To have an understanding of what is at stake, we’ll paint the picture of a scenario.
So, you are a builder contracted to expand the driveway of a customer. However, a tall tree is in the way and will have to be removed. You hire an Arborist, an independent contractor. In the course of removal, the tree strikes the home causing severe damage to the roof.
In the real sense, it’s the Arborist who holds responsibility for the accident. However, you will be held responsible for the damage and not the Arborist.
As a business, you’ll be assured that your general liability insurance policy will be enough; that’s far from the truth. What will happen next is that your business will be slammed with an expensive lawsuit. While you may be off the hook, your business credibility will be called to question.
Who is an Independent Contractor?
Hiring an independent contractor, also called freelancers, makes a lot of sense from a financial and business perspective. Your business is bound to benefit from the experience, expertise, and skillsets on offer. It is said that hiring independent contractors will not only save you money but also time and paperwork.
Whether it’s a designer, accountant, data analyst, or copywriter, you’ll pay on a project basis. That sounds like a sweet deal. Despite the numerous benefits accruable, you might also find yourself dealing with nightmares when things go awry.
When working with independent contractors, you owe it to yourself and your business to put in place protection mechanisms. From the legal perspective, it is expected that you’ll have an independent contractor agreement in place. However, this is going to prove inadequate in the event of any mishap.
What To Do When Working With Independent Contractors
Let’s identify the tips to improve your understanding of how to protect your business when using independent contractors;
1. Understand Your Current Coverage
The first point of entry is perusing your existing coverage. You need to understand the place of independent contractors before signing the dotted lines with one. To stay safe, talk to your insurance advisor about bring on an independent contractor.
2. Ensure The Independent Contractor Has Adequate Coverage
While you should only engage independent contractors with the skills, experience, and track record, that will not be enough. You will have to go ahead to verify that the contractor carries enough coverage in the event of any mishap in the course of discharging their duties. It is recommended that they carry the same coverage and limits as your insurance.
Be insistent on possessing insurance as a condition of service.
3. Increase Your Level of Protection With an Umbrella Coverage
To stay on a safe lane, you can opt for umbrella coverage if you are unsure of the independent contractor’s policy. Umbrella coverage is an extra level of protection beyond the standard policies.
Umbrella coverage is not a stand-alone policy; it works with other liability coverage.
Never go into a gentleman’s agreement with an independent contractor, else your business might suffer for it. Do your due diligence as a business to ensure that you are fully protected while enjoying the benefits of using an independent contractor.
Finally, don’t fail to explore all possible avenue on how to protect your business when engaging a freelancer, you’ll be better for it.