Once your business is up and running, you might come to the realization that you can’t do it all, and you’ll need more help. Instead of hiring a full-time employee to handle some projects, you might opt to go for an independent contractor, vendor, or other third party. This is a great choice for small business owners, to save money and grow your business. When you go this route, it’s important to understand the downfalls if you don’t properly insure independent contractors you hire.
Insurance Options
If you decide to expand your workforce with independent contractors, you might have to upgrade your commercial insurance. If an independent contractor you hire makes a mistake without insurance, you could end up paying a lot of money.. That’s because the client can sue both you and the contractor for financial damages. With all that said, it is important to be protected in these instances. So you have two options:
Hire an insured contractor: If something goes wrong and you are sued, you can sue the contractor and recoup some of your losses. You can check if they have coverage by reviewing their certificate of liability insurance.
Add your independent contractor to your general liability policy as an additional insured: This means that they are covered by your insurance for the duration of the job. Make sure you have the right commercial insurance policies. This means a policy covering temporary staff and independent contractors for any work they perform for you.
Key Benefits of Independent Contractor Insurance
When working with independent contractors, having the appropriate insurance coverage in place can provide critical protection for your company. Here are some major advantages of ensuring your independent contractors are properly insured:
Financial Protection from Lawsuits. If an independent contractor has an accident or makes, getting them insured protects you from major financial losses. Without appropriate insurance, your company may be held liable for damages, legal fees, and compensation. Independent contractor insurance assures that you are not solely responsible for these charges.
Coverage for Errors and Omissions (E&O). Contractor errors and omissions insurance (E&O) protects against claims based on mistakes, negligence, or inability to deliver services as promised. This coverage protects your company against the financial consequences of contractor errors, protecting you from costly legal fights.
Liability Insurance for Third-Party Injuries and Property Damage. When independent contractors are covered under general liability insurance, it provides protection against third-party claims for bodily injuries and property damage. Whether an accident injures a client or damages their property, general liability insurance covers such instances, reducing your financial exposure. You can add a contractor to your policy as an “additional insured.” That way the policy covers accidents, property damage and physical injuries caused by the contractor
Professionalism and Peace of Mind. Contractors with insurance or who are covered by your policy ensure that both parties are protected, providing you with peace of mind. This not only protects your organization, but also strengthens your reputation as a responsible business owner.
Reduces Potential Gabs in Coverage. With an independent contractor add to your policy, you’ll reduce potential gaps in coverage. Doing so is crucial for safeguarding your company against unforeseen liabilities resulting from contractor errors or mishaps.
Professions Where Independent Contractor Insurance is Crucial
Independent contractor insurance is especially crucial for specialists in high-risk industries. These are jobs where liability, property damage, or errors can result in substantial financial losses. Some occupations where this insurance is particularly important include:
Construction Workers and Contractors. Construction projects involve numerous hazards, including property damage and on-site accidents, making liability coverage vital.
Freelance Designers and Developers. Errors in design or software development may result in financial losses for clients, prompting legal action.
Consultants and Business Advisors. Mistakes or oversights in professional advise can have financial or legal ramifications for clients, making professional liability insurance essential.
Real Estate Agents and Brokers. These specialists handle major financial transactions and may face legal ramifications if problems develop during negotiations or closings.
Photographers and Videographers. Misplaced or damaged equipment, missed photos, or liability during events can result in financial loss, hence insurance is essential for these positions.
Compare Quotes
Considering the cost of court fees, medical expenses, and repairs that might arise from negligence or accidents, having the appropriate insurance coverage is less expensive than risking the financial strain of a large liability claim. To save money, compare free quotes with an EZ agent. We’ll provide you with one agent to walk you through the process and find you the best policy available. To get free instant quotes, simply enter your zip code in the bar above, call us at 855-694-0047. No hassle, no obligation.
Businesses grow and change all the time, which means that, at some point, you might need to modify your commercial insurance policies. While your policies are contracts, they are not completely set in stone. An insurance endorsement can add, take away, or exclude certain types of coverage. While some endorsements are added by your insurance company to minimize their risk, others can be beneficial because they allow you, the business owner, to customize your policies, which could save you money. For example, if you find that your policy has something that you do not need, you can request an endorsement to remove it. On the other hand, there might come a time when you need to extend your policy so that your business is fully covered. In this case, you can request an endorsement to add certain types of coverage.
Endorsements Explained
Endorsements are documents that are attached to your original insurance policy and are only good for that particular policy’s period. Some endorsements are added by your insurance company and can either exclude certain things from being covered or clarify what is covered by a policy. For example, some commercial property insurance policies have a wind and hail deductible endorsement, which requires you to pay a separate deductible in the case of wind or hail damage, while some general liability policies have exclusions for damages resulting from exposure to asbestos. Some endorsements clarify what is covered, such as a professional service exclusion, which makes clear that your general liability policy only covers bodily and property damage, not damage caused by professional advice.
As previously mentioned, other endorsements are additions that you can request for your policy. These changes can allow your business to grow and change while still remaining fully covered by your insurance policy. For example, if you change your business’s address, add another location, or add a new product, then you can make changes to your policy without the risk of losing insurance coverage.
