Does General Liability Cover Independent Contractors?

Jul 14 2025 15:00

Understanding Liability Risks with Independent Contractors

When working with independent contractors, understanding liability risks is crucial. Many business owners assume their General Liability (GL) policy provides comprehensive protection, but the reality is more complex. If contractors don't have their own coverage, businesses face significant risks.

Your GL Policy Covers Your Business

Independent contractors are not employees, but their actions can still impact your business. While a GL policy may cover lawsuits related to the contractor’s work, these individuals are not automatically insured under your business's policy.

Insurance Solutions to Reduce Your Risk

Require Contractors to Have Their Own GL Insurance

Many industries require contractors to maintain their own policy. This ensures that claims from their work are covered by their policy, not your business’s.

Ask for Proof of Insurance

Always request a certificate of insurance (COI) from contractors. Hiring without verifying coverage can pose significant risks.

Be Named as an Additional Insured

Require contractors to list your business as an additional insured. This extends coverage and mitigates risk.

Consider an Owner’s and Contractor’s Protective (OCP) Policy

An OCP policy, purchased by the contractor but covering your business, provides primary liability protection.

Use a Well-Drafted Contract to Clarify Insurance Responsibilities

Clearly outline insurance requirements and liability in contracts. A well-crafted contract can prevent disputes by detailing these responsibilities. Proper insurance coverage is critical when hiring independent contractors. Failing to verify their insurance could leave your business responsible for claims. Consider assessing your current contractor policies and take action to ensure full coverage.