As a small business, there is a large array of different employment types you will come across. From full-time employees to contractors and vendors, it can be difficult to navigate to whom you owe certain liabilities. In fact, for many small businesses, independent contractors are a necessary and important piece of getting off the ground. First-time owners are likely unaware of what insurance they need to have and what insurance they should expect their contractors to have on their own.
Insurance to Require for Independent Contractors
When an independent contractor makes a mistake, it could cost the business owner a lot of money. This is particularly true for technology-based technology as a third-party installer could make vital mistakes in networking that your company could be liable for. Insured contractors have the opportunity to recover some of the damages through a lawsuit. However, uninsured contractors leave little room to do so. Two important coverages for this purpose include:
- Professional Liability Insurance. Also known as Errors and Omissions Insurance, this coverage includes mistakes and oversights that could be made by a contractor when they are performing a professional service, such as the networking example.
- General Liability Insurance. Accidents, especially those involving property damage, are covered by this general insurance. This would also cover one of your own employees sustaining a physical injury caused by the contractor or their work. Often, this will also include Product Liability for physical products created or installed by the contractor that inflicts bodily harm.
Checking Contractors’ Insurance Policies
Like any small business, a contract is likely to have their own insurance to cover when things go wrong. Because of this, those hiring a contractor shouldn’t feel awkward asking for proof of the insurance. Even further, they are likely used to such a request. Simply tell the contractor your insurance requires proof and they can send a Certificate of Liability, which is easily downloaded as a PDF file. For the extra cautious, the insurance carrier can be called to confirm the insurance policy using the policy number on the certificate.
Should I Cover Contractors in my own Small Business Insurance?
Contractors should have their own insurance, but it can pay to be prudent. Your own insurance will give the ability to add subcontractors or additional insureds. If you are hiring extra helpers for a service you are providing, it is both smart and potentially required for you to do so.
Need help figuring out your insurance policy, or looking for a better small business insurance policy to cover contractor liability? Contact us today to talk to an ABCO agent.