Hiring 1099 contractors gives businesses the flexibility they need to scale quickly—but flexibility doesn’t mean freedom from risk. One of the most costly mistakes hiring companies make is failing to verify that their independent contractors carry the proper insurance.
At Bunker, we’ve seen firsthand how working with uninsured contractors can expose businesses to serious financial and legal liabilities. In this article, we’ll break down what can go wrong—and how to protect your business with the right insurance strategies.
What’s the Big Deal About Contractor Insurance?
A contractor’s insurance isn’t just for them—it’s also for you. When a contractor causes damage, makes an error, or gets injured on the job, you could be on the hook if they’re not properly insured.
Here’s what that risk looks like:
1. Client Property Damage = You Pay
Let’s say you hire a freelance videographer to shoot an event in your office. They trip over a cord, knocking over a $4,000 projector. If they don’t have General Liability Insurance, your business may be forced to absorb the repair or replacement cost—or worse, face a lawsuit.
2. Errors and Omissions Can Come Back to You
Hiring a marketing consultant who gives poor strategic advice? A freelance accountant who makes a tax filing error? If these contractors lack Professional Liability Insurance (E&O), your business may get dragged into legal disputes or bear the brunt of client losses.
3. Injury on the Job = Worker’s Comp Confusion
Some states require businesses to cover injured contractors under Workers’ Compensation, especially if they’re misclassified. If your contractor gets hurt and doesn’t have their own policy, you could end up liable for medical expenses—even if they’re technically not your employee.
4. Risk to Your Own Insurance Policy
Here’s a hidden cost most businesses overlook: if you work with uninsured contractors and a claim arises, your own business insurance may be affected. You could see:
- Increased premiums
- Denied claims
- Policy cancellation
5. Compliance and Legal Headaches
Many industries—from construction to tech—require COIs (Certificates of Insurance) to be on file for all contractors. If an audit happens and you don’t have documentation, you could be hit with fines or contract termination.
How to Protect Your Business
The solution isn’t cutting contractors—it’s ensuring they’re properly insured.
Here’s how:
- Set clear insurance requirements in your contracts
- Request a Certificate of Insurance (COI) before any work begins
- Use a platform like Bunker to automate COI collection and verification
- Educate contractors on affordable policy options so they can stay compliant
At Bunker, we help businesses streamline contractor compliance while making insurance easier and faster for freelancers to access. Everyone wins when the process is simple.
Final Thoughts
Hiring uninsured contractors might save time upfront—but it opens the door to massive financial, legal, and reputational risk.
If your business relies on 1099s, take a proactive approach: require insurance, track compliance, and protect your future.
👉 Need help ensuring your contractors are covered?
Visit buildbunker.com to streamline insurance for your workforce. You can also contact us at support@buidbunker.com!
