Does General Liability Cover Independent Contractors?

Jul 14 2025 15:00

Understanding Liability Risks with Independent Contractors

When hiring independent contractors, it is crucial for business owners to understand the liability risks involved. Many assume that their General Liability (GL) policy offers complete protection, but the reality is more nuanced. Without proper coverage, incidents involving contractors could pose significant financial risks to businesses.

Your GL Policy Covers Your Business

Independent contractors, labeled as 1099 workers, differ from employees. Despite this distinction, their work can affect your business. A GL policy typically helps cover lawsuits tied to the contractor’s actions affecting your company. However, it does not automatically extend coverage to the contractors themselves.

Insurance Solutions to Reduce Your Risk

Here are steps to ensure your business and contractors are suitably covered: - **Require Contractors to Have Their Own GL Insurance:** It's common for industries to mandate contractors carry individual policies. This ensures any claims from their work are directed to their insurance, not yours. - **Ask for Proof of Insurance:** Always request a certificate of insurance (COI) from your contractors. This reduces the risk of hiring someone without verified coverage. - **Be Named as an Additional Insured:** By asking contractors to include your business as an additional insured, your policy's coverage can potentially help protect against specific claims. - **Consider an Owner’s and Contractor’s Protective (OCP) Policy:** This policy, bought by the contractor but covering the hiring business, offers primary liability protection. - **Use a Well-Drafted Contract to Clarify Insurance Responsibilities:** Clearly defining insurance and liability details in contracts can prevent disputes. A well-structured contract mitigates risks associated with ambiguous responsibilities. Proper insurance coverage is crucial when working with independent contractors. Failing to verify their insurance could leave your business liable for unexpected claims. Assess your current policies and consider improvements to protect your business interests.