The following guest post is presented by Bunker:
The word insurance has prompted many an eye roll over the years. Add “liability” in front of it and an eye roll quickly turns to a glossy gaze. It’s not hard to understand why; the commercial insurance industry is deeply rooted in PDF documents, out of date tech processes and poor customer service. All of this leads to misunderstanding and miscommunication between a growing workforce of independent professionals and an industry still intent on treating them like mega corporations.
Wonoloers value independence, flexibility, and autonomy over your work. Complex systems like business insurance can make it feel like some of that’s slipping away. Bunker is on a mission to ensure independent professionals have the proper coverages for their various contracts and eliminate excess costs forced upon them by the traditional system. The first step to truly having agency over your career is understanding your options, your requirements, and what questions to ask to make sure you’re getting coverage that’s right for you as an individual.
Here’s the information you’ll need to feel empowered to face the insurance industry head on.
First, some definitions.
There are countless types of businesses, each with their own risks and capital. As an independent contractor, you are considered a business, albeit a very small one. In order to tailor insurance to the actual needs of a business, it’s segmented into the specific risks it addresses. While some businesses may require everything from Cyber Liability Coverage to Crime insurance, gig workers typically require a General Liability Policy. General Liability provides protection when you are legally liable for bodily injury or property damage. It also provides defense if someone alleges you caused bodily injury or property damage. The duty of the insurer to defend you is generally broader, than the duty to indemnify.
Here’s a breakdown of some common terms that you might come across in your General Liability policy
Occurrence Limit is the maximum amount payable per claim.
Aggregate Limit is the maximum amount payable per policy term.
Product or Completed Operations Limit is the amount payable for damages arising out of the insured’s products or business operations conducted away from the insured’s premises once those operations have been completed or abandoned.
Advertising and Personal Injury Limit is the amount payable arising out of false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; and invasion of privacy.
Medical Payments cover medical or funeral expenses incurred by such persons as a result of bodily injury (BI) or death sustained by accident under the conditions specified in the policy.
Coverage Levels and premiums are the maximum limits payable outlined in an insurance policy and the cost to the insured.
Again, insurance is not a one size fits all product. That being said, similar types of work will need similar protections. Usage Based Insurance allows you build the exact coverage you’ll need for your job, but here are some profiles to give you an idea of what you’ll be looking at.
Meet Abby. She just landed a year long gig working in as a landscaper in Arizona. Her average day will consist of gardening & lawn maintenance.
Her contract requires her to have a $1 million General Liability policy. Abby will likely have to pay $62.50 each month, for a total of $750.
Meet Collin. He has contracted with the Mall of America to host his kiosk over the holiday season. His day will consist selling iPhone cases to passing customers, keeping inventory, and preventing shoplifting.
His contract requires him to have a $1 million/2 Million General Liability policy. Using Bunker, Collin will have to pay $41.67 each month, or a total of $125 for the duration of his three month contract.
Without looking beyond traditional insurance options Collin may have had the same monthly rate. However, because they stick rigidly to year-long contracts, he would likely have ended up paying $500 for an annual policy.
Why Do I Need Insurance?
While many independent professionals only purchase business insurance when it’s required for gig, there are recognizable benefits of having it, all focused on protecting your livelihood from suffering a catastrophic financial loss due to an accident that may happen during the course of your work.
From a contractual standpoint, when you work as an Independent Contractor on behalf of a company, your risk flows upstream to your Client, which is why most contracts require you to carry business insurance. Your coverage thereby protects the Client from accidents you may have caused while working. For example, it’s not uncommon for the Client to be named in a lawsuit over the actions of a contractor, so having proper policies and endorsements in place ensures the Client does not suffer the consequences for a contractor’s errors.
Exceptions to the Rule
Generally speaking, insurance requirements in contracts often come from historical records they’ve used for years with larger vendors and suppliers. That being said, the ambiguous requirements for business relationships can be to your benefit. Often times, required coverages can be “waived” by the Client because they may not apply to the specific engagement.
As an independent contractor, you can request for coverages to be waived that you don’t believe are necessary for the work you are performing. Just keep in mind that it’s up to the Client, many of which are rooted in very disciplined risk management practices.
Asking the Important Questions:
Sometimes it can feel like the insurance industry is intentionally confusing. If there are requirements, quotes or policies that you don’t understand, it’s best to ask questions. No matter who you’re insured with, Bunker’s team of licensed insurance advisors is always available for a phone call or an online chat to make sure you feel comfortable and in control of your coverage. Here are some important questions to make sure you have the answer to:
There is hope for the commercial insurance industry with the evolution of the gig economy. The increase in independent contractors has forced insurance carriers and brokers to develop new products and modify existing ones to better serve the unique needs of the gig workforce. As insurance companies continue their advancements, products will increasingly become priced more competitively and be better tailored.
Bunker’s Usage Based Insurance is a testament to this future. We worked with carriers for two years to develop the first product that allows independent contractors to purchase insurance for the specific term and avoid unnecessary costs. Coverages are tailored to their unique situation, quotes are received within minutes, and completed through our website so you can get back to work faster.
It’s no secret that insurance is confusing. If you remember anything from this blog post, remember that having a brief conversation with an insurance professional to ask the right questions can help provide clarity and assurance for your coverages – ultimately making sure your business is protected and saving endless amount of headaches!