Independent Contractor Insurance Requirements

Independent Contractor Insurance Requirements
••• contractor using drywall lift image by Joy Fera from

An independent contractor is most often a self-employed individual who may perform work for other companies or individuals in a variety of fields and settings such as construction, landscaping or design work. An independent contractor might also work as an artist or freelancer completing projects in film or writing. Independent contractors are responsible for taking care of their own insurance needs, and some contractors may be required to carry certain types of insurance to complete their work.

General Liability

General liability insurance protects the assets of an individual or business in the event of a lawsuit for personal injury or property damage resulting from something that was done or not done through the course of a job or project. Contractors who plan to work in the building industry are often required by state mandates to carry a minimum level of general liability insurance coverage in order to protect home owners and consumers from contractor error. Many companies and businesses that hire independent contractors refuse to work with uninsured contractors. An independent contractor agreement typically states the minimum levels of insurance required for each contractor on each job, and most businesses require a copy of the contractor's insurance certificate before work commences.


Indemnity insurance protects business owners and individuals against lawsuits that may be brought against them for errors or misjudgments that cause injury or loss. If an independent contractor provides building materials or installs materials that prove to be faulty, the structural integrity of a building may be at risk and could cause injury or result in significant repair costs. If a consultant offers advice that results in loss or injury, a lawsuit may be brought against him. Indemnity insurance provides protection against losses that may have been incurred as a result of faulty products, poor manufacturing, incorrect advice or inferior materials.

Health and Disability Coverage

Independent contractors are essentially self-employed individuals, and they must plan for their own health insurance coverage. An independent contractor is not considered an employee of any of the companies he completes work for. As a result, he is not typically eligible to participate in company-provided benefits such as health insurance, paid sick leave or disability pay. An unexpected illness or injury can leave an independent contractor out or work for months, but insurance coverage can provide financial protection. Health insurance or disability insurance is essential for many independent contractors, because it can provide coverage for doctors' bills and may replace lost income during a period of recovery.