In 2020, whether despite or because of the coronavirus epidemic, more than 4 million new businesses were created in the United States. Most of these businesses have fewer than 10 employees, the majority of which are individual operations. In fact, a huge increase has occurred in the online workplace with the increase of independent contractors.
Now that things are back to normal, many people have decided that they prefer to work for themselves. Maybe you are one of them. Whether you have chosen to be an independent contractor working online or providing business skills locally, there are several important things you need to know about commercial liability insurance for contractors.
Business insurance keeps you from having to pay a lot of money when things go wrong. General liability coverage combines several forms of protection into one policy.
Physical injuries
Physical injury is a risk for independent contractors who work on site or have locations open to the public. An accountant or doctor usually operates from a public office, for example, while an auctioneer, plumber or welder works on site. If someone is injured on or near your workspace, whether or not you were responsible for the injury, they can sue your business. Say, for example, that someone walks in through the front door of your office, trips over a doormat, and twists their ankle. They may need a trip to the emergency room, x-rays, surgery, follow-up care, etc. They will expect your business to pay for these expenses. When you have a general liability insurance policy, that coverage pays for these expenses for you. They can pay legal fees to defend you in court and also pay for settlements or judgments against you. Without this coverage, you have to pay these costs entirely out of pocket.
Damage to property
Another risk that small businesses face on a regular basis is property damage. If something happens to a customer’s property and they blame your business for the damage, you may need to go to court to defend yourself. And if things turn against you, there may be significant fees and settlements to pay on top of legal fees. Let’s say you are a independent welding contractor, and a customer’s utility trailer was left in your lot for repair. One of your employees backs up in this trailer while moving a piece of equipment and damages the trailer. Your customer will expect your business to pay for repairs or to replace the trailer if the damage is severe. General liability insurance will cover these expenses for you instead.
Products and services
Protecting products and completed transactions is for those rare times when something doesn’t last. Maybe you are a freelance landscaping contractor and recommended a mulch your client was allergic to. Or you are a self-employed electrician whose job has failed prematurely due to poor quality materials. When problems like this arise, liability insurance has you covered. He pays the legal fees when you have to go to court. It also pays for judgments and settlements against you. Not only does this pay for the expenses, but it frees up your time so you can continue working and earning an income instead of facing legal headaches.
Advertising injuries
Advertising injuries and personal injuries are things related to advertising your business. The most common issues covered by this section of your policy are slander, libel, and copyright infringement. Maybe you are a freelance web designer creating a social media ad for your services. You are using archival photographs that include a person in the photo. The image you used was for commercial use, but your business is continued by the person pictured. They claim that you had no commercial right to use their image. If you have not intentionally infringed copyright, this part of your commercial insurance policy will pay the associated costs.
Premises for rent
When an independent contractor rents or leases commercial space for business operations, the landlord often requires insurance coverage for the rental premises. This way, if something happens to cause damage to the property, there is a remedy to repair the damage. For example, a freelance mechanic can rent a storage room for his tools and supplies. He drops something and causes a big crack in the concrete floor. The owner of the property would want this floor repaired, and he would expect the mechanic to pay for those repairs.
In conclusion
As you can see, general liability insurance is a very important tool for small businesses for independent contractors. This is true even for online entrepreneurs. Why? Because online entrepreneurs use advertising, recommend products, and provide services. And sometimes claims are made against companies even when they are not true.
Maybe you are a freelance accountant who works only online. You can still face legal action that claims someone was injured on your business premises. Without general liability protection, you would be left alone with the paperwork, court appearances and legal fees. Even if you win the claim, you still don’t have the time, cost, and frustration to deal with it.
So protect your independent business with insurance from the start. General Liability is a relatively inexpensive way to provide basic business insurance coverage and overall peace of mind.
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