As an independent contractor, you can be held liable for accidents, property damage, or mistakes in your work — liability insurance safeguards your business and finances.
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Accidents can happen on the job — whether it’s property damage at a client site or someone injured while you’re working. General liability insurance covers lawsuits, legal fees, and settlements, keeping your business safe.
If a client claims your advice, service, or work caused them financial loss, professional liability insurance helps protect you from costly legal battles. It’s essential for contractors providing skilled or specialized services.
Independent contractors often rely on specialized tools, laptops, or equipment. Contents insurance helps repair or replace them if they’re stolen, damaged, or lost — so you can get back to work quickly without paying out-of-pocket.
Whether you’re working on a client’s site, providing specialized services, or delivering expert advice, one mistake or accident could quickly turn into a costly claim. Even if you’re careful, some risks are out of your control. A client might sue, claiming your work caused them financial loss.
If your laptop crashes, specialized equipment is damaged, or tools are stolen, it can halt your work and lead to financial loss. Even accidents that seem minor, like dropping equipment at a client site, could result in costly repairs or claims.
Short answer? Less than most out-of-pocket accidents. Independent contractors can generally expect to pay between $30 to $100 per month for insurance, depending on your trade, the tools and equipment you use, your location, and the level of coverage you need.
Just like your contracts are unique to each client, your insurance policy should be tailored to the way you actually work.
Are you a consultant working from home, or a tradesperson handling tools and equipment on client sites?
Different trades carry different levels of risk — jobs involving physical labour, heavy machinery, or client property usually increase exposure (and cost).
Do you just need liability coverage, or are you also protecting your tools, equipment, and professional services?
The broader your protection, the higher the premium — but also the better your safety net.
Are you a one-person operation or do you subcontract work to others?
Solo contractors may pay less, while managing multiple workers or larger projects can increase costs.
A clean claims record often means lower premiums.
If you’ve had prior claims, you can still get coverage — but it may affect your rate.
“Daniel,” who operated a small bookkeeping firm in Calgary, mistakenly filed a client’s corporate tax return with incorrect figures, leading to penalties and interest charges. The client sued for negligence. Professional liability (errors & omissions) insurance covered:
$12,000 in legal defense costs
$15,000 in settlement to reimburse penalties and interest
Total insured loss: $27,000 — Without coverage, Daniel’s firm would have had to absorb the cost and risk reputational harm.
“Leila,” a consulting engineer in Toronto, leased an office where an electrical short caused a fire that damaged her drafting equipment, computers, and furniture.
Commercial property insurance covered:
$20,000 in equipment and office furniture replacement
$7,500 in cleanup and restoration costs
Total insured loss: $27,500 — Without coverage, Leila would have had to pay out of pocket and halt operations.
Even a one-person business can face lawsuits or property damage claims. Liability doesn’t disappear just because you’re small.
Most client policies don’t extend to contractors. In fact, many contracts require you to carry your own coverage.
Even small projects can lead to big claims — a simple mistake, property damage, or injury could cost thousands.
If I’m working alone on a small project, do I really need liability insurance?
Yes. Even a minor mistake, like accidentally damaging a client’s property or causing a slip-and-fall, could result in a costly claim. Liability coverage protects your personal and business assets.
My client has insurance—won’t that cover me if something goes wrong on site?
Usually not. Most client policies don’t extend to independent contractors, so you need your own coverage to be fully protected.
What happens if a subcontractor I hire causes damage?
Many independent contractors use liability coverage that extends to subcontractors, protecting you from claims resulting from their actions while working under your supervision.
What if I make a miscalculation or give bad advice to a client?
Professional liability (errors & omissions) insurance covers claims arising from mistakes, omissions, or negligence in your work — so you won’t be personally responsible for costly legal fees or settlements.
Scenario | Out-of-Pocket Cost (Without Insurance) | Covered By Insurance? |
|---|---|---|
A client claims property damage while you’re working on-site | $5,000 – $50,000+ (repairs, legal fees, settlement) | ✔ General Liability |
You make a mistake in your work that causes financial loss to a client | $10,000 – $100,000+ (legal costs, settlement, lost income) | ✔ Professional Liability |
Your tools, equipment, or laptop are stolen or damaged | $2,000 – $25,000+ (replacement/repair costs) | ✔ Contents/Equipment Coverage |
An employee or subcontractor causes an accident while working for you | $10,000 – $75,000+ (liability claims, legal fees) | ✔ Liability/Workers Coverage |
A client alleges negligence or failure to deliver promised services | $15,000 – $100,000+ (defense and settlement) | ✔ Professional Liability |
Taking on larger contracts or higher-value jobs often comes with bigger risks — like increased liability, stricter client requirements, or more expensive tools on-site. Making sure your policy scales with your business ensures you’re properly covered when it matters most.
Protects Your Personal Finances – Even a small mistake on a job can lead to costly claims. Insurance ensures you don’t have to pay out-of-pocket
Covers Legal Expenses – From property damage to client disputes, insurance helps cover legal fees, settlements, and defense costs.
Safeguards Your Tools and Equipment – Laptops, tools, and other work essentials are often expensive. Coverage helps replace or repair them if they’re lost, stolen, or damaged.
Builds Client Confidence – Many clients expect contractors to carry insurance. It shows professionalism and reduces hesitation when hiring you.
Supports Business Growth – Having the right coverage allows you to take on bigger projects or clients without worrying about exposure.
1. Thinking Small Size Means No Risk
Even solo contractors can face lawsuits for mistakes or accidents. Get liability and professional coverage tailored to your business, no matter your size.
2. Relying On Your Client's Insurance
Many clients expect you to carry your own coverage; theirs usually doesn’t extend to you. Always maintain your own policy instead of assuming clients’ insurance will protect you.
3. Not Covering Tools And Equipment
Replacing stolen or damaged tools out-of-pocket can be expensive. Add contents or equipment coverage to your policy to safeguard your tools.
4. Failing to update coverage for new projects
Taking on higher-risk jobs without adjusting insurance exposes you to financial loss. Review your policy before starting new projects or expanding services.
5. Ignoring Professional Liability
Mistakes in services or advice can lead to claims; skipping this coverage is risky. Include professional liability insurance to cover errors, omissions, or advice-related claims.
