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Government Contractors / IT Insurance

Some liability policies include coverage for independent contractors and some do not.  I think it would be important if an independent contractors working for my client makes an error that my client has coverage if they are sued.

A review of your contracts to determine what the insurance requirements are is important. Your insurance may not be corresponding to the contract. Sometimes, a simple change is needed.

How does General Liability differ from Professional Liability?

• General Liability is referred to as "trip and fall" insurance. Professional Liability covers errors or omissions, malpractice, and association professional liability issues. A General Liability policy excludes professional liability and vice versa.

Do I have a Professional Liability exposure?

• Do you provide a professional service? Could you be sued for something you failed to do or something you did wrong? What are your clients' expectations? Legal defense is one of the most important coverages provided.

What if my consulting business is in my home? (See Home-Based Business)

• You need General Liability for your business-related liability issues. You also need to do a risk analysis about professional liability. Remember, anyone can sue you. Legal defense is an important feature of this policy.

What is the difference between an Independent Contractor (U.S. Income Tax Form 1099) and Employee (Form W-2), when considering liability and workers' compensation?

• Many people use independent contractors instead of employees for tax reasons, but an independent contractor without his/her own insurance becomes your responsibility for liability and workers' compensation.

Does it make a difference whether I use 1099 contractors or full-time or part-time employees?

• Only if independent 1099 contractors have their own insurance and provide you with a certificate of insurance. If not, they are treated as employees for workers' compensation and liability.

What about insurance offered by Trade Associations?

• You will often find insurance products through trade associations cost effective, but there may be limitations. Does the definition of "insured" include the corporation, individual, employee, or subcontractor?

How do I separate my home insurance needs from my business insurance needs?

• It is important to separate the property and liability issues of each. You may have used personal dollars to purchase business furniture and equipment, but it is still considered business property.

Does my Homeowners policy cover my business?

• There is very limited coverage for business personal property. Some policies are as low as $500.
• Liability can be extended by a premium-bearing endorsement, but it only covers you if your client visits you in your home office, not if you visit the client.

What about full-time or part-time workers in my home or working in their homes?

• If a full-time or part-time worker is hurt in a work related injury, you are responsible for the medical bills, whether or not you carry workers' compensation.

What happens when a client or visitor comes to my house?

• Your Homeowners policy covers personal visitors but is not designed for business visitors, so business liability insurance is needed.

What happens when I go to a client's office location or other location for a presentation or meeting?

• Your homeowners' personal liability does not apply when you leave your home on business-related activities, so business insurance is needed.