Protective Liability Insurance

What Does Protective Liability Insurance Mean?

Protective liability insurance is a type of liability coverage used by contractors or business owners to manage risks associated with independent contractors they may hire. In other words, protective liability insurance covers potential gaps that may exist in other liability policies for certain business owners or contractors. It works alongside a contractor’s general liability insurance, which usually responds to claims arising from the company’s own employees and operations rather than from people hired as independent businesses.

Insuranceopedia Explains Protective Liability Insurance

Although independent contractors are not part of a contractor’s company, the contractor can still be held liable for injuries or property damage caused by the independent contractor while working on a project. The independent contractor may carry their own independent contractor business insurance, but that protects the contractor’s own business and does not always cover the company that hired them. For example, if a contractor hires an independent contractor to install a new sidewalk at a home, and the independent contractor injures a resident during the job, the contractor could be held liable. Protective liability insurance safeguards contractors from such risks.