Insurance 101: Decoding Common Business Insurance Questions For You To Understand What You Need, When You Need It

By Katie Deschler

Insurance, a word that has a reputation of an eye roll when mentioned.  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, slow low-tech processes and poor customer service.  All of this leads to misunderstanding and miscommunication, not to mention the industry has not adapted to the workforce of 2018, treating independent professionals like mega corporations.  

Bunker is on a mission to ensure independent professionals have the proper coverages for their various contracts and eliminate excess costs from the traditional system.

Through relationships with staffing enterprises, along with technology and licensed insurance advisors, Bunker has identified common questions when independent professionals encounter commercial/liability insurance.  We hope this provides some context on the insurance products and guidance as you go through the process of procuring insurance to satisfy requirements for your contracts. 

Why Do I Even Need This? 

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.

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In today’s popular litigious environment, insurance can defend a business owner (you) against accidents caused by you or false accusations that end up costing thousands of dollars in legal fees.

From a contractual standpoint, with you working as an independent 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 caused by the independent professional 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 of the errors of a contractor. We told you- the environment is litigious! 

What Coverages Do I Need And When Can I Get A Quote?

The commercial insurance industry is drastically behind the personal auto insurance industry in terms of transparency and quote speed. Most personal auto insurance quotes can be generated online, in minutes. Because of the traditional nature of the commercial industry, the complexity with each case (variables like number of employees, amount of revenue, type of work) and the rapid growth of independent contractor usage (see Rise Of The Gig Economy), commercial insurance has been slow to adapt. With most insurance brokers, you can expect over four (4) days to receive a quote, often longer. By working with insurance carriers to build coverages specifically for independent professionals, Bunker provides quotes much faster (within minutes for common coverages, 2-3 days for complex cases) and allows independent contractors to purchase coverages for the length of their contract, avoiding the unnecessary annual insurance policy.

If you’d like to learn more about what general protection coverages provide, here’s a quick summary of common coverages listed in enterprise contracts.  

  • General Liability: This coverage includes physical liability and property damage.  Property damage also covers libel and slander.
  • Professional Liability: This coverage is also known as Errors & Omissions.  (Another word that makes this confusing- we get it).  This primarily covers economic or financial losses due to the insured’s (your) professional error.  It can also be used to defend yourself in a court case. 
  • Cyber Liability: Cyber is becoming increasingly popular as a requirement in contracts and is a crucial coverage for consultants working on with Client data or anyone that sells products or services through the internet.  
  • Crime: Crime, sometimes referred to as Third Party Employee Dishonesty, may also be required if a contractor has access to a Client’s property or access to financial records and transaction information.

Are There Ever Exceptions To Insurance In A Contract? 

Generally speaking, the insurance that an enterprise places in a contract with an independent contractor often comes from historical records they’ve used for years with larger vendors and suppliers.  That said, there’s not a one-size-fits-all requirement for business relationships, which can be to your benefit.  Often times coverages required 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, it’s up to the Client and many are rooted in very disciplined risk management practices.

A final note, Bunker has created an insurance requirement assessment to help enterprises evaluate the coverages/limits they place in contracts and, hopefully, reduce them from their legacy vendor/supplier tendencies to more 1099 appropriate levels. 
 

The Future

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.  

For example, in just 2 years, Bunker worked with carriers to develop and launch Usage-Based Insurance.  As a first to market insurance product, independent contractors can purchase insurance for the unique 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 ensure you are carrying adequate limits and coverages to protect your livelihood can save you an endless amount of headaches in the future.

Remember you can run your business up to all business standards in good faith, but having the proper coverage will protect your business from lawsuits.

Make sure you can defend your business against enemies in today’s business environment and are properly covered so you can focus on your unique skill.

This article is courtesy of Bunker: 

Bunker is a platform for small business insurance, specifically focusing on insurance when it’s required by contract.  We’re the only company that seamlessly embeds commercial insurance directly into the contracting and compliance process.  On one side of the platform we automate the insurance requirement compliance process for large enterprise organizations, allowing them to seamlessly onboard and manage their contractors, partners, and vendors.  On the other side we’re a fully licensed digital broker, providing tailored policies to contractors and small businesses, allowing them to simply and affordably comply with requirements from clients, landlords or other partners. 

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