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How Much Does Independent Contractor Insurance Cost?

Austin Landes, CIC
4 minute read

Although hiring independent contractors to support business operations is not a new practice, it has become increasingly common during recent years.

About 1 in every 10 U.S. workers is an independent contractor, and outsourcing to these professionals is now considered a mainstream way for companies to acquire labor for their various projects or operational needs.

It’s important to remember that anyone hired in this capacity might have to comply with the company's independent contractor guidelines, which may include purchasing commercial insurance.

In this article, we give you general guidelines about what factors determine the insurance rates for independent contractors and what you can expect to pay for various professions.

If you would like a more accurate estimate, we have an online rating platform where you can get quotes from up to 10 insurance companies in around 5 minutes.

Independent contractor insurance costs depend on:

#1. Policies Required By Your Employer

It is hard to determine average pricing because each company has a different set of insurance requirements that independent contractors must meet before they can begin work.

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For example, some consultants are just required to have a general liability policy of $1,000,000. In this scenario, the independent contractor will usually pay roughly $300-800 per year.

Other companies require general liability, commercial auto, workers compensation, and technology errors and omissions policies, and each policy must cover $10,000,000. In this scenario, the independent contractor might have to pay closer to $8,000-$20,000, depending on the type of work involved.

From our experience, most independent contractor requirements fall somewhere in the middle, and insurance costs range between $500-$1200—the lower end would apply to more to an office role and the higher end a construction job or on-site project.

#2. Type Of Work You Are Performing

Aside from the policies required by your employer, the most important determining factor in your insurance pricing is the type of work you are performing.

For example, there is a large difference between the cost of a general liability policy for an independent contractor doing graphic designand an independent contractor performing welding services on oil pipelines—the price would start at about $300-500 for the former and about $1500-2500 for the latter.

There is just more risk in certain professions than others, and that risk is reflected in what you pay for insurance.

#3. "Capped Owner Payroll" Limits

Once the policies you need and type of work you perform are determined, there are factors that can help you lower the cost of your independent contractor insurance. Specifically, “capped owner payroll” limits can help save you money. Here’s how.

There are two popular ways that insurance companies rate independent contractor insurance policies: gross sales and payroll amount.

General liability and other liability policies can use either method, but workers compensation policies will always use the total payroll amount to determine the price.

You can cap any of your payroll policies to a certain amount (sometimes as low as $19,000) if you are the only employee, even if you pay yourself $100,000.

The result of being able to cap your payroll at a lower amount than you actually receive is that your insurance will only cost a fraction of what it would have cost otherwise. Each state and insurance company has different guidelines on this cap, so consult your insurance agent to make sure that you are taking advantage of it properly.


Purchasing insurance as an independent contractor can start as low as $300 and go up from there. The cost depends on the policies you are required to purchase and limits of those policies.

For a quick estimate from over 10 insurance companies, get a quote online for general liability, professional liability, property insurance, workers compensation insurance, commercial auto, and cyber liability insurance.

Austin Landes, CIC

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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