Independent Contractor Insurance
For many reasons, being an IC delivery driver is a great opportunity. There is nothing like being self-employed, but that opportunity does not come without some risk. From our experience, we have found many IC’s do not carefully consider the inherent exposure created by their occupation, nor do they adequately address these exposures and protect themselves with something as simple and as cost-effective as an insurance policy(s).
Here is what any prospective IC driver needs to consider as risks:
Commercial Auto Liability Insurance
Let’s assume you’re going to use your vehicle every day to perform deliveries. What’s the problem? After all, you have a personal auto insurance policy (PAP). Traditionally, there has been a “gray” area as to whether a PAP will adequately respond to a claim should you be involved in an accident while working as an IC. Through the years, we have seen these situations play out both favorably and unfavorably.
There is one absolute way to protect yourself when it comes to the auto exposure and that is by procuring a commercial auto liability policy for your vehicle. This coverage should respond in the event of a claim that occurs while working as an IC. We recommend $1,000,000 Combined Single Limit (CSL) liability to provide the best protection.
Note: If you are a “master contractor” and contract with other IC’s, further auto liability protection is needed in the form of Hired/Non-Owned Auto Liability coverage with $1,000,000 limits.
Keeping Cargo Safe
Handling cargo for customers is part of the job. Each delivery can be an adventure on handling something new and ultimately it is your responsibility to get the goods delivered safe and sound, and in one piece. But what would happen if the cargo were damaged or stolen? That is where a properly written Motor Truck Cargo insurance policy can protect you and pay to replace the customers’ goods. Standard limits offered by carriers are anywhere between $10,000 and $25,000 per loss and can easily be increased should you need protection for higher-valued cargo. Again, it's important to recognize that if you are acting as a “master contractor,” you have added exposure and should purchase additional protection for customers’ goods via courier/dishonesty bonding coverage with limits equal to your cargo coverage.
Oftentimes, this coverage is overlooked and not purchased by an IC. The fact is that it's an important policy to provide protection for your delivery business. Whether contracting directly with a customer or providing services to a contracting courier service, General Liability addresses some key exposures. Such as damaging a customer’s premises or injuring a third party. Depending on the circumstances, and the state you’re operating within, commercial auto insurance may or may not provide coverage for these exposures, so having a General Liability policy will help to ensure you have coverage one way or the other. Standard GL policy limits are $1,000,000 per occurrence and $2,000,000 general aggregate. The coverage is not expensive and provides other necessary, albeit seldom utilized, business coverage. So, making it part of your insurance program would be strongly advised.
Injuries While Working
What happens if you’re injured while working as an IC? In most instances, your IC agreement with the contracting courier company dictates that you are responsible for Workers Compensation (WC) coverage for this very reason. A WC policy can provide you with coverage and benefits for your injury, so you don’t have to risk being injured and uncovered. An alternative solution to WC would be to procure Occupational-Accident (Occ-Acc) coverage for you. This policy provides limited coverage and benefits (as compared to WC) and can be more cost-effective. For more information on Occ-Acc, we’d encourage you to visit the website for the Association for Delivery Drivers (www.a4dd.org) who offers such coverage if you become a member.
Stay tuned for part II of our series on IC insurance in our April Transportation Newsletter.