Independent Contractor Insurance: What It Is, How to Get It

From NerdWallet, Rosalie Murphy discusses what insurance an independent contractor needs and how to get it. Rosalie writes:
What is independent contractor insurance?
Independent contractor insurance protects 1099 workers against the risks that come with operating a business. It can refer to several types of business insurance, including policies that shield contractors from liability risks and those that help replace damaged property.
» MORE: How to get insurance for sole proprietors and the self-employed
What insurance does an independent contractor need?
The specific type of insurance you should get depends on the type of contract work you perform. For example, a self-employed accountant should have errors and omissions insurance in case she makes a mistake that costs her customer money. A musician who uses his own instruments and sound equipment may need commercial property insurance that will pay out if his inventory is stolen, damaged or destroyed.
At a minimum, though, you should consider liability insurance. As a 1099 contractor, you can be held liable for harming another person or their property just as any small-business owner can be. Liability insurance can help protect against these risks.
General liability insurance for independent contractors
Most businesses — includes independent contractors — should have general liability insurance coverage.
General liability insurance protects you if you’re accused of causing harm to a third party or their property. It can also protect you against claims of libel, slander and reputational harm
If you clean homes and are accused of damaging someone’s furniture, for example, general liability insurance could help cover your legal costs.
In some cases, the company that hires you as a contractor may be able to add you to their general liability insurance policy. In others, they may require you to carry your own policy and ask to see a certificate of insurance before hiring you.
Professional liability insurance for independent contractors
If you provide services to customers for a fee, you should have professional liability insurance.
Professional liability insurance, also known as errors and omissions insurance, protects you if a client or customer accuses you of causing harm. If you’re a graphic designer, real estate agent or any other type of contractor who provides services, clients could sue you over inadequate performance.
This includes claims of:
Mistakes or oversights in performing your service.
Breach of contract.
Professional negligence.
Failure to deliver a service on time.
What other kinds of insurance do independent contractors need?
Depending on what kind of work you do, you may need additional types of business insurance beyond general and professional liability insurance.
Type of insurance
Who needs it
Commercial property insurance covers property that is damaged in accidents, weather events or other hazards.
Independent contractors who rely heavily on particular materials or pieces of equipment to do their work, such as musicians, photographers or videographers. Also, if you rent office or retail space, your lease may require it.
Commercial auto insurance covers your personal vehicle in the course of doing business, not just vehicles owned by the business. It can help you cover costs related to crashes, including property damage and medical expenses.
Independent contractors who own a business vehicle or who often use their personal car in the course of doing business, such as construction contractors or delivery drivers.
Business interruption insurance covers the income you would have earned while your business was unable to operate due to an accident or disaster.
Independent contractors whose work would be significantly set back by a disaster, such as a pipe bursting and causing water damage to equipment that the business relies on.
Cyber liability insurance covers damage resulting from data breaches or software hacks, including the costs of notifying customers and setting up credit monitoring.
Independent contractors, such as accountants, who handle sensitive information.
You may be able to package several kinds of insurance into a business owner’s policy, or BOP. Business owner’s policies usually include general liability insurance, commercial property insurance and business interruption insurance.

Type of insurance	Who needs it
Commercial property insurance covers property that is damaged in accidents, weather events or other hazards.	Independent contractors who rely heavily on particular materials or pieces of equipment to do their work, such as musicians, photographers or videographers. Also, if you rent office or retail space, your lease may require it.
Commercial auto insurance covers your personal vehicle in the course of doing business, not just vehicles owned by the business. It can help you cover costs related to crashes, including property damage and medical expenses.	Independent contractors who own a business vehicle or who often use their personal car in the course of doing business, such as construction contractors or delivery drivers.
Business interruption insurance covers the income you would have earned while your business was unable to operate due to an accident or disaster.	Independent contractors whose work would be significantly set back by a disaster, such as a pipe bursting and causing water damage to equipment that the business relies on.
Cyber liability insurance covers damage resulting from data breaches or software hacks, including the costs of notifying customers and setting up credit monitoring.	Independent contractors, such as accountants, who handle sensitive information.