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.
When you own a small business that offers advice or services, there’s always a risk of lawsuits due to errors and omissions. Even if you have done your job to the best of your ability, something can still go wrong. Sometimes customers just aren’t happy with your work, and they could decide to sue your business. However, a lot of errors and omissions (E&O) claims can be resolved before they become costly lawsuits. In order to prevent, or quickly resolve, any errors and omissions claims made against your business, you have to know what to expect. Here are the most common errors and omissions claims:
Breaking your contract can result in your customer losing money, in which they can sure you for.
Breach of Contract
If you have a verbal or written contract with a customer, you have to adhere to that contract. If a customer suffers any financial loss due to a breach of contract on your part, they can sue to recover their financial loss. For example, if you missed a deadline to put up a website for a company you’re under contract with, they can sue you for any money that they are losing while the site isn’t up and running. The types of breach of contract include:
Anticipatory breach– a business tells the customer that they will not be fulfilling the terms of their contract
Minor breach– a business fails to live up to a small detail in the contract.
Material or fundamental breach– a breach that is extreme enough to nullify the contract completely.
Misrepresentation
One of the biggest mistakes that businesses can make is overstating their expertise, promising their clients something they cannot deliver, or not fully disclosing information. If your company misrepresents itself or doesn’t disclose information, resulting in financial or reputational loss to the customer, then you can expect a lawsuit to follow. The lawsuit will be labeled as intentional or fraudulent misrepresentation. For example, if a car dealer lies about the history of a used car and their customer later finds out their car was in an accident, this would be considered fraudulent misrepresentation.
If you lie or even partially lie, then you can be sued for misrepresentation.
If you’re not careful, you can be slapped with a lawsuit, no matter whether you have intentionally or unintentionally misrepresented your company. E&O misrepresentation claims can include:
Making a statement that is partially true.
Making a statement that is completely false.
Omitting details, or failing to disclose important information.
Negligence
Claims of negligence often occur when a business’ poor oversight leads to financial or even physical injury of another party. You could also be considered negligent if you communicate poorly with your customer, or if you fail to take reasonable care or control when providing your services. Even if you fully explain your prices and expected outcomes, a customer might form unrealistic expectations for your work. If you don’t meet their expectations, they might sue you.
Create a detailed contract that both parties review and sign before work begins. Include expectations about deadlines, payments and any other agreed-upon expectations between you and the customer.
Make sure that you document everything that you’re doing so that you can prove you are getting the work done.
Always keep an open communication with your clients, especially if something goes wrong while you are under contract, or if there is a minor glitch. Prioritize honesty and transparency with your customers and let them know if you are going to miss a deadline, so you can manage expectations and work together to solve the problem.
Errors and omissions insurance is the best way to protect your company from a lawsuit and reduce the risk of losing your business because of a mistake. If you are sued, E&O insurance will pay your legal costs such as attorney’s fees, court fees, and settlement costs. As long as your policy is active at the time of the incident, you will be protected. You do not want to wait until something happens in order to be insured. Make sure that your business is fully protected in the event of an incident by speaking to an EZ agent. To find an affordable plan that gets you the most coverage with the most savings, enter your zip code in the bar above, or to speak directly to a licensed agent in your area, call 888-615-4893.
