Being an independent contractor and/or consultant for a wide variety of B2B and B2C interests comes with many benefits. You get to set your own hours, work from your favourite coffee shop, apply tax deductions, decide who you work with, and for the most part you get to control your own destiny. However, there are instances where it can all go wrong. In one fell swoop a liability case can crush your business. This is unfortunately not all that uncommon. Many independent contractors pay extremely close attention to their client contracts and accounting, but neglect insurance. And yet the latter can have more of an impact than anything else applicable to your success.
Today, Park Insurance seeks to applaud your entrepreneurial spirit by offering a few tips that will help protect you from common liability concerns.
5 Things Independent Contractors and Consultants Need to Know About Liability Insurance, Before it’s Too Late
1. Home-based Business is Not Covered by Your Home Insurance Policy
This fact was initially addressed in our popular article on 5 Common Insurance Myths and Misconceptions. It is a common one indeed. Your basic home insurance policy does not fully cover you as an independent contractor. Equipment, materials, and other items used in the scope of business may be exempt. Even more startling, is that operating a small consulting business from your home without notifying your insurance provider could void your policy.
It gets deeper. If clients, employees, and/or subcontractors visit your home, you are opened up to even greater risk. Basic liability coverage provided by your home insurance policy may be inadequate or even invalid in the event that a claim from one of the above occurs from a visit to your home office.
The type of contracting/consulting business will determine your insurance needs. The simple addition of a rider (an add-on provision) to your current home insurance policy may be sufficient. Alternatively, you may need to purchase a separate business insurance policy to provide appropriate coverage. View more on overall business insurance to find what may be most applicable to your contracted service.
2. Cyber Concerns Are Making Cyber-Insurance a Priority
Many consultants are able to become independent contractors because of the world wide web. You can secure and maintain client/customer relationships via online solicitations and ongoing communications. This involves a lot of sharing and storage of online data. This data makes you susceptible to the wave of cybercrime that is so prominent in today’s marketplace. This opens you up to greater liability concerns. For example, you could have access to sensitive client data, that if breached, could cause significant damage to the client. This could leave you liable beyond financial means. Tech-based consultants are even more vulnerable to this type of risk. View more on how to protect your contracting/consulting business from cybercrime and follow up with a look at cyber insurance policies.
3. Dissatisfied (or Dishonest) Clients Could Make Claims
There is a lot of gray area when it comes to the financial impact that the work done by you can have upon a client. Whether direct or indirect, a client may feel that the relationship harmed them in some way. It often comes down to miscommunication and expectations on both sides. Even if their expectations were not realistic, in your opinion, it does not keep you from being liable. In an ideal world, you will be able to negotiate to make it work. But sometimes a client simply prefers to opt for legal action, and files a claim to recoup losses, whether real or imagined. You need to make sure you’re protected accordingly. To go without full coverage makes you susceptible to one of the most common forms of independent contractor/consultant liability.
4. The Right Insurance Can Actually Get You More Business
A B2B client can get sued because of your direct or indirect involvement with them. They understand that they take on a certain amount of risk by entering into a contract with you. In fact, some businesses have mandates to request documentation from independent contractors, stating proof of general liability insurance and workers compensation insurance before they enter into any agreements. As an independent contractor/consultant with full coverage, you can market this fact on your promotional materials (website, etc.) to add more credibility to your business. You may end up securing new contracts because of it.
5. Your Current Business Insurance Isn’t as Comprehensive as You Think
You need to consult with an independent insurance broker that specializes in your unique needs. An independent insurance broker who specializes in business insurance is a kindred spirit to independent contractors and consultants. They know the ins-and-outs of what you do, and know the concerns and loopholes surrounding general insurance policies that may leave you exposed. Contact an independent insurance broker to have one of the most important conversations you could ever have on behalf of your personal business.
Contact Park Insurance by completing the form found here or call us anytime at 1-800-663-3739. We are here to help with all your business insurance questions.