What is Independent Contractor Insurance and Is It Worth It? 4 Things to Know

Charlotte Miller

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What is Independent Contractor Insurance and Is It Worth It? 4 Things to Know

Workplace injuries are costly, and you’re responsible for your medical bills if you’re an independent contractor. The main cause of workers’ comp death claims is traffic accidents that occur when the employee is in a work vehicle.

Independent contractor insurance can help protect you financially if you get hurt or ill at work. It can also provide coverage for your vehicle if the damage occurs in a work-related accident.

So, what is independent contractor insurance? Is it worth the cost? Here are four things to know:

  1. It can Protect Your Financially After an Injury

On average, 2.8 out of 100 workers in the U.S are injured in workplace accidents every year. Independent contractor insurance can help protect you financially if you’re one of those workers.

Independent contractors are not eligible for workers’ compensation insurance, a state-mandated program that benefits employees injured on the job.

So, if you’re an independent contractor and you get hurt while working, you likely won’t be able to rely on workers’ comp to cover your medical bills and lost wages.

Instead, you’ll have to rely on your health insurance or, if you don’t have any, you’ll have to pay for everything out of pocket.

Independent contractor insurance can help fill the gap left by workers’ compensation. It’s basically a type of liability insurance that can cover your medical expenses and lost wages if you’re injured while working.

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  1. It Can Also Provide Coverage for Your Vehicle If The Damage Occurs in a Work-Related Accident

Nursing assistants, heavy truck and tractor-trailer truck drivers, laborers and freight, stock, and material movers are considered the most dangerous jobs in the U.S. So, if you’re an independent contractor to any of these occupations, you may need IC insurance.

Independent contractor insurance can cover on-the-job accidents if you work in a high-risk occupation. It can also protect your vehicle if damage occurs in a work-related accident.

  1. Protection From Legal Issues

One of the best reasons to get independent contractor insurance is its protection from legal issues. If someone accuses you of negligence or damages caused by your work, your insurance policy can help cover the cost of a lawyer to defend you. 

Independent contractor insurance is not mandatory by law, but it is a good idea if you regularly work with clients or customers. 

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  1. Tax Savings

An independent contractor may not be considered an employee, so the company that hires them does not have to withhold taxes. However, the contractor is responsible for paying their taxes quarterly. Therefore, it can lead to significant tax savings for the company.

The insurance can also be used as a tax deduction.

  1. Peace of Mind

Whether you’re a freelancer, consultant, or small business owner who contracts with other businesses, independent contractor insurance can give you assurance and peace of mind that comes with knowing you and your work are protected.

It helps you avoid the risks of being an independent contractor, such as liability for damages you may cause to others or their building or property while working and lawsuits against you alleging professional malpractice.


 However, in general, if you work with other companies or individuals in any capacity, it is crucial to know “what is independent contractor insurance policy?” to protect yourself from potential risks. It would be advisable to have independent contractor insurance unique to your business.