An independent contractor is a person or business who performs services for another person pursuant to an agreement and who is not subject to the other's control, or right to control, the manner and means of performing the services. The exact nature of the independent contractor's relationship with the hiring party is important since an independent contractor pays his/her own Social Security, income taxes without payroll deduction, has no retirement or health plan rights, and often is not entitled to worker's compensation coverage.
There are a number of factors which to consider in making the decision whether people are employees or independent contractors. One of the most important considerations is the degree of control exercised by the company over the work of the workers. An employer has the right to control an employee. It is important to determine whether the company had the right to direct and control the workers not only as to the results desired, but also as to the details, manner and means by which the results were accomplished. If the company had the right to supervise and control such details of the work performed, and the manner and means by which the results were to be accomplished, an employer-employee relationship would be indicated. On the other hand, the absence of supervision and control by the company would support a finding that the workers were independent contractors and not employees.
Another factor to be considered is the connection and regularity of business between the independent contractor and the hiring party. Important factors to be considered are separate advertising, procurement of licensing, maintenance of a place of business, and supplying of tools and equipment by the independent contractor. If the service rendered is to be completed by a certain time, as opposed to an indefinite time period, a finding of an independent contractor status is more likely.
Independent contractors insurance coverage is a type of insurance that is specifically designed to protect individuals who work as independent contractors or freelancers. It provides coverage for various risks that independent contractors may face in their line of work. This insurance is crucial for protecting independent contractors against financial losses due to accidents, negligence claims, or other unforeseen events. There are several types of insurance coverage available for independent contractors, each catering to specific risks and needs. 1. General Liability Insurance: This type of coverage is essential for all independent contractors. It protects against third-party claims for bodily injury, property damage, and personal injury caused by the contractor's work. General liability insurance can cover legal fees, settlements, and medical expenses resulting from covered claims. 2. Professional Liability Insurance (Errors and Omissions Insurance): Independent contractors who provide professional services, such as consultants, lawyers, or architects, should consider this coverage. It protects against claims of professional negligence, errors, or omissions that could result in financial losses to the client. Professional liability insurance covers legal fees, settlements, and damages. 3. Workers' Compensation Insurance: This coverage is relevant for independent contractors who have employees working under them. It provides wage replacement and medical benefits to employees in the event of work-related injuries or illnesses. Workers' compensation insurance also protects the independent contractor from potential lawsuits filed by employees related to work injuries. 4. Commercial Auto Insurance: Independent contractors who use vehicles for work purposes should have this coverage. It provides protection in case of accidents, damages, or theft involving vehicles used for business operations. Commercial auto insurance covers vehicle repairs, medical expenses, and property damage resulting from covered events. 5. Cyber Liability Insurance: Independent contractors who handle sensitive client data or operate online should consider this coverage. Cyber liability insurance protects against data breaches, cyberattacks, and hacking incidents. It covers legal expenses, investigation costs, and potential financial liabilities resulting from data breaches. 6. Equipment and Tool Insurance: Contractors who rely heavily on specialized equipment, tools, or machinery should consider this coverage. It protects against damage, theft, or loss of equipment while on the job site or in transit. Equipment and tool insurance typically covers repair or replacement costs. Independent contractors should carefully assess their specific needs and risks associated with their line of work before selecting the appropriate insurance coverage. Different types of independent contractor insurance coverage can be combined or customized to create a comprehensive insurance package that suits their specific requirements.
