2014

How Much Is Contractors Insurance?

IT contractors who work on their own often don’t think of themselves as small businesses – until they’re asked for proof of insurance from a client. Luckily, having the contractors insurance coverage that helps you win clients doesn’t have to break the bank.

Below are cost estimates to give you an idea of what your insurance might cost. They are for illustration only – if you’d like to see a quote for your business, fill out an application, and we’ll send free quotes to your inbox.

The insurance cost estimates on this page are for an independent contractor or small IT business with up to $150,000 in annual revenue. The industry we assumed is programming or web design. The cost of your business insurance will depend on your actual revenue, your state, and the type of services you provide.

How Much Does General Liability Insurance Cost for Independent Contractors?

General Liability Insurance is the first commercial policy most contractors buy. It offers protection when third parties are injured or get their property damaged on your business premises (think: a visiting client trips over a cord and breaks a leg).

One note: this General Liability Insurance quote actually includes Commercial Property Insurance, too. Many IT contractors qualify to have these two policies bundled together into a money-saving Business Owner’s Policy (BOP).


General Liability and Property Insurance (Business Owner's Policy) Quote:
Coverage Amount
$1,000,000 General Liability per Occurrence
$2,000,000 General Liability Annual Aggregate
$1,000,000 Personal & Advertising Injury per Occurrence
$2,000,000 Products Completed Operations Aggregate
$300,000 Damage to Rented Premises
$10,000 Medical

Property Coverage:
This coverage helps protect your business assets in the event of theft, fire, and certain weather events, and is included in the General Liability Insurance quote.
$10,000 Business Property
$50,000 Business Computer & Media *
$5,000 Laptop Computer - World-Wide *
* A package endorsement has been added to provide this coverage for the optimal price / value.

$500 Property Claim Deductible

$425.00 to $900.00 Typical Annual Premium

How Much Does Umbrella Liability Insurance Cost for Independent Contractors?

This policy offers additional coverage in the event that you face a claim that exceeds the limit of your General Liability Insurance policy. If you're not sure whether you can benefit from Umbrella Insurance, ask your agent for more details.
Umbrella Liability Quote:
Coverage Amount
$1,000,000 Per Occurrence and Aggregate
$10,000 Retention (Deductible)

$450.00 Typical Annual Premium

How Much Does Workers' Compensation & Employer's Liability Insurance Cost for Independent Contractors?

Workers' Comp is the only coverage business owners are legally required to carry. Requirements vary by state, so be sure to check the rules where you live. This policy helps cover the costs associated with workplace injuries and illnesses.
Workers' Compensation Quote:
Employer's Liability
$1,000,000 Bodily Injury by Accident, Each Accident
$1,000,000 Bodily Injury Disease, Each Employee
$1,000,000 Bodily Injury Disease, Policy Limit

Payroll 
State Class Payroll
IL 8859-02 $140,000
* Owner / officer payroll may have been adjusted to state guidelines.

$641.00 to $1,100 Typical Annual Premium (Based on state rates and payroll)

Two important notes about your Workers' Compensation policy: First, the premiums you pay are auditable, which means they can be reviewed at the end of the year. If you ended up paying an employee more or less than you estimated when you applied for coverage, you may have to pay an additional premium (or be eligible for a premium credit). Second, it's important to keep your policy up to date by informing your agent any time you hire new employees or hire someone who will be working out of state for an extended period of time.

How Much Does Professional Liability Insurance Cost for Independent Contractors?

Professional Liability Insurance (also called Errors & Omissions Insurance) offers coverage when a client claims that your professional negligence caused them financial harm. So if a client sues you for failing to live up to the promises you made in your contract, you would likely make a claim on your Professional Liability Insurance policy.

Professional Liability (Errors and Omissions) Quote:
Coverage Amount
$1,000,000 Per Occurrence
$1,000,000 Annual Aggregate
$2,500 Deductible


$1,000.00 to $1,500.00 Typical Annual Premium

The Errors and Omissions coverage and premium quoted above does NOT include unauthorized access and malicious code coverage. This may be important if you provide security services for your clients including firewall and antivirus application services. The additional premium is typically around 5%.

The Errors and Omissions coverage and premium quoted above does NOT include intellectual property liability coverage. This is sometimes referred to broadly as intellectual property liability and cyber liability coverage and is most often required by software developers, web developers, ASPs, etc. If you would like more information about protection against these risks, please contact us.


Claims Made Notice:
All Errors and Omissions policies quoted are issued on a "claims-made" basis. This means that coverage is only provided for work that is done while the policy is in force and for claims that are filed while the policy is in force. For more details, see our page What Is Claims-Made Liability Coverage?

How Much Does Fidelity Bond (Third Party Employee Dishonesty) Insurance Cost for Independent Contractors?

Fidelity Bond (Third-Party Employee Dishonesty) provides coverage when an employee steals money, equipment or other assets from one of your clients. If you';re providing IT services for a bank or financial institution, there's a good chance they'll request that you carry a third-party fidelity bond.

Fidelity Bond Quote:
Total Employees Covered: 1 to 10
Coverage Amount
$1,000,000
$50,000 Deductible

$1,850.00 Typical Annual Premium

How You'll Be Billed for Your Business Insurance


In most cases, you will receive a bill directly from your insurance carrier for the following insurance policies:

  • General Liability
  • Workers’ Comp
  • Umbrella
  • Fidelity Bond

The carrier will typically send an invoice four to six weeks after your coverage starts. Errors & Omissions (Professional Liability) Insurance is the exception. In most cases, you'll need to pay in full before starting coverage, though we can sometimes arrange financing through a premium finance company. You can expect to pay about 30 percent of your premium down, plus 15 percent interest.