When you are offering services to other businesses and people as a independent contractor in Colorado, it is important to protect yourself against the many risks that such a business brings by getting yourself good independent contractor insurance.
We will explain in this article what the main aspects of insurance for independent contractor involves, with special reference to the specific requirements in Colorado.
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General Liability Insurance ->
Professional Liability ->
Product Liability Insurance ->
Commercial Auto ->
Workers Compensation ->
Commercial Property ->
Other Business Insurance ->
The three main areas that need to be covered are liability, asset protection and requirements set by Colorado regarding safety and workers compensation.
When you are running a independent contractor business in Colorado, what liabilities does that create?
In Colorado, every business that carries out its main activities in the homes and premises of customers, which is the main activity of independent contractor, are legally governed by relevant state and federal laws that create a “duty of care” to you to protect the people and property of your customers.
This falls under the title of General Liability, and your business needs to protect against this risk by taking out general liability insurance in Colorado.
Simply by working in Colorado and walking onto a customer’s site when your business has been hired as independent contractor to perform some task, you have accepted that you are responsible for the safety and protection of people inside your working domain.
The legal principle of due care in Colorado defines a responsibility that a person in a particular situation is expected to keep the working area or any other place around it in proper and safe working condition.
In other words, it means being sufficiently careful so that any other person (a third party) doesn’t get injured or have their property and possessions damaged.
You are expected to act with due care in carrying your work or you could suffer the consequences.
Another way of looking at the duty of independent contractor is that you must avoid any possibility of negligence, since the law in Colorado can treat failing to act as an “average person” would have done as being negligent.
For example, if you have laid out the worktools you need for your job across a doorway, and a person steps into the pile and falls, then even though it may be that your were acting in the same way as all independent contractor normally do, if it is not the sort of thing that an “average person” would do, you can be held to be negligent and have to bear the consequences.
General liability insurance for independent contractor protects you in case an accident occurs while you are working at a customer worksite and the person injured or whose property was damaged claims that you either were negligent or put another person at risk, in which case you can be held guilty of a breach of your duty to exercise due care.
The kinds of injury claims that can be made for which independent contractor need general liability insurance include costs of any medical treatment, including hospital and nursing charges, ambulance fees, post-hospitalization treatments such as physiotherapy or occupational therapy.
As well, people can claim that some damage was done to their property and possessions and demand all costs of repairing or replacing property that was damaged or destroyed.
In any event of a court case, a claim can be made for the legal costs, regardless of whether or not you were at fault
Because you are offering specific and specialized independent contractor services in Colorado, you also have a duty to perform the work at an acceptable standard, and if a customer feels that the result of your work was not up to general standards, they could sue you for recovery of any resulting costs.
To protect your business in case a customer sues your, because there is a risk that something can go wrong in the performance of your services, you need to take out independent contractor professional liability insurance (also called Errors & Omissions insurance for independent contractor in Colorado).
Asset insurance for independent contractor
The basic physical tools and equipment that you use in your independent contractor business for work may be left unattended or exposed on a worksite.
If they are damaged, lost, or stolen, you may need to replace the expensive equipment in a hurry. Until you do it can result in work delays and missed deadlines.
The main benefit of having full independent contractor equipment insurance in Colorado is that you have the ability to go out and immediately replace the missing equipment or tools with the confidence that the insurance company will cover the costs.
With equipment insurance, you will be prepared for any unexpected occurrences, and also be sure that you are financially protected. In our estimates of costs, we show the likely cost based on the “insurable value (IV)”, which should at a minimum be the replacement cost of the tools and equipment.
If like most other independent contractor you are transporting yourself, any workers and your equipment out onto worksites in a van or truck, it’s essential to have full commercial auto insurance in Colorado.
Even more important is to know that if you ever use a private vehicle for work activity, your personal insurance will not cover accidents, theft or any other loss.
In our estimates of costs, we show the likely cost based on the “insurable value (IV)”, which should at a minimum be the replacement cost of the auto.
