Businesses of all sizes rely on independent contractors. These workers aren’t technically employees, as they don’t receive the benefits like those that are official and full-time, but they do play a crucial role in your workforce, helping meet goals and providing supplemental labor.
While you appreciate the work that they do and find their time valuable, it’s important to ensure that they have insurance coverage while on the job, just in case something goes wrong. In most cases, they aren’t covered by your business insurance policies at all, but all of that depends on factors like the work being done and the actual policy itself.
Before you make any policy changes or additions, here’s what you need to know.
What Is an Independent Contractor?
An independent contractor is someone who works for you but not as a standard employee. They may work on a project-by-project basis or have a slightly more regular list of work duties, but what separates them from your other workers is their independence. You don’t provide them with benefits or even take taxes out of their paychecks. On the worksite, they have their own tools and have some control over when and where they work. At tax time, they receive a standard 1099 instead of a W2.
While contractors allow you to get extra hands on, say, a roofing job, they don’t qualify for the same insurance coverage as your regular employees, so you need to check with your insurance provider in order to prevent expensive disasters from happening.
Why Insurance Coverage Isn’t Automatic
What happens when an independent contractor accidentally breaks a customer’s window while handling some gardening tasks? Or drops a heavy piece of equipment, breaking their tile? With a standard employee, your insurance would cover the costs of the repairs, but with an independent contractor, you may have to pay for that out of pocket.
Your business insurance is designed to cover you and your employees, not your independent contractors, which is why hiring them comes with some risks.
Risks of Hiring Uninsured Contractors & A Solution
If one of your independent contractors damages your customer’s property, you could have to pay for any repairs out of your own pocket. Getting hurt on the job is another circumstance that can lead to costly bills because your workers’ compensation insurance doesn’t cover contractors.
What can you do to mitigate these risks? First, check with your insurance company. There might be a way to ensure that your independent contractors are covered by your policies. You could also request that your contractors take out their own liability policies, just in case.
Contact Spivey Insurance
When hiring contractors to help get the job done, it’s important to make sure that they have proper insurance coverage. If you have any questions about your current plan or need to take out a new one that covers all of your workers, please reach out to Spivey Insurance. Our knowledgeable agents can help get you on the right path, coverage-wise.