Does General Liability Cover Independent Contractors?

Understanding liability risks when working with independent contractors is essential for business owners. Many assume their General Liability (GL) policy offers full protection, but the reality is more nuanced. Without proper coverage, the risks can be significant if contractors don’t have their own insurance.

Your GL Policy Covers Your Business

Independent contractors aren't employees, yet their actions can still impact your business. While a GL policy might cover lawsuits related to a contractor's work, these workers aren't automatically insured under your policy.

Insurance Solutions to Reduce Your Risk

Explore these key solutions to protect your business:

1. Require Contractors to Have Their Own GL Insurance

Many industries mandate that contractors carry their own policy. This ensures any claims from their work are covered by their policy, not yours. Always ask for proof of insurance, such as a certificate of insurance (COI), to verify their coverage.

2. Be Named as an Additional Insured

By requiring contractors to list your business as an additional insured, you extend coverage and mitigate risk. Consider an Owner’s and Contractor’s Protective (OCP) Policy, which is purchased by the contractor but covers your business, providing primary liability protection.

3. Use a Well-Drafted Contract to Clarify Insurance Responsibilities

Outline insurance requirements and liability responsibilities in all contracts. A clear contract can prevent disputes, ensuring that insurance responsibilities are understood by all parties involved.

Proper insurance coverage is critical when hiring independent contractors. Failing to verify this could leave your business responsible for unwanted claims. It's advisable to conduct a risk assessment of your current contractor policies to stay protected.