Working as an independent contractor presents a range of unique challenges. One of those obstacles is protecting yourself and your small business through the right forms of insurance. Contractor insurance isn’t required in the state of Texas. You can easily save money by opting to not enroll in virtually any commercial insurance coverage. You may also find yourself paying an insurmountable amount of money if you are uninsured and facing a loss.
Insurance is important for companies big or small as a safety net against a range of perils including liability caused by you while performing a job. Many different forms of insurance exist and understanding your risks is the first step in finding the right insurance coverages for your needs. Having too little insurance may save you money in the short term, but it can also leave you vulnerable in the event of a loss. Companies with too much insurance end up overpaying for protection they may never use and losing money in the process. Take a closer look at your needs and the available options contractors have to stay protected.
How Much is Contractor Insurance?
To determine the amount you’ll pay for contractor insurance, you’ll need to examine a variety of factors. This is because “contractor insurance” is more of an umbrella term that describes a range of insurance products available to individual contractors, rather than a singular coverage. Most commonly, contractor insurance may refer to general liability insurance, and more on that later, but there are many different coverage options available.
The way insurance companies determine your premium is by ultimately concluding how much of a risk you are as a client. If you have more risk, you’ll likely pay higher premiums, and if you possess less risk, you can expect lower rates. Common factors that can affect your premiums include:
- Where your business is located/conducted.
- The type of work you perform.
- The size of your company.
- The amount of coverage you require.
- The amount you pay for your deductibles.
There are additional factors, but these are a good starting point to understand how rates are affected.
Further complicating things, it is important to remember that each insurance brand will use its own methods and calculations to determine the amount of risk you hold. For these reasons and more, we will see a range of insurance rates presented for contractors even within the same industry.
General Liability Insurance for Contractors in Texas
When things go wrong while you are performing the job you were hired to do and a loss of some sort occurs, your small business will find itself against some rather large problems. Liability is a tricky and expensive hurdle to jump. General liability insurance helps you restore such losses without having to cut into your profits.
Many different scenarios can arise, but when you are liable for causing injury, property damage, or reputational harm to another business or an individual, a general liability policy is a safety net to help limit expenses. Although it isn’t required by law, many contractors may find it hard to earn a job without having the right insurance policies in place, specifically general liability coverage. Here are some common examples of how general liability insurance for contractors can help protect your small business:
|A customer is injured while visiting your office, as a result of your work while on their property, or as a result of your product/service.||Bodily injury liability helps cover medical bills and other expenses such as a loss of income if you are held liable for another party’s injuries due to negligence.|
|While on a project, you cause damage to your client’s home or business.||Physical damage liability will be there to absorb the cost of restoring this loss. You can easily rely on your general liability insurance policy to pay for repairs and right the wrong.|
|Your client is suing you due to a dispute stemming from a loss such as an injury or property damage.||Legal and administrative expenses can add up quickly when facing a lawsuit or filing a claim. General liability covers such costs.|
|Your company runs an ad campaign that accidentally causes the reputation of a competitor to take a hit.||Advertisement and reputation disputes are covered through a general liability insurance policy.|
|While creating a website, you end up misusing the content of a photographer in a manner that is inconsistent with the image’s copyright.||Copyright infringements can be tricky and are evolving thanks to the ever-growing way we connect online. A general liability insurance policy protects you during such missteps.|
The key to remember is that general liability insurance for contractors is a safeguard against losses caused to other parties. If you were to cause damage to your own property or a fellow worker, you’ll likely need additional forms of insurance to remain covered. Intentional acts are also not covered and excessive losses may also require additional insurance options to avoid coverage gaps.
Commercial Auto Insurance Covers Contractors
While commercial insurance policies are always recommended, they are often optional. Commercial auto insurance, however, is not. In the state of Texas and virtually every other, you’ll need a commercial auto insurance policy to drive legal while conducting business. Even if you have a personal auto insurance policy, if you are involved in an accident, your coverage will not apply and you will be required to restore any losses out of your pocket.
This can be a complicated area for contractors who may often use personal vehicles to, from, and during a job. If you are operating a vehicle for anything work-related, you’ll want a commercial auto insurance policy. The bare minimum will provide you with liability coverage for both bodily harm and property damage which is necessary to fulfill the requirements of state laws. Additional coverages can help you in a variety of ways including roadside assistance, restoring your vehicle and property after an accident, gap coverage, and more. Speak with your insurance agent to help best understand the protections you and your vehicle need to get the job done all with peace of mind.
Contractors Have Coverage Options
Different perils require different types of insurance. As a contractor, you can face everything from liability issues that are so large, they extend past your typical coverage, interruptions to your business, personal injury concerns, and more. Explore some of the affordable commercial insurance options contractors have available:
- Commercial Property Insurance- Independent contractors can often find themselves in a variety of locations, however, many still use shops, storefronts, warehouses, etc. as a headquarters to get the job done. Not to mention equipment and other forms of property. Your commercial property insurance policy protects you from losses that may destroy your property making it easier to restore your company and move forward.
- Commercial Umbrella Coverage- Insurance policies come with limits. These limits help keep insurance affordable and outline how you are protected and against which perils as well. When a loss is suffered that is so large it will take more than your coverage to recover from, you’ll need to pay out of pocket to restore it or rely on additional coverage options. A commercial umbrella policy helps contractors restore losses they are reliable for with an extra layer of protection.
- Business Interruption Insurance- When physical damage causes your work to become interrupted, this can mean a loss of inventory, jobs, and income. Independent contractors are often hired for specific jobs, and once they are over, it’s over. Any interruption to your business can be a huge setback and this coverage can help mitigate such financial blows.
- Business Crime Insurance- Theft and other crimes can harm your operations and leave you feeling violated. It is important to remember that the Internet is also changing the way criminals can strike your business. A business crime insurance policy helps you recover faster so that you can focus on the next job.
- Workers’ Comp- A workers’ compensation policy can protect you from paying medical bills and the loss of income due to injury while fulfilling a job for your client.
No matter which level of coverage is needed, there are plenty of insurance options available for you. Contractors deserve protection and can gain as much through understanding their needs and comparative shopping.
Contractor Insurance For One Job
Each contractor operates differently. There is a wide range of industries and jobs out there, and sometimes, you’ll need a specific form of coverage to perform a task. You may also find that certain insurance agencies only cover specific industries. This is why working with a singular insurance brand can be frustrating for independent contractors. Here at Freedom Insurance Group, our agents work to provide you with the right coverage across a wide range of insurance providers. We can help you locate the appropriate insurance solutions no matter which industry you work in.
Save Money on Your Contractor Insurance
Freedom Insurance Group helps contractors protect themselves while saving money. Since 2005, we’ve worked with small businesses like you to deliver an average savings of 40%. Our partnerships with more than 25 top-rated insurance carriers allow our agents to pinpoint a personalized insurance plan for you at the lowest possible cost. Quality insurance products at a price that won’t break the bank. Get a free business insurance quote with our easy-to-use tool, or contact one of our agents today!