Does General Liability Cover Independent Workers?

Understanding Liability Risks with Independent Contractors

When working with independent contractors, understanding liability risks is crucial. Many business owners assume that their General Liability (GL) policy provides full protection. However, the reality can be more nuanced, and risks arise if contractors don’t have their own coverage.

Your GL Policy Covers Your Business

Independent contractors are not employees, but their actions can significantly impact a business. While a GL policy might cover lawsuits related to the contractor’s work, independent contractors are not automatically insured under the business’s policy.

Insurance Solutions to Reduce Your Risk

Ensuring you are adequately protected when working with independent contractors involves several key steps:

Require Contractors to Have Their Own GL Insurance

Many industries require contractors to carry their own policy. This measure ensures that claims arising from their work are covered by their policy rather than the business’s.

Ask for Proof of Insurance

Businesses should request a certificate of insurance (COI) to verify that contractors have coverage. Hiring contractors without verifying their insurance poses significant risks.

Be Named as an Additional Insured

By requiring contractors to list the business as an additional insured, you extend your coverage and mitigate risks associated with their actions.

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

It’s essential to outline insurance requirements and liability responsibilities clearly in contracts. A clear contract can prevent disputes and protect both parties.

Proper insurance coverage is critical when hiring independent contractors. Failing to verify insurance could leave business owners responsible for claims. Consider conducting a risk assessment of your current contractor policies to ensure you are adequately protected.