Common Endorsements
There are some common endorsements that you might want to consider for your business:
Adding locations and increasing your limits can be done with adding endorsements to provide more liability coverage.
Additional Insured– This is most often paired with a general liability insurance policy and allows you to add a third party to your policy, such as a subcontractor who is doing work for you.
Adding/Changing Location– You can request endorsements to make administrative changes to your policy, such as a change of address or a change in the policyholder’s name. You can also add locations to your policy coverage; this will protect your new location and your current location.
Extended Reporting Period– This will give you the ability to report claims after the expiration date of your insurance policy on a claims-made professional liability policy, or on an error and omissions insurance policy.
Increased Limits– This endorsement allows you to increase your limit of liability for your business property, as well as to extend workers’ compensation benefits not covered by state law.
Industry-Specific Endorsements- You can also add coverage that is specific to your industry with certain endorsements, such as a contractor’s enhancement endorsement. These endorsements will cover equipment, property, and other tools specific to your industry, and at a cheaper rate than if purchased individually.
Adding An Endorsement
Adding endorsements to existing policies is a great way to continue your coverage as your business continues to grow. You can personalize your policies to add endorsements that fit your business’ needs. Adding them is easy: simply speak to your current agent, and ask that they be added when your policy renews, or when you are shopping for a new policy.
It can be confusing to know just how much coverage you need for your growing business. EZ.Insure specializes in breaking down your needs and your risks. We will provide you with a trained, licensed agent who will compare business insurance quotes in minutes. We aim to find you the most coverage with the most savings, all at no cost to you. To get free quotes, simply enter your zip code in the bar above, or to speak directly with an agent, call 888-615-4893.
Insurance terminology can be confusing, you’re a business owner, not an insurance expert. It can be difficult to differentiate between terms, but it is crucial to understand the differences in order to ensure that you are getting the right coverage, and that you are in compliance with your plan’s conditions. For example, there are two terms, “additional insured” and “loss payee,” that both describe a third party who requires special protection as part of your commercial insurance policy. The two terms may be similar in some ways, but are very different in terms of the protection offered to all parties involved.
Additional Insured
You should request to be added to a business’ liability policy if you are being contracted to perform a job. It will protect you in case something goes wrong.
Simply put, an additional insured is anyone added to an insurance policy who is not the primary policy holder. If your business contracts any outside workers or businesses that could be held liable for jobs that they perform while working with you, those third parties will often request to be added to your commercial liability policy. Adding them to your policy will mean that they will be covered for work done with your business or on your premises. You should also request to be added to a business’ liability policy if you are the one being contracted to perform a job.
For example, let’s say you hire a janitorial company to clean your workplace, and a customer or other person who doesn’t work for your business gets hurt on your premises because of something the janitorial company has done. If you have listed the janitorial company as an additional insured on your general liability insurance policy or business owners policy, BOP, then the janitorial company will be protected under your policy in case they are sued for negligence. The additional insured has liability protection, but they don’t have a legal first right to claim payments from the named insured’s insurance policy.
Loss Payee
A loss payee is a third party listed on a commercial property insurance policy’s declarations page who is entitled to all or a portion of the insurance claim payments in the event of a loss. When there is a loss payee, who is usually a finance company, bank, or other lender, listed on a policy, the insurance company will pay claims directly to the loss payee first before it makes payments to anyone else, including the policy owner. The named insured, or policy holder, comes second because loss payees have an insurable interest in the property.
For example, if your business takes out a loan to purchase a building, the mortgage company who is financing the building might require you to list them as a loss payee on your commercial insurance policy’s declarations page. So, if there is any damage to the property, such as a fire, or an accident, then the mortgage company’s interests will be protected. Whenever you file a damage claim, your insurance company will have to notify the loss payee (your mortgage company). The insurer will then issue a check to pay for repairs, made out to both the named insured (you) and the loss payee (the mortgage company).
The Difference
Additional insured and loss payee are similar, but the difference determines what protection you get.
Additional insured and loss payees are both entitled to receive insurance benefits from the named insured’s (policy owner) policy. The main difference is that additional insured will receive liability protection, whereas loss payees will only receive property damage coverage. Additional insured generally cannot receive any payments for any property claims, unless they have a direct involvement in the claim. For example, if the janitorial service from above did not service an area of your business where a customer was injured, then they would have no ability to file a claim.
Whenever you work with another business that increases your business’s legal liability, you should consider requesting to be added as an additional insured on their policy. On the other hand, if you have a direct interest in investing in another business and are considering becoming their lender, then you should request to be added as a loss payee on their insurance policy. That way your interests are protected, and you will get first rights to claim proceeds from their insurance company in case of any damage.
You can’t add an additional insured or a loss payee to all types of small business insurance; these endorsements are only available on some small business insurance policies. To find out if you can add either to your insurance policy, and which one might be right for you, you should speak to an insurance agent. EZ.Insure offers highly-trained agents who will review your business insurance policies, make sure you are properly insured, and help you determine if a third-party request to be named as a loss payee or additional insured is reasonable. Make sure you’ve got the right coverage for your business at the right price by connecting with one of our agents. To get started, simply enter your zip code in the bar above, or to speak to an agent directly call 888-615-4893.
