Contractor Management 11 min

The handbook for independent contractor insurance

Written by Pedro Barros
January 18, 2024
Pedro Barros


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You’ve taken the bold leap into the exciting world of becoming your own boss. But lurking beneath that excitement is a tiny voice of concern nagging at you: “How do I protect myself and my business?”

That’s where independent contractor insurance comes into play.

The right insurance can protect you, but knowing what to choose and what you need isn’t always easy. You might have questions, such as:

  • What type of insurance should I get?

  • How much will it cost?

  • Can I even afford it?

After all, insurance can be murky territory filled with complex terms and perplexing options.

We’re here to clarify contractor insurance for you. In this article, we’ll simplify the insurance business. This will guide you in making informed decisions that will both protect your business and give you peace of mind.

Do independent contractors need insurance?

In short: ideally, yes. 

As an independent contractor, you need insurance, especially if you have your eyes set on bigger projects.

You may be tempted to save on insurance costs at the moment — that is until something unexpected happens.

Insurance coverage protects you from any damage resulting from your work or your operations. As an independent contractor, having insurance coverage means that you are backed by the insurance company and their team of professionals, who’ll handle any claims or legal issues that may arise.

Moreover, depending on your location and nature of the work, insurance may be mandatory for a contractor.

If you work with a larger business, it’s unlikely that they’ll get insurance for you. This is because adding an additional insured to their policy can lead to increased premiums. Even if you are included in the hiring company’s insurance plan, there may be exclusions that limit coverage for independent contractors. 

With independent contractor insurance, you know you’re protected at all times. You also have full control over the scope of your insurance coverage.

Be cautious of misclassification

Here’s where things can get tricky. 

If an employer gives you an offer with insurance, carefully consider the terms and conditions and read the fine print. While this offer may seem like a convenient option, it could have serious implications related to misclassification.

In certain countries and for certain types of workers, accepting insurance provided by an employer might indicate that you aren’t truly in an independent contractor relationship — rather, you’re an employee. This misclassification can lead to significant consequences for both you and the employer.

If misclassified, the employer may be liable for penalties related to misclassification. They may also need to provide statutory benefits and provisions that weren’t initially afforded to the contractor. As an independent contractor, you can lose freedom and flexibility to choose your work hours, projects, and clients.

That’s why it’s essential to understand the legal differences between independent contractor and employee relationships in your specific jurisdiction.

For more guidance on staying compliant as an independent contractor, check out Remote’s guide on employee and independent contractor misclassification.

Who should get independent contractor insurance?

Independent contractor insurance protects many occupations from potential risks and liabilities. The most common professions that need independent contractor insurance are:

  • IT consultants

  • Photographers

  • Freelance writers

  • Graphic designers

  • Event planners

While this list provides a quick overview, it’s crucial to consider insurance regardless of your occupation. The type of insurance you’ll need depends on the nature of your work. Take a look at different insurance types to help you pick the most suitable coverage for you.

Types of insurance for independent contractors

Choosing the right type of insurance coverage for your occupation is crucial. Here are several options to consider and how they can benefit you: 

General liability insurance

General liability insurance is a fundamental type of coverage for independent contractors. It protects contractors against third-party claims of bodily injury, property damage, advertising injury, and personal injury during their course of work. 

For example, let's say a freelance photographer damages prototypes while at a client shoot, or a graphic designer’s client falls in their office. A general liability policy would cover the resulting costs, including medical expenses and legal fees. Without this coverage, independent contractors would bear the brunt of all financial liabilities. 

You also show professionalism and credibility with general liability insurance. Clients are reassured that you’re prepared for unforeseen circumstances and capable of handling potential accidents.

Professional liability insurance

Professional liability insurance, also known as errors and omissions insurance, is specialized coverage that protects independent contractors from claims related to mistakes or negligence in their work. It’s particularly important for those providing professional services, advice, or expertise.

Certain professions like doctors, lawyers, consultants, and architects face higher risks of errors that could lead to financial losses and reputational harm. Professional liability coverage helps contractors deal with expensive lawsuits, legal fees, and damages. 

Take a marketing consultant for example. If their advertising strategy fails to deliver the results that were promised to a client, they could face a lawsuit. Omissions insurance would cover legal costs and potential settlements, mitigating the financial hit on their business and reputation.

Mistakes can happen to the best of us. Getting professional liability insurance is a smart move since it provides protection against potential mistakes, misjudgments, or oversights in professional work.

Commercial auto insurance

For independent contractors who travel for work or use vehicles for work purposes, commercial auto insurance is your go-to. When independent contractors travel to meet with clients, have meetings, or complete tasks related to their jobs, they face increased risks while on the road.

For professionals such as traveling salespersons, delivery drivers, equipment transporters, and mobile service providers, commercial auto insurance ensures they have the necessary protection on the road.

Picture a traveling salesperson who rents a car to visit clients from out of town every week. If a car accident were to happen during a business trip, this coverage would protect them from potential liabilities, property damage, and medical expenses.

Commercial property insurance

Commercial property insurance secures the physical assets and property that contractors use for work. It’s a great way for contractors with offices or workshops, expensive equipment, and inventory to safeguard their assets. 