Wherever you operate your independent contractor business out of, whether it’s a part of your own home or some other owned or rented property in Colorado, you need to have a separate commercial property insurance policy in Colorado to cover the value of the dedicated space against fires, storms, flooding and other natural occurrences, and also against man-made events like vandalism and arson.
The costs of the insurance depends on the declared value of the property.
In our estimates of costs, we show the likely cost based on the “insurable value (IV)”, which should at a minimum be the replacement cost of buildings and content.
independent contractor insurance cost in Colorado
Every independent contractor business in Colorado has its own unique features.
As a result your independent contractor insurance requirements will need to be calculated according to your own special features.
Aspects like the size of your business, the location in Colorado, the number of employees, the length of time that you have been operating your independent contractor business, any relevant claims history, and many other things will affect the cost.
In the table we will give some very general guidelines for what independent contractor can expect for their business insurance in Colorado.
Before making any decisions, talk to experienced insurance agents and insurance brokers, and also consult directly with the local insurance companies in Colorado.
A good way to start locating the people you need to talk with is to do a very general web search (in Google or your preferred search engine) looking for a wide term like “independent contractor insurance agent in Colorado“.
The table shown below lists three categories of likely insurance levels recommended for small, medium and large independent contractor businesses, along with the likely annual premiums you can expect to pay.
Take this as a very general guide and discuss all your options with your insurance agent, broker or company before deciding.
|Subject||Level of cover||Likely average cost per year|
Small and startup business
|General liability||$1 million per year, maximum $250,000 single claim||$450 – $650|
|Professional liability / E & O||$50,000 full year, $25,000 single claim with $250 deductible||$250 – $400|
|Commercial property||Calculated on insurable value (IV) with $250 deductible||$.50 – $.55 per $100 IV|
|Equipment||Based on insurable value (IV) – per $10,000 with $250 deductible||$120 – $175|
|Vehicle||Depends on the insurable value (IV) with $250 deductible||$1200 – $3000|
Medium size business
|General liability||$2 million per year, maximum $1 million single claim||$500 – $750|
|Professional liability / E & O||$100,000 full year, $50,000 single claim with $1,000 deductible||$650 – $900|
|Commercial property||Calculated on insurable value (IV) with $500 deductible||$.35 – $.50 per $100 IV|
|Equipment||Based on insurable value (IV) – per $10,000 with $500 deductible||$100 – $200|
|Vehicle||Depends on the insurable value (IV) with $500 deductible||$1100 – $2700|
|General liability||$5 million per year, maximum $1 million single claim||$1500 – $2250|
|Professional liability / E & O||$500,000 full year, $100,000 single claim with $2,500 deductible||$950 – $1300|
|Equipment||Based on insurable value (IV) – per $10,000 with $1,000 deductible||$80 – $150|
|Vehicle||Depends on the insurable value (IV) with $1,000 deductible||$1000 – $2500|
What other benefits are there in independent contractor liability insurance?
None of the liability insurances cover every kind of allegation, such as deliberately breaking the Colorado law or deceiving customers.
However, they give the very important benefit of shifting the duty of defense over onto the insurance company.
Instead of you having to look for a defending legal team, you have the insurance company’s experts doing the defense on your behalf.
Can independent contractor get short-term insurance cover in Colorado?
If you run a seasonal operation in Colorado, catering for influx of tourists, or for closures during winter months, then you can negotiate insurance for shorter cover periods, including 24-hour, daily, weekly or monthly insurance.
This will usually save a proportion of the full-year cover.
How can you save on the premiums for independent contractor insurance in Colorado?
One of the best ways to reduce premiums for independent contractor is to agree to a deductible amount on any claim.
This means that your business meets the first amount of any claim, up to the agreed amount. Insurance companies want to avoid dealing with “nuisance” claims because they create very high costs.
Talk to your agent or broker and see how much money you can save.