Does General Liability Cover Independent Workers?

Understanding Liability Risks with Independent Contractors

When working with independent contractors, understanding liability risks is crucial for any business owner. Many assume that their General Liability (GL) policy offers comprehensive protection, but the reality is more nuanced. Without proper coverage, the risks are significant if contractors do not have their own insurance.

Your GL Policy Covers Your Business

Independent contractors are not technically employees, but their actions can still affect your business. While a GL policy might cover lawsuits involving a contractor's work, it generally does not automatically include independent contractors under the business's policy. This distinction is crucial in understanding your coverage limitations.

Insurance Solutions to Reduce Your Risk

Require Contractors to Have Their Own GL Insurance

To mitigate risk, it's advisable for businesses to require independent contractors to carry their own GL insurance. Many industries mandate contractors to maintain their own policies, which ensures that any claims arising from their work fall under their insurance, rather than the business's coverage.

Ask for Proof of Insurance

Businesses should always request a certificate of insurance (COI) from contractors. Verifying insurance coverage is essential to avoid the risks associated with hiring uninsured contractors.

Be Named as an Additional Insured

By requiring contractors to list your business as an additional insured on their policy, you can extend coverage, which helps mitigate potential risks.

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

An OCP policy is an option where the contractor buys a policy that covers the business, providing primary liability protection.

Use a Well-Drafted Contract to Clarify Insurance Responsibilities

Clearly outlining insurance requirements and liability responsibilities in your contracts is essential. A detailed contract can prevent disputes and clarify expectations. Proper insurance coverage is critical when engaging with independent contractors. Without verifying that contractors have adequate insurance, you might find your business liable for claims. Therefore, a comprehensive risk assessment of current contractor policies is recommended to ensure your business is protected.