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What are the Best Types of Insurance for Independent Contractors?

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  • Written By: Tess C. Taylor
  • Edited By: W. Everett
  • Last Modified Date: 03 November 2016
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Entrepreneurs and independent contractors generally do not have all the benefits of traditional full-time employees, including insurance benefits. It is often necessary for these self-employed professionals to purchase their own insurance for independent contractors. These insurance plans can include health insurance, supplemental wellness insurance, retirement and life insurance, disability insurance, and property and liability insurance.

Finding health insurance for independent contractors is often a priority for new entrepreneurs who have lost these benefits. Health insurance can be bought from companies that sell independent health insurance plans to independent contractors, though these policies are generally more expensive than the group plans provided by full-time employers to their workers. Wellness insurance and medical discount plans are also available to independent contractors. These typically can be purchased at a group rate for those who belong to independent contractor unions or associations.

Entrepreneurs also generally need coverage for other areas of preventative health care, such as dental and vision insurance. They typically also need insurance for short-term special medical issues such as surgery or pregnancy services. When this is the case, supplemental insurance for independent contractors can be the solution. Many supplemental insurance plans are available that pay for routine wellness visits, eyeglasses, dental care, and preventative care.

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In addition to standard supplemental insurance plans, there is insurance to help cover independent contractors when they are unable to work due to serious illness or disability. Short- and long-term insurance for independent contractors can be purchased at a fraction of the cost of standard health insurance. During a period of time when a contractor cannot be productive, for example when undergoing treatment for cancer or recovering from an injury, this insurance typically gives a cash benefit to the household to help defray expenses.

For long-term goals, there is also life and retirement insurance for independent contractors. Instead of a 401K retirement plan, independent contractors may opt for a retirement savings plan or independent retirement accounts (IRA) because these allow pre-tax money to be set aside. Life insurance can often be purchased through group plans. Whole life can be used to save money for the unexpected expenses.

Liability insurance plans can help independent contractors protect property and home offices from financial loss as a result of injury, theft, or damage. This is a critical aspect of being an independent contractor because accidents and mistakes can happen, but personal assets need to be protected. Business liability insurance can protect independent contractors from lawsuits brought by customers.

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mobilian33
Post 4

The cost of getting health insurance for independent contractors is so expensive most of the time and it is enough to discourage people from trying to make a living working for themselves.

Animandel
Post 3

@Feryll - You make a good point about independent contractors needing some type of insurance to cover the costs of any damage they might cause while in or at your house working. We hired a guy to cut down a couple of trees that were starting to grow over the roof of our house. One of the trees was a pine tree, so there were pine needles and cones all over the roof of the house.

My husband was making regular trips up the ladder to remove debris that had fallen from the trees. The guy said he could remove the trees and the price was reasonable, so we gave him the go-ahead. The first tree removal went well, perfectly. However, the second one got away from him and fell in the middle of our roof.

The guy had no small business liability insurance, and he didn't have enough money to pay for the damage.

Drentel
Post 1

You should always check that any contractor who does work for you has liability insurance.

I have a friend who has a large commercial and residential cleaning company. When he started his business he, and sometimes a helper, cleaned homes. He was really small time then and he did not even consider the need for liability insurance. He did have a few mishaps. He damaged a hardwood floor and he sucked up a cord to a fax machine with his cleaning machine.

In these cases, he just paid to replace the items and repair the damage he had done. However, once he started getting larger jobs he was required to have small business liability insurance to bid on the jobs.

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