Does General Liability Cover Independent (1099) Workers?

Understanding Contractor Liability Risks

When working with independent contractors, understanding the nuances of liability risks is crucial. Many business owners assume their General Liability (GL) policy offers comprehensive protection. However, the reality can be more complex. If contractors don’t have their own coverage, businesses might face unexpected risks.

Your GL Policy Covers Your Business

Independent contractors, while not employees, can still affect a business through their work. A general liability policy may cover legal matters arising from a contractor’s work, but contractors themselves aren’t automatically included under the business's policy.

Insurance Solutions to Reduce Your Risk

Require Contractors to Have Their Own GL Insurance

Many industries insist that contractors carry their own policies. This ensures that any claims from their activities are handled by their insurance, rather than the business’s.

Ask for Proof of Insurance

Businesses should always request a certificate of insurance (COI) from contractors. Hiring without verifying coverage poses significant risks.

Be Named as an Additional Insured

Requiring contractors to name the business as an additional insured extends coverage and mitigates potential risks.

Consider an Owner’s and Contractor’s Protective (OCP) Policy

An OCP policy, purchased by the contractor but covering the business, provides primary liability protection.

Use a Well-Drafted Contract to Clarify Insurance Responsibilities

Clearly outlining insurance requirements and liability responsibilities in contracts is vital. A well-crafted agreement can prevent disputes, serving as a safeguard.

Conclusion: Proper Insurance Coverage is Critical

Ensuring proper insurance coverage when hiring independent contractors is critical. Lack of verification could leave business owners liable for claims. Conducting a risk assessment of current contractor policies is a proactive step towards safeguarding your business.