General Liability and Independent Contractor Coverage

Recognizing the Risks of Uninsured Contractors

Understanding liability risks when engaging independent contractors is crucial for businesses. Many business owners mistakenly believe their General Liability (GL) policy provides comprehensive protection. However, the reality is more nuanced. Without their own coverage, contractors can expose your business to significant risks.

Your GL Policy Covers Your Business

Independent contractors are not your employees, but their actions can significantly impact your business. While your GL policy may cover lawsuits related to a contractor's work, it does not automatically insure independent contractors under your policy.

Insurance Solutions to Reduce Your Risk

Require Contractors to Have Their Own GL Insurance

Many industries demand contractors carry their own policies. This requirement ensures that any claims resulting from their work fall under their policy, relieving your business of additional liability.

Ask for Proof of Insurance

Always request a certificate of insurance (COI) from contractors. Hiring contractors without verifying their coverage introduces unnecessary risks to your business.

Be Named as an Additional Insured

By requiring contractors to list your business as an additional insured, you extend coverage and mitigate risk, ensuring protection directly applies in case of incidents.

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

An OCP policy, which is purchased by the contractor but covers your business, provides primary liability protection, securing your interests against potential claims.

Use a Well-Drafted Contract to Clarify Insurance Responsibilities

Clearly outline insurance requirements and liability responsibilities in contracts. A well-drafted contract can prevent disputes and further safeguard your business, serving as a documented agreement of each party's obligations. Proper insurance coverage is critical when hiring independent contractors. Failing to verify insurance may leave you liable for claims. Conduct a risk assessment of your current contractor policies to ensure comprehensive coverage and protection.