When one hires independent contractors and other third parties to work or provide services for their business, there are certain problems and questions that may arise:
- What insurance should my contractors already have?
- Does my insurance cover the contractors and vendors that I hire?
- Will I need worker’s compensation for my contractors?
- Are there any other types of add-on insurance that I may need.
Let us now take a look at these four major insurance issues and troubleshoot them…
What Kinds of Insurance Should Independent Contractors Already Have?
After hiring someone, they could make some expensive mistakes. That is why one should hire insured contractors that have Professional Liability Insurance, which covers mistakes and oversights that a contractor might make. The contractor should also be required to have General Liability Insurance, which covers many types of accidents. In order to make sure that your contractors have these kinds of insurance, you should review their Certificate of Liability Insurance. It would also be prudent to include language in your contract that requires these types of insurance.
Can Contractors Be Covered with My Insurance?
Usually, most contractors will have their own contractors insurance, but in some cases, you might need to cover a contractor with your insurance. You can cover a contractor by calling your insurance provider. The contractors that you add to your insurance policy are called “additional insureds.” By doing this, you are able to offer these contractors temporary coverage if it is needed for a particular situation.
Will I Need to Have Worker’s Compensation for My Contractors?
In most cases, small businesses don’t need to offer worker’s compensation for temporary workers and independent contractors. However, there isn’t always a strict definition for “independent contractor.” If a contractor is hired for a job that lasts for an extended period of time, and you work with them with the same oversight that you would give to one of your regular employees, then a judge might rule that this entity is an employee of yours that you may be responsible for in certain situations. In this case, you might have to offer them worker’s compensation and other certain benefits. Temporary help can also be an employment condition that has many exceptions as well. If you do hire temporary workers from any kind or employment agency and/or staffing firm, then it would be wise to check with the agency to see if these temporary employees are covered by some other insurance.
Are There Any Types of Add-On Insurance I May Need?
There is a certain type of insurance coverage that many contractors need, but do not have. It is an add-on insurance coverage called Care, Custody and Control Insurance. The general liability policy has an exclusion for anything in your care, custody, or control. However, many insurance companies offer a limited amount of care, custody, and control coverage for an extra fee. Usually, most offer a $5,000 to $10,000 coverage or more. This is usually enough to take care of any type of physical object that the contractor may be working on if it is accidentally broken or damaged.