Michigan business insurance requirements

As an independent contractor or small business owner, you know that the hustle is real. Amidst constantly trying to generate enough income to support you or your employees, handling the day-to-day business operations, and trying to sustain or scale, your days never seem to have enough time in them.

Surely, liability insurance is the last thing on your mind. But what happens when a client is injured due to the work you performed? Or what happens when you accidentally damage your clients’ personal property? Lastly, what if a client sues you because they aren’t happy with the services you rendered?

Let’s face it, every industry has inherent risks. Running a business has risks. Being a human has risks. Everyday, at any given job site, there is always a level of risk involved. In which case, every independent contractor and business could benefit from a general liability insurance and professional liability insurance policy.

General Liability Insurance

General liability insurance protects businesses from third-party claims of bodily injury, personal injury, and property damage. Should one of your clients or a third party claim that they (or their things) were injured at your fault, you could be held liable.

What could that look like, exactly?

General liability examples:

• You’re an independent contractor, laying concrete on the roof of a property, sealing it in preparation for heavy rain. While you’re up on the roof, your concrete mix (bundled up in a bag) falls off. You’ve tied everything up to ensure it won’t hurt anyone, but as the string pulls tight, the bag swings and breaks a massive window. The client now thinks it’s your responsibility to pay for the damages.
• Say, you’re a makeup artist and you’ve finally booked a gig that might help you expand your network and get more work. The model you’re working with is a bit uptight, but whatever. The work is what’s important. However, as you begin to apply the makeup, she starts to have an allergic reaction. Even though you use oil-free, natural products, she blames you for the reaction and wants you to pay for the medical bills from the ER visit.

In reality, these types of situations occur. It only takes one fickle client or third party to file a claim—one that could tie up the hours you need for operations, cost you money, and escalate into something bigger (like a lawsuit).

Professional Liability Insurance

Professional liability insurance is coverage structured to protect independent contractors and businesses if their clients say that:

• You didn’t do your job right
• You made a mistake that costed them money

Also known as errors and omissions insurance (E&O), this type of policy works to protect your business when a client claims that you were negligent.

Professional liability example:

• You’re an aerobics instructor that’s been hired by a small group to instruct a class. When you’re there, you decide to increase the regiment. Unfortunately, one of your students is injured during the workout, which causes them to miss out on a photoshoot they had scheduled the next day. Because they missed out on the job, they’ve lost money. They blame you for negligence, claiming that you should’ve taken note of their skill level and refrained from the rigorous movements.

In any case, if a client believes you to have made an error or mistake, then an E&O policy can help mitigate the consequences.