Becoming a contractor has its perks, but it also has its downfalls… workplace cover insurance costs being one of them. Independent contractors run their own business, hiring out their services to other organisations, and unlike employees, independent contractors negotiate their own fees and working arrangements. They can work for a variety of clients at one time, and if they have specific expertise, independent contracting can be an ideal way of capitalising on their knowledge.
As an independent contractor, your entitlements and obligations differ from an employee in many ways. It is wise for contractors to know the rights and responsibilities of contractor workers before beginning to save time and money.
Unlike employees, independent contractors are generally responsible for their own workplace insurance cover and bear the commercial risk for losses suffered from any work performed. Depending on the contract agreement, both the independent contractor and the hirer may have liability insurance and workers’ compensation obligations.
Workers Compensation – Workplace Accident Insurance
Workers’ compensation laws are state and territory based. As an independent contractor, you may not necessarily be entitled to workers’ compensation unless you have arranged your own workplace accident insurance. Consider personal injury and illness insurance to ensure that you are financially secure should any accident or illness prevents you from working. Some independent contractors are covered by workers’ compensation in some states and in specific circumstances. To find out if you are covered, contact your state or territory’s work, health and safety and workers’ compensation agency.
Liability insurance protects you against the financial risk of being found liable to a third party for death or injury, loss or damage of property or monetary loss resulting from your negligence, your advice or your provision of unsafe products or services. As an independent contractor, it’s extremely important that you consider liability insurance, as the costs of being found liable or negligent can be extremely high. You can take out a number of different types of liability insurance including public or product liability and professional indemnity.
All independent contractors must make sure they are adequately covered under some form of Professional indemnity insurance. This insurance provides protection for trained workers and businesses in Australia from claims made against them for negligent acts or breach of duty while performing their service. This type of cover is designed for trained workers or businesses that give advice and/or provide a service to individuals or businesses and are looking for a form of protection against legal claims not covered under general insurance policies. Professional indemnity insurance does not generally provide cover for criminal prosecution and a number of other liabilities recognised under criminal law though other forms of insurance may cover these. Make sure you compare the different workplace insurance options available to find a suitable match for you.
Asset and Revenue Insurance
Asset and revenue insurance provides protection in the event of burglary, natural disaster, machinery breakdown and other forms of damage. It’s likely that most of the equipment you use during the course of your contract will be your own, so you should consider asset and revenue insurance to help minimise the financial risk.
If you work from home, you should ensure that you have the correct level of insurance to protect your business. In some cases, home and contents insurance does not cover home-based businesses. In addition to the types of insurance mentioned above, you should also ensure that you are protected from incidents including natural disaster, fire or theft. Many insurance policies don’t cover tools of trade, office furniture or computer equipment used for your business – you may need to advise your insurer that you require cover for your business assets.
There are alternatives such as working through an on hire company that covers some, if not all of your insurances, which means that you get the freedom to be independent contractor but don’t have to worry about some of the independent contractor liabilities. Above all, make sure you get the correct advice in regards to what you need to be covered for as a contractor in your particular skill.