The growth of the gig economy is in hyperdrive: The number of independent contractors in the U.S. increased by 34 percent from 2020 to 2021 – more than 13 million Americans joined the gig economy in a single year. And it’s unlikely that those figures are a pandemic-driven anomaly: More than half of the U.S. workforce, according to one estimate, is projected to participate in the gig economy by 2027.
One of the implications of this growth is that, in the years ahead, more customers and purchasers in the greater economy can be expected to engage with gig workers and organizations that employ them. That can be a good thing – business is business, after all. But customers who interact with the gig economy should have an idea of how it works, especially with regard to liability. The fact is, most gig workers aren’t sufficiently covered by business insurance – if they have it at all. And in many cases, the organization they represent or through which they work can’t be held accountable. In other words, if a customer is harmed or incurs damages as a result of an independent contractor’s work, that customer may have trouble getting restitution.
So as consumers of services and products that intersect with the gig economy – as we all are on some level – what is the best way to avoid a worst-case scenario with an underinsured small business or gig worker? Just ask.
Verify Insurance and Ask for a Contract
Anytime a customer does business within the gig economy, there are fewer assurances, relative to traditional organizations, that a gig worker or business is sufficiently insured – as discussed in a previous blog. Let’s say, for example, that a toilet in your home backs up and floods your bathroom. You go online to quickly scroll through a list of local businesses that can help, and you choose the first one that can come right away. (No one wants to waste a moment fixing a leaking toilet.) But did you know that some small-business plumbers are self-employed, making them independent contractors – and part of the gig economy?
In this scenario, if the plumber services your home and makes a bad decision – or perhaps is only guilty of a tiny oversight – their insurance may not be robust enough to cover the cost of repairs if the situation goes from bad to worse. Imagine calling a specialist to repair an issue in your home and finding yourself on the hook for thousands of dollars for a mistake they made.
Best practices for internal risk management, then, should require that contracts be in place (and fully vetted) with any independent contractors or vendors. The contract language should include proof of insurance for the independent contractor or vendor for liability limits of at least $1 million per occurrence – and possibly higher limits depending on the nature of the contractor’s or vendor’s work.
How SynchronoSure Can Help
When more consumers ask to verify insurance, the onus falls on small businesses and gig workers to ensure that they are appropriately insured. But how can a plumber – or a bakery owner or a management consultant – know exactly how much coverage is enough? Realistically, they can’t be expected to. But their agent should. If a small business owner or gig worker isn’t sufficiently insured, or simply doesn’t know whether they are covered, request that their insurance agent reach out to SynchronoSure. We have the tools to meet their needs.
With a streamlined application process and customizable coverage – including business personal property, business liability and miscellaneous professional liability through our GigBOP® package insurance – SynchronoSure can help gig workers and small businesses navigate their general liability risks effectively. When gig workers are properly insured, both customers and those providing them service are better off for it.
Click here to learn more about insurance for gig businesses and start helping them protect their assets.