FAQ

An independent contractor is a person or business who works for another person or entity under a contract. An independent contractor does not have an employee-employer relationship with those they provide services for; it is more like a business to business relationship.
According to the IRS, “The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

Independent contractors can be held liable for damages if something goes awry. Like any business, an independent contractor can be sued for damaging client property, causing bodily harm, and advertising injury. Advertising injuries include libel, slander, copy infringement, and more.

General liability insurance for independent contractors is necessary because:

• It offers legal and financial protection: If sued, general liability insurance helps cover legal fees and damages.
• Some clients require it: Most clients prefer you have general liability insurance, and many will require it. Your clients want the assurance that they will not be held liable for any damages caused by you or your work.
• Sometimes it is required by law: Some industries are required by law to carry general liability insurance, especially in the construction field. The IL Department of Insurance (ILDOI) helps educate Illinois businesses about required and recommended business insurance. Your IL insurance agency can also help advise you.

There are two ways independent contractors can get general liability coverage. The first is to get their own insurance policy. The second is to be an additional insured on their client’s existing insurance policy.

When you get your own insurance policy, you can request a certificate of insurance or proof of insurance. This certificate proves to your clients you have proper coverage for the services you offer.

Or, if your client is willing, they may be able to add you to their general liability insurance policy for the duration of the job. This usually comes at a cost to the client, but it is relatively inexpensive.

An additional insured refers to any person or entity other than the policyholder who is covered by the insurance policy. The coverage is often limited to a single event, such as the completion of a specific job. In other cases, coverage could also last for the lifetime of the policy.

Coverage for an additional insured party is usually more limited than what is afforded to the policyholder. How much coverage is offered depends on the policy. Typically, an additional insured endorsement includes defense coverage and coverage for certain third-party lawsuits.

Defense coverage helps cover legal defense fees, court fees, and settlement or judgment costs. For third-party lawsuits, the additional insured endorsement helps cover claims of property damage, bodily injury, and advertising injuries.

Though an Additional Insured endorsement seems to favor the one endorsed more than the policyholder, it can greatly benefit the policyholder. When it comes to lawsuits, it is a common strategy to go after anyone and everyone tied to the accident or damage. The additional insured endorsement not only puts one more barrier between you and the injured party but also another layer of financial and legal coverage.

A client asks their contractor/subcontractor/business owner to be named as an additional insured on their policy for the duration of the project/service.

Whether you are the contractor or the client, an additional insured endorsement can help protect you. Even if you have your own insurance, you can request to be added as an additional insured to another’s policy. By doing so, you can file a claim with their insurance provider to pay for damages and legal fees as opposed to using your own insurance.

How much should you expect to pay for general liability insurance? Though it is never a satisfying answer, it depends. Different types of businesses have different risks. The more risk involved, the greater the premium. However, most small businesses are pleasantly surprised at the affordability of general liability insurance.

In general, most carriers charge a minimum premium for all businesses that range between $200 and $500 annually. Considering the standard policy provides $1,000,000 of coverage, it is a lot of bang for your buck. But, of course, huge companies or those with an inordinate amount of risk can pay premiums in the millions. Thankfully, most insurance providers offer a free general liability insurance quote, so you know exactly how much it will cost before signing on any dotted line.

Though Illinois general liability insurance is only required in some cases, it is always recommended. It covers common risks that companies and independent contractors face, regardless of the size of their business. Independent contractors are at just as much risk as large companies for lawsuits.

Without proper coverage, independent contractors could find themselves knee deep in legal matters that can be financially devastating. Every independent contractor should at least consult an Illinois insurance agency to weigh all of their options.

Liability insurance costs in Chicago can vary widely between insurance companies. Liability insurance rates are generally factored in using a) the gross sales for the business, b) the gross payroll for employees and owners, c) the square footage of the premises and d) any sub-contractor exposures (if applicable). Insurance rates are developed at a rate per $1,000 utilizing one or more of the above factors.

A typical small business in Illinois can expect to pay anywhere between $300 and $5,000 annually for their general liability policy. Policies are normally audited at the end of each year to make the rates fair for everyone.  They ask for things like annual gross sales, sub costs, materials, and owner/employee payroll.

At Chicago Contractors Insurance.com we specialize in working with contractors and their insurance needs. do is business insurance. We are laser-focused on delivering super quick insurance quotes with bottom dollar prices. We take a lot of pride in helping small business owners buy better business insurance with fewer headaches, and lower rates. We shop your IL liability coverage with multiple insurance companies, so you do not have to.