People and businesses that operate as independent contractors aren't covered by the insurance of the companies they provide with services. To properly protect themselves and their business, they must obtain their own insurance. In addition, some companies require that the service providers they hire or consider hiring show proof of insurance, since its absence could pose an issue for the hiring company.

Liability Insurance

General liability insurance provides coverage and protection from various accidents or other potential disasters. Customers, suppliers or site visitors could trip, slip and fall or misuse a piece of equipment. Liability insurance typically covers any associated legal fees, medical expenses or judgments. If the independent contractor operates a vehicle for business purposes, the company should also obtain commercial liability insurance on the vehicle. This ensures that the insurance company pays if the vehicle is involved in a business-related accident.

Workers Compensation

Workers compensation is similar to liability insurance in many ways, but is solely reserved for coverage of the business owner and any employees. Rates are based on the hazard and risk inherent in the job role the covered individuals fulfill. States require that companies with employees provide workers compensation and will levy penalties if none exists.

Disability Insurance

If an independent contractor gets sick or injured and is unable to work, disability insurance pays a percentage of her wages during the period she's unable to work. Short-term disability insurance typically pays for up to 12 weeks. Long-term disability provides payments for an inability to work after short-term disability insurance ends, usually beginning in week 13. Self-employed individuals with significant savings may opt to purchase only long-term disability insurance.

Errors, Risks and Omissions

Errors, risk and omissions insurance provides coverage to professionals including consultants, accountants and attorneys. It provides protection against a disgruntled customer or client suing you for mistakes, nonperformance or poor performance. For example, a consultant analyzes operations and recommends changes. The company implements those changes improperly, suffers a drop in revenues as a result and then sues to recoup the difference. This type of insurance would pay the legal fees and any awarded damages.


Independent contractors providing maintenance or construction services operate at a higher risk due to the types of activities they engage in. Therefore, those with employees must have workers compensation and general liability insurance at a minimum. If a hiring company doesn't confirm that a company has such coverage, that hiring company could be liable for any legal actions or medical consequences of the contractor's actions.