The issue that many business operators have to contend with is knowing what type of cover they need and what level of protection is required.
Here is a look at the recommended types of insurances for 1099 contractors so that you can arrange the right insurance deal for your business, including an overview of how the type of work you are bidding for and doing will affect the specific insurance you need.
Protect your business if something goes wrong
One of the first aspects to consider is professional liability insurance coverage.
When you are searching insurance for handymen at next-insurance.com, for instance, you want to check that you also have professional liability coverage which includes an element of protection against injuries on site and equipment breakages.
Liability insurance serves an important purpose and is designed to protect your business if something goes wrong and there is a scenario where there might be a claim filed against your business.
If you are a contractor and have spent time on a number of different sites it is not hard to see the ongoing potential for someone to suffer a slip, trip or fall, or a piece of equipment failing or being misused, resulting in an accident.
When you are arranging liability coverage make sure you take into account the minimum level of cover you might need in order to be accepted as a bidder for certain contracts. This is normally specified in contract documents and if your cover is not high enough you probably won’t be considered in the bidding process.
Similar to liability insurance
If you have employees you will need to look at workers compensation coverage.
This is similar insurance coverage to liability insurance in a number of ways but the specific difference between the two is that workers compensation is aimed at covering the business owner plus any of their employees.
You will find that the rates quoted to you will be based on the perceived risks attached to the work that you carry out. Each state stipulates that companies with employees provide workers compensation coverage and there are penalties likely to be levied if you don’t have this in place.
Protecting against disability
There is no doubt that disability insurance can be considered a smart and prudent move for a 1099 contractor to arrange.
This insurance option is designed to pay a specific weekly benefit to a contractor if you are unable to work as a result of a disability caused by carrying out your work.
You will find that there is a waiting period when you take out disability insurance before you are able to start receiving the benefit, so the payments will not normally start immediately after the event that has caused you to suffer the disability.
You can choose the waiting period before the insurance benefit starts to pay out and this will have a direct influence on the level of premium you are asked to pay, reducing the cost of the cover if you can afford to extend the waiting period for benefits.
Completing a project
Another type of insurance that a 1099 contractor might need to look at is a performance bond.
As the name implies, the bond is tied to completing work satisfactorily and on time and it is a financial commitment to offer a level of assurance that the work will be completed in accordance with the schedule of works agreed.
The idea of a performance bond is to protect the hiring entity from suffering from poor workmanship or if they are let down because a contractor is unable to finish the work, through illness or disability, for example.
The reason for having a performance bond is that it gives a level of coverage and assurance that is preferable to pursuing litigation when a job doesn’t go to plan.
A cash performance bond provides a guarantee that a project will be completed and is another insurance option that should be on the radar of any 1099 contractor.
If you want to be sure that your business and workers are protected from some of the dangers and consequences attached to contracting work arranging the right business insurance is the way to do that.