A recent study conducted by Accenture estimates that by 2020, nearly half of the global workforce will comprise independent contractors, also known as sole propriety businesses. If you’re one of the people considering setting up a sole propriety business, you need to be aware that you still need proper insurance.
There are two main reasons for this. First, insurance protects you in case of disasters such as floods and fires. If a flood sweeps away your business premise, an insurance cover would compensate you for the damages and help you get back on your feet. Secondly, in most industries, the people you work for will want proof of insurance before giving you the job. It means that insurance can be the difference between getting deals done and going out of business.
3 Main Insurance Covers to Consider
Of course, there are many insurance covers that you need both for yourself and business. But, the following three are must-haves if you’re to remain in business.
General Liability Insurance
Also known as contractor liability insurance, this cover provides protection from a range of accidents and incidents. Whether it’s a client slipping and breaking a leg in your office or misuse of a piece of equipment, the policy will cover damages. If you’re a roofing contractor, for example, a hammer you’re using up on the roof can accidentally slip from your grip, slide down the roof, and hit someone below. General liability insurance covers claims originating from such incidents.
Remember, however, that the policy doesn’t cover motor vehicles. If you have a car that you use for business purposes, you need to separately obtain commercial auto coverage to protect you in case of an auto accident.
Professional Liability Insurance
As a professional, you always do your best to ensure the best possible outcomes. Whether you’re installing a roof or painting a client’s house, you’ll give it your best shot, always combining your experience and skills to give clients value for their money. However, despite your best efforts, mistakes are inevitable. Occasionally, you may not leave the best of impressions on a client. Or, you may fail to show up for the job altogether.
Clients are allowed to sue for damages resulting from poor workmanship and no-shows. If you have professional liability insurance, you’re protected in case a client files a claim for such damages.
Contractor Disability Insurance
Finally, you also need to guard your business against injuries and medical conditions that might render you unable to perform your duties as required. Take an example of a private doctor who is involved in an accident and fractures an arm. The arm may take months to heal, keeping the physician out of work for a long time. How does he or she provide for their family during the period they won’t be working?
Contractor disability insurance! If you have this cover, any short-term or long-term disability that keeps you from work won’t necessarily disrupt your paycheck; you will be sufficiently compensated for losses.
Don’t Start Without These Covers
Until you obtain all the three covers, you’re not fully ready for the challenges of independent contracting.