Using independent contractors to perform discrete, well-defined tasks on your project is one way to tap into existing talent without adding employees to your payroll. Firms typically tap their existing networks; however, they are increasingly using online platforms that function as a marketplace for firms and freelancers to find each other and strike a mutually beneficial relationship.
The freelancer is an independent contractor, and historically the usual risk management principles apply; the independent contractor is treated as an entity that is outside of your firm. Recognizing that firms are increasingly using independent contractors/freelancers, the Victor/CNA professional liability program has expanded the definition of the term “insured” and now provides coverage for contracted personnel under the direct control and supervision of your firm for the scope of duties the contracted personnel complete on behalf of the firm.
The contracted personnel have to be engaged in their individual capacity. Firms need to be aware that the coverage extends to those personnel whose income is reported on a 1099 form for federal income tax purposes. The policy only provides coverage for the contracted personnel if they do not have professional liability (PL) coverage of their own. If they already have PL coverage, the policy will provide excess coverage if the contracted personnel’s policy limits are exhausted.
This change means that firms no longer have to insist that contracted personnel carry PL coverage of their own. If you believe that the contracted personnel have the necessary talent, the Victor/CNA PL policy provides coverage for the services performed by your contracted personnel. This will ease the administrative burden for firms that want to use independent contractors since you don’t need to contact your broker for endorsements to add the independent contractor as a named insured.
More information is available on the 2020 Victor/CNA Professional Liability Policy changes and highlights. Future blog posts will talk about some of the other changes that will help firms as they manage their professional practices and projects.