The loss or damage to business property can cause financial setbacks or disrupt business operations. For example, if a contractor’s tools or equipment are stolen from a job site, that issue could severely impact the person's ability to complete projects on time — and, ultimately, result in financial loss.

This insurance provides coverage to replace or repair stolen or damaged items so that the contractor recovers from financial setbacks and resumes their business.

Workers’ compensation insurance

Workers’ compensation insurance helps contractors get support for medical expenses, wages, and rehabilitation after work accidents or illnesses.

This type of insurance is especially useful for independent contractors who work in physically demanding fields, such as construction, manual labor, or healthcare. The risk of injuries is higher in these industries, and workers’ compensation coverage offers support as necessary. 

If a physical therapist were to injure their back while assisting a patient during an in-home visit, workers’ compensation insurance would cover their medical bills and provide them with income replacement during their recovery period.

This support is invaluable when accidents happen, as the contractor can focus on getting better without worrying about financial burdens.

Business owner’s policy

A business owner’s policy (BOP) is an all-in-one insurance package that combines general liability insurance and commercial property insurance.

It’s a great choice for independent contractors because it protects you against a wide range of risks — namely third-party claims for bodily injury, property damage, and loss or damage to business property.

By bundling general liability and commercial property coverage together, independent contractors can save on costs while having complete protection for their business.

Do you need liability insurance when working with international clients?

Absolutely. When working with clients in different countries, it’s important to stay protected. Dealing with international clients has a unique set of challenges. If any issues arise, liability insurance can help you cover legal costs and potential damages.

Working with international clients means dealing with different legal systems, cultural norms, and business practices. When disputes happen, navigating unfamiliar legal territory can be even more challenging and costly. That’s why global contractors should always consider getting liability insurance to protect themselves.

What insurance should global contractors have?

As global contractors venture into international markets, getting insurance should a priority. While the insurance you need varies depending on your location, here are some key insurance types that you should consider.  

Standard insurance types for global contractors: 

  • Foreign general liability insurance

  • International commercial property insurance

  • Business travel insurance

  • International professional liability insurance

Other insurance types to consider:

  • Political risk insurance

  • Export credit insurance

  • Kidnap and ransom insurance

  • Foreign voluntary workers’ compensation insurance

How much does independent contractor insurance cost?

Insurance costs vary according to type of coverage, nature of the contractor’s work, level of risk, and desired coverage limit. Your location, business size, claims history, and deductible, also affect the cost.  

For office roles, the average cost of general liability insurance is around $360 per year. If you include commercial property insurance or a BOP, the annual cost is roughly $500. For on-site jobs, the cost can reach up to $1,200 annually.

How to save big on insurance costs

When it comes to independent contractor insurance, striking the right balance between affordability and adequate coverage is the sweet spot. Here are Remote’s tips for saving on insurance costs without compromising protection:

Compare coverage options

Don’t just sign with the first insurance provider. Shop around and compare quotes. After you explore the market, you’ll know the best rates and coverage for your needs.  

Bundle policies

Bundling different insurance policies, like commercial property and general liability policies, is cost-efficient. Consider getting annual insurance instead of making monthly payments. It's usually cheaper to pay yearly.

Adjust coverage limits 

What type of protection do you really need? Carefully assess your requirements and adjust your coverage limits to suit your profession.

Explore discounts 

Ask about discounts. There are a variety available for safety measures, claims-free history, industry affiliations, and more. 

If you need more guidance, consult an insurance broker to help you find cost-effective options.

Coverage limits and deductibles

Every independent contractor should be aware of coverage limits and deductibles of their insurance. These factors determine the amount of money you receive from the insurance company, and how much you need to pay out-of-pocket in the event of a claim.

Let’s discuss each of them in detail.

Coverage limits

Coverage limits are the maximum amount an insurance policy will pay out for a claim. When deciding on a coverage limit, evaluate the risk of the job, the potential costs of a claim, and your financial situation.

For example, a general liability insurance policy may have a coverage limit of $1 million per claim and a $2 million aggregate limit. This means it covers up to $1 million for each claim and up to $2 million in total claims within the policy period.

Setting appropriate coverage limits ensures you have the right level of protection for your situation.


A deductible is the amount that the independent contractor must pay before the insurance coverage kicks in. Choosing the right deductible amount involves balancing premium costs and potential out-of-pocket expenses. 

A higher deductible typically leads to lower premiums but requires the policyholder to pay more in the event of a claim. 

Let’s say you get an auto insurance policy with a $500 deductible. This means you must pay the first $500 of any covered claim, and the insurance will cover the rest. 

Properly setting your deductible amount helps you protect yourself while staying on budget. 

Protect yourself and your business today

Being an independent contractor means you get to work on your own terms. It also means you’re responsible for protecting yourself and your business. 

Getting the right independent contractor insurance gives you the peace of mind to focus on doing what you love.

While insurance is a great way to protect yourself, why stop there? You likely have other questions about working independently, especially if you plan to work with international clients.

Luckily, you don’t have to go at it alone. Get started with Remote today to take care of invoicing, signing contracts, and onboarding in one single platform.

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