets for cyber attacks because they generally don’t have security protocols to protect their work devices. They often use personal devices for work, further increasing the risk of an attack.

Example Situations Where Independent Contractors Can Claim Their Cyber Liability Coverage

• A self-employed writer has a targeted cyber attack on their work device that prevents them from meeting a writing deadline. Cyber liability can help recover lost wages or expenses

• A contract worker becomes the victim of a phishing scam that holds your data for ransom. This type of insurance policy can help the worker pay the ransom to get their valuable data back

Personal Liability Insurance for Independent Contractors

Personal liability insurance is a coverage included in homeowner’s insurance policies. If someone gets injured while in the premises of the policyholder's house or any other private space that’s covered, this will cover medical treatment costs. Further coverage applies for attorney fees and other related costs in case the injured party files a lawsuit.

Personal liability insurance isn’t a business insurance policy. And in case you’re looking for personal liability insurance for independent contractors, then sign up for a public liability or general liability insurance package.

Independent Contractor Liability Insurance Cost

The average independent contractor liability insurance cost is $34 per month or $408 per year for a $1 million general liability coverage underwritten for low-risk professions. The cost of your independent contractor insurance policy will change depending on the 

• Types of coverage you need

• Your business assets

• Risk of your job

• Claims history

• Business history

• Location

In connection, here’s a table showing the rates of the best companies for independent contractor liability insurance: