Does General Liability Insurance Cover 1099 Contractors?

Understanding Liability Risks with Independent Contractors

Many business owners mistakenly believe that their General Liability (GL) insurance policy provides comprehensive protection, including coverage for independent contractors or 1099 workers. However, the reality is more complex. Not ensuring that independent contractors have their own insurance can expose your business to significant liability risks.

Your GL Policy Covers Your Business

Independent contractors, while not employees, can affect a business's liability through their work. A GL policy typically covers lawsuits involving a contractor's completed operations, but it doesn't automatically extend coverage to the contractors themselves. The distinction between employee and independent contractor is crucial for determining coverage.

Insurance Solutions to Reduce Your Risk

  • Require Contractors to Have Their Own GL Insurance: It's commonplace in many industries to require contractors to maintain their own GL policies. This ensures that any claims arising from their work are handled by their policy.
  • Ask for Proof of Insurance: Always request a certificate of insurance (COI) from contractors. This verifies their coverage and reduces the risk of liability falling on your business when hiring without verifying insurance.
  • Be Named as an Additional Insured: By having contractors list your business as an additional insured on their policy, you extend potential coverage to your business, mitigating risk.
  • Consider an Owner’s and Contractor’s Protective (OCP) Policy: An OCP policy offers primary liability protection and is purchased by the contractor, but covers the business in relation to the contractor’s operations.
  • Use a Well-Drafted Contract: Contracts should clearly outline insurance requirements and liability responsibilities to prevent disputes. An explicit contract can avoid ambiguity in the case of claims.
Reinforcing the need for proper insurance coverage when hiring independent contractors is crucial. Failing to verify insurance can leave a business liable for claims, so it's wise to assess your current contractor policies and take appropriate action to protect your business.