The Importance of Independent Contractor Insurance

Being an independent contractor has many benefits. You likely have job flexibility, a level of independence, and variety that is unmatched in any other work model out there! But along with the benefits come certain risks. To ensure both you and your family are protected from any potential risks, it's important to have independent contractor insurance. Although you may never need it, you're going to regret not having it if you or your corporation are named in any lawsuits down the road.

You may be thinking, “But what are the odds of a lawsuit actually happening?” or "I'm an honest independent contractor so I won't be caught up in any lawsuits". Although these are reasonable questions and statements, many business owners will have a lawsuit filed against them at some point during operation. You might intend to do everything right, yet a lawsuit can still happen.

Errors & Omissions and Commercial General Liability Insurance as an Independent Contractor

If you are incorporated or a sole proprietor, you'll need to obtain both Errors & Omissions ("E&O") and Commercial General Liability ("CGL") insurance. These protect against litigation expenses related to bodily injury or property damage caused by a person legally liable for those damages (i.e., an employee). This is required by law. The E&O covers professional advice given during a claim while CGL protects independent contractors from missteps made while operating their company (e.g., expenditures without proper authorization).

You may be wondering how much protection E&O and CGL offer and how much coverage you should obtain. As litigation is increasingly prevalent, it's a worthwhile business expense. The general recommendation is to have a minimum of $2 million coverage for E&O and CGL, separately. Additionally, independent contractor insurance is a fully tax-deductible business expense. Obtaining insurance also enables you to establish yourself as a contractor according to Canada Revenue requirements.

What Company Should I Use to Obtain Independent Contractor Insurance?

The company you use to purchase independent contractor insurance from depends on what you, as an individual and a contractor, are most comfortable with. You should use a company that you feel you can trust. Thus, you may find it helpful to shop around before making your decision. PROLINK is often recommended. They are an innovative insurance brokerage headquartered in Toronto, Ontario and provide quality services to professionals throughout the country. They have satellite offices so they can serve independent contractors across Canada. PROLINK has been operating for more than three decades and prides itself on understanding the needs of each profession. They offer industry-leading coverage at competitive prices. You can read more about PROLINK’s insurance and apply here.