Does General Liability Cover Independent Workers?

Understanding Liability Risks with Independent Contractors

Many business owners assume that General Liability (GL) insurance provides full protection when working with independent contractors. However, the reality is more nuanced. It's crucial to understand the liability risks involved, especially if contractors lack their own coverage.

Your GL Policy Covers Your Business

Unlike employees, independent contractors are not automatically covered under the business’s GL policy. Still, their actions can significantly impact a business. While a GL policy might cover lawsuits involving their work, the protection does not extend fully to independent contractors unless specific measures are taken.

Insurance Solutions to Reduce Your Risk

Require Contractors to Have Their Own GL Insurance

Many industries mandate that independent contractors carry their own GL policy. This ensures claims arising from their work fall under their insurance rather than impacting the business’s policy directly.

Ask for Proof of Insurance

Businesses should request a certificate of insurance (COI) from contractors. Hiring without confirming their coverage could mean assuming liability for damages or injuries that occur.

Be Named as an Additional Insured

Requiring contractors to name your business as an additional insured extends coverage and mitigates potential risks that may arise from their activities.

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

An OCP policy, while purchased by the contractor, provides primary liability protection for the business. This ensures a more direct protective measure against liabilities.

Use a Well-Drafted Contract to Clarify Insurance Responsibilities

It's vital to have a clear contract that outlines insurance requirements and liability responsibilities. A well-drafted agreement can prevent disputes and ensure both parties are clear about who is responsible for what.

Conclusion: The Importance of Proper Insurance Coverage

When hiring independent contractors, having proper insurance coverage is critical. Business owners who neglect to verify insurance coverage could find themselves facing liability claims. Conducting a risk assessment of your current contractor policies is a smart step towards protecting your business.