If you own a small business, chances are you’ve hired or considered hiring independent contractors. From freelance designers and consultants to delivery drivers and subcontractors, independent workers play a big role in helping businesses grow without the overhead of full-time staff. But a common question many business owners ask is: Does my business insurance cover independent contractors?
The short answer is: It depends on your policy.
Let’s break it down.
What Is an Independent Contractor?
An independent contractor is a person or business hired to perform work but not classified as an employee. They’re usually responsible for their own taxes, tools, and sometimes even their own insurance. Common examples include:
- Freelance graphic designers
- IT consultants
- Contract delivery drivers
- Handymen or subcontracted laborers
Because they aren’t technically on your payroll, they don’t fall under the same legal protections or insurance coverage as your employees—unless your policy says otherwise.
General Liability Insurance and Contractors
General liability insurance is one of the most common business insurance policies. It covers third-party injuries, property damage, and legal claims. But when it comes to independent contractors, things get tricky.
Most general liability policies do not automatically cover independent contractors. In fact, if a contractor causes damage or injury while working for you, and they don’t have their own insurance, your policy might not help—or worse, it could leave you exposed.
Some policies offer an option to add contractors as “additional insureds” or list them on the policy, but this must be done intentionally and usually for a fee.
Workers’ Comp Doesn’t Apply—But That Doesn’t Mean You’re Safe
Workers’ compensation insurance is designed to cover injuries to employees on the job. Independent contractors aren’t employees, so they’re usually not covered.
However, in some cases—like if a contractor gets injured—you could still be held liable. Courts or state agencies may decide the contractor was acting as an employee, opening your business up to unexpected costs.
That’s why many business owners require contractors to carry their own liability and workers’ comp insurance and provide proof before work begins.
How to Protect Your Business
Here are a few steps you can take to stay protected:
- Review your insurance policy with an agent to see what’s covered.
- Require certificates of insurance from any contractor you hire.
- Consider adding contractors as additional insureds if the project is high-risk.
- Put it in writing. Make sure contracts clearly define the working relationship and insurance responsibilities.
Talk to an Agent Who Gets It
If you’ve been wondering, “Does my business insurance cover independent contractors?”, you’re not alone. It’s one of the most common and important questions business owners face today. The answer depends on your unique situation and the insurance coverage you carry.
At Insured ASAP, we work with businesses across Illinois to provide affordable, clear, and customized insurance options. Whether you’re hiring your first contractor or managing a team of freelancers, we’ll help you understand your risks and get the coverage that fits.
Need a fast quote or have questions? Contact Insured ASAP today or request a free business insurance review. We’re here to keep your business moving—without surprises.
