Types of Insurance That Every Independent Contractor Needs

Types of Insurance That Every Independent Contractor Needs


Many different types of insurance need to be considered when an independent contractor enters the home or place of business to work on a basement. Whether you are a homeowner reading this to better understand the process, or you are an independent contractor yourself, this blog will clearly explain the different types of insurance both parties need to get the job done.  

What is General Liability Insurance?

What is General Liability Insurance? In one word, essential! This insurance is mainly designed to cover expenses stemming from any job-related accidents and injuries.

How it works:

  • You purchase a General Liability Insurance plan.
  • An independent contractor causes injury or damages property.
  • The insurance company will cover it (up to a certain amount) under general liability insurance.

Having said this, every independent contractor, homeowner, and place of business should have some form of general liability insurance before the project begins. Although General Liability Insurance is not always mandatory, ask yourself, “what is General Liability Insurance compared to the cost of an actual lawsuit?” Leading companies such as Basement Masters will always have strong General Liability Insurance – in fact, most people won’t do business with basement remodeling companies unless they have it!

What is Umbrella Insurance?

Umbrella insurance is one of the many different types of insurance that’s designed to protect you from a major lawsuit. It is basically an upgrade your existing policy so that you have will more coverage than the standard liability deduction. In other words, if you get in more financial trouble than a standard policy covers, then the umbrella insurance policy will usually kick in (at least with most cases).

Essentially, you pay more to the insurance company now in exchange for having them pay higher settlements later. If you are a homeowner or own a place of business, then an Umbrella insurance policy could be a wise investment. If you are an independent contractor, it is also a good idea, but not nearly as important (because most circumstances in Umbrella policies relate to the property owner).

There is, however, a second reason for contractors to have Umbrella insurance. Your company might take on a big project with a contract requiring an increase in your current General Liability Insurance coverage. Adding an Umbrella insurance policy to your existing General Liability Insurance plan is an easy way to do this (doing this is sometimes called Excess Liability Insurance). Basically, almost any basement remodeling company looking to expand to bigger projects will eventually need Umbrella insurance! 

What is Workers Compensation Insurance? 

Workers Compensation Insurance is a crucial way to make sure employers reasonably take care of their workers. It has two purposes: first, it guarantees workers will get reimbursed for lost income and medical expenses in the event of an emergency. Second, it mostly prevents the employer from being sued for negligence (though not always).

Exactly what is workers compensation varies from state to state. Your state will have its own set of laws that determine payouts, layouts, and whether such insurance is mandatory or not. Some states, for example, will require you to buy Workers Compensation Insurance after your company grows to a certain number of employees. Check with your state’s local website to find out more about your area.

If you are the one having your basement worked on, you don’t need Workers Compensation Insurance. If you are a contractor, however, it is absolutely in your best interest to have Workers Compensation Insurance (and oftentimes mandatory).

What is Commercial Auto Insurance? 

Commercial Auto Insurance only applies to contractors. This form of insurance covers vehicle repairs, and many different types of expenses stemming from automobile accidents.

If one of your employees gets into an auto accident – even in their own personal vehicle – you could be held responsible. Commercial Auto Insurance kicks in whenever an employee’s personal insurance is not enough to cover damages. It can also cover professional tools and other work equipment inside of the vehicle.   

What is Rental Equipment Insurance? 

Again, this is one of the different types of insurance that only the contractors have to worry about. Here’s how it works:

  • Many independent contractors will rent the necessary tools and equipment to get the job done.
  • The rental companies make them sign waivers saying that they take full legal responsibility for the rental equipment and will not sue in the case of an accident.
  • Contractors buy Rental Equipment Insurance to cover themselves in the event of an accident that occurred while using the equipment, or to cover the cost if the equipment is stolen or otherwise damaged.

Which Types of Insurance Are Most Important?

 At BasementRemodeling.com, we are far from legal consultants, so choosing from the different types of insurance is ultimately up to you. However, we can say that the more insurance you have, the more secure your projects will be, and that’s never a bad thing!

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