Risks Faced by Independent Contractors without Insurance
Your risk of incurring huge losses as the result of a lawsuit increases if you do not carry insurance. You can still be sued, but if you lose you will be responsible for any damages you are held liable for, and for your legal fees as well.
Not having insurance causes other issues too. Clients may be reluctant to hire you if they learn that you are not insured. They may also take your business less seriously if you do not carry insurance. A contractor that does not have insurance is often perceived as not being very business savvy or experienced, or as someone who cuts corners. You may not be able to legally work in some locations if you are not insured.
Commercial Auto Coverage
Commercial auto coverage protects not only the 1099 contractor but also the hiring entity in the event an accident occurs while the contractor is driving as part of the job he was hired to do. For example, if a 1099 contract landscaper causes an injury accident on his way to pick up plants for a client’s project, his commercial auto coverage will take care of the accident costs, rather than have the client held liable.
Occupational Accident Insurance
Disability insurance is a prudent insurance type for 1099 contractors to purchase. It is insurance that will pay a prestated weekly benefit to the contractor in the event the contractor is unable to work due to a disability. It is not only the contractor engaged in potentially dangerous work who needs disability insurance. A freelance writer, for example, can become disabled by falling in a parking lot, getting hit by a car or requiring back surgery. Disability insurance typically requires a waiting period following the event that causes the disability before the policy begins to pay. The premiums fluctuate depending on the chosen waiting period length, the percentage of settlement that will be paid each week and the general riskiness of the contractor’s chosen occupation.
NOTE: All of the Insurance products described above are indications of the products and programs that can be made part of our program portfolio and require an application, underwriting and approval before they can be quoted and bound. Any insurance related coverage must be represented by one of our approved and appointed Licensed Insurance Agency partners.