<Title>Does General Liability Cover Independent Workers?</Title>

Understanding how liability risks are managed when working with independent contractors is crucial for business owners. Many assume that their General Liability (GL) policy provides full protection. However, the reality is more nuanced, especially concerning independent (1099) contractors. Failing to verify insurance could leave your business exposed to significant risks if these contractors do not have their own coverage.

Your GL Policy Covers Your Business

Independent contractors, though not employees, can significantly impact your business operations. While a GL policy typically covers lawsuits involving a contractor’s work, it does not automatically include independent contractors under the business’s policy. This distinction highlights the importance of ensuring that contractors have their own liability coverage.

Insurance Solutions to Reduce Your Risk

There are several strategies to mitigate the risks associated with hiring independent contractors:

• Require contractors to have their own GL insurance: Many industries require contractors to carry their own policy to ensure that claims arising from their work are covered by their insurance, rather than the business’s. This practice not only shifts the liability away but also encourages contractors to adhere to higher standards.
• Ask for proof of insurance: It is wise to request a certificate of insurance (COI) from contractors. This step helps verify their coverage and protects your business from potential liabilities that could arise from hiring uninsured contractors.
• Be named as an additional insured: By requiring contractors to list your business as an additional insured, you extend your coverage and mitigate risks related to their actions or negligence.
• 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, thus safeguarding your interests.
• Use a well-drafted contract to clarify insurance responsibilities: Clearly outline insurance requirements and liability responsibilities in contracts. For instance, a contract that specifies coverage levels and designates liability can prevent disputes and potential legal battles.

Proper insurance coverage is critical when hiring independent contractors. Ensuring that your contractors have adequate coverage protects your business from potential risks and liabilities. As a proactive business owner, conduct a risk assessment of your current contractor policies to ensure comprehensive protection.