If you’re a 1099 contractor, you’ve likely asked yourself: “Do I really need liability insurance?” The short answer? Yes—more often than you think. While not always legally mandated, liability insurance is often required contractually, and in many industries, it’s the only thing standing between you and financial ruin.

In this post, we’ll break down when liability insurance is required, what type of coverage you might need, and why ignoring it could cost you more than just your next job.

When Is Liability Insurance Legally Required for 1099 Contractors?

1. Industry Licensing Requirements

Some states and professions require proof of liability insurance to obtain or renew a license. For example:

General contractors often need liability insurance to get a state license
Healthcare professionals may be required to show proof of malpractice or professional liability coverage
Certain IT and finance professionals must carry errors and omissions (E&O) insurance

2. Client Contracts & Subcontractor Agreements

Even if the law doesn’t demand it, your clients probably will. Many subcontractor agreements require:

General Liability Insurance
Professional Liability (E&O)
Certificates of Insurance (COIs) to prove you’re covered

If you can’t provide a COI, you could lose the job—no matter how qualified you are.

3. Compliance with Landlords or Vendors

If you work out of a rented space or share facilities with other professionals (like co-working spaces), your lease agreement may require:

Liability coverage to protect others from bodily injury or property damage caused by your business activities

What Happens If You Don’t Have Liability Insurance?

You may not be arrested for skipping insurance—but the financial and reputational consequences can be severe.

Lawsuits from unhappy clients or third-party injuries could cost thousands (or more) in legal fees, damages, and settlements.
Denied project bids or lost clients due to missing coverage.
Personal financial exposure, since 1099s are considered sole proprietors unless incorporated—meaning your personal assets are at risk.

What Type of Liability Insurance Should 1099s Consider?

At Bunker, we help independent contractors across industries find coverage that fits their needs and budget. Here’s what we typically recommend:

✅ General Liability Insurance

Protects against third-party bodily injury, property damage, and legal costs. It’s the #1 policy required in contractor agreements.

✅ Professional Liability Insurance (E&O)

Ideal for consultants, writers, marketers, and designers. Covers claims of negligence, missed deadlines, and bad advice.

✅ Cyber Liability (if you handle sensitive data)

Covers breaches, hacks, and client data exposure—common for virtual work.

✅ Workers’ Comp (even if it’s just you)

In some states, solo contractors still need this to comply with labor laws or client requirements.

The Bunker Advantage

At Bunker, we specialize in helping 1099 contractors get compliant fast—with instant COIs, industry-specific policies, and affordable premiums. Whether you’re a subcontractor, freelancer, or solo consultant, we’ve got your back.

Conclusion

So, are 1099 contractors legally required to carry liability insurance? Not always by law—but almost always by necessity. Don’t wait until a contract falls through or a client files a lawsuit. Get ahead of the curve and protect yourself today.

👉 Need help finding the right policy? Visit buildbunker.com or contact us at support@buildbunker.com! to get started.