What Kind of Insurance Do Independent Contractors Need?

As a contractor, you have to prioritize the safety of your workers. Accidents can occur unexpectedly, so it's important for independent contractors to consider the insurance options available to protect their workers and construction site. By subscribing to this policy, you protect your workers and safeguard your business interests.

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Need of WC Insurance for Independent Contractors

The independent contractor is vicariously liable for the act committed by his employee during the course of employment. Hence, the independent contractor would be held responsible for any wrongful acts that an employee may commit during employment.

In the Govind Prasad Sharma v. Board Of Revenue And Ors. on 29 September 1964, a writ petition under Article 226 was filed in the Court of Madhya Pradesh. In this case, the court held that the independent contractor is liable for all the improper acts committed by his employees.

Hence, if any employee suffers from injury or damage, the independent contractor is liable to get the appropriate treatment for his employee. So, the contractor must buy worker compensation insurance for all the workers.

Need of Contractors-all Risk for Independent Contractors

Along with a worker compensation policy, an independent contractor also needs contractor all risk insurance policies. It is also known as the CAR policy. The CAR policy also comes with an add-on feature that allows the contractor to extend the coverage of the policy.

It is explicitly designed for the contractors as the name suggests. The contractor, subcontractor and companies financing such projects may purchase the CAR policy.

The CAR policy has the following coverages.

  • It indemnifies the insured against any material damage.
  • It offers coverage for property lost.
  • Legal liability is also covered under the CAR policy.
  • Liability arising due to accidental loss is covered under the CAR policy.
  • Loss caused due to human error is indemnified under the CAR policy.

Role of Worker Compensation Insurance

The need for worker compensation insurance is always highly crucial in most industries. In Govind Prasad Sharma v. Board Of Revenue on 29 September 1964 make it obligatory for the employer to compensate the employee if the latter suffers any workplace injury. The workmen compensation insurance ensures that the frontline workers must be adequately compensated for all the injuries they sustained on duty.


Workmen compensation insurance is considered one of the most common and effective risk mitigation tool. Workmen's compensation insurance is a type of mandatory requirement for certain industries. As an independent contractor, in order to protect himself and his workers from potential losses arising from accidents, there is a higher need for workmen compensation insurance.

Written By: PolicyBazaar - Updated: 09 August 2023
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Policybazaar for Business - Workmen Compensation Insurance - Customer Reviews
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Based on 92 reviews
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