Top 6 Tips For Buying Insurance As an Independent Contractor


Millions of Americans are now working as independent contractors. It saves companies money, and can be very rewarding for the worker. Contractors are responsible for obtaining their own general liability insurance, for one thing. Unfortunately, a portion of that population is incorrectly classified. How can you know the difference, and how can you find affordable insurance if you need to? Here are 10 tips to help you:

  1. Know how being a contractor impacts your eligibility. The U.S. Labor Department believes that up to 30% of businesses may classify workers under the wrong category, either intentionally or accidentally. Being considered a contractor versus an employee is significant. Employers don’t have to pay unemployment or worker’s compensation taxes for contractors, unlike employees. While an employer is not required to offer coverage to an employee, either, they are more likely to receive that benefit than a contractor.
  2. Make sure that you are truly an independent contractor, not an employee. The main difference between an employee and a contractor centers around autonomy and control. If you must report to an office every day during specific hours and receive specific assignments, you are generally considered as an employee. If you can decide when and where to perform your work, you’re a contractor.
  3. If you have been denied group benefits because you were falsely classified as a contractor, report it. You can file a lawsuit with the labor department against your company for the back value of lost benefits. The IRS is also stepping up enforcement, so you may want to contact them.
  4. If you are a legitimate contractor, start looking for affordable general liability insurance as soon as possible. As an independent contractor, you have the freedom to pick from among the variety of general liability insurance plans available. The healthier and younger you are, the more options that will be available. The good news is that you don’t have to wait for a corporate open enrollment period; just buy a plan right away, and it can take effect as soon as the next day–and no later than the following month.
  5. Choose a high-deductible plan. It still covers most essential general liability insurance aspects, but normally forces you to pay a certain percentage of the costsif anything goes wrong on the job. As a result, the premiums are lower. It’s better to have less comprehensive coverage for awhile than to stay uninsured, especially if you later develop a pre-existing condition.
  6. Shop around! Prices vary among general liability insurance companies. Each of the major providers offer different plans. One is sure to fit your needs.

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