Workers’ compensation coverage is expensive and it can take a big chunk out of your small business budget if you don’t plan ahead. Especially that end of the policy period when your provider audits you and bills you with the final payment to fulfill your premium responsibilities.

In case it’s time to re-up on your policy and you don’t have the money set aside to cover the bill, try asking your insurance agent if they have an installment plan available and save yourself the budget crunch.

Payroll services and insurance providers are more and more often offering their clients the option of paying on an installment plan, especially its clients whose businesses are seasonal with unpredictable profits. It’s a tricky process much like paying your taxes on installment with an intricate formula to figure out what your payments will be. Instead of making one big payment, you instead make the calculated payment every time you do a payroll. No big upfront payments. No end of policy surprises. And all you had to do to help get your budget in order was ask.

You’ve got basic liability insurance coverage in case you get sued for a slip and fall in your business’ front lobby or a defective product on your shelves. You’ve got property coverage for the building that houses your business and inventory protection insurance in the event of theft of damage due to covered perils.

If you have a company car, you have auto insurance to cover it, and if you have employees, you have both worker’s compensation coverage and employee fraud coverage.

What else is there?

Key Persons Coverage – This is specialty coverage that protects the business if something happens to a key manager or corporate officer, an employee whose absence would be reflected in the financial bottom line.

Directors Coverage – This policy covers the personal property of owners of the business so that if the company is sued then their homes, cars and valuables will be safe from the litigation.

Business Interruption Coverage – If a storm hits and damages the building of your business or a significant amount of inventory so that your business cannot open for, this policy will help you pay the bills. It compensates for lost income, recurring bills like rent and utilities as well as the cost of setting up an alternative storefront until the original reopens.

Umbrella Coverage – Like an umbrella, this policy is meant to give you extra coverage if you incur liability expenses that exceed the limits of your basic liability policy.

When you hire an independent contractor to paint your house or perform work for your clients, you are taking a huge liability risk if your contractor is not insured. What if one of your contractor’s crew falls off the ladder and gets hurt? Who pays for his medical bills? What if you hire a contractor to perform technical work on a client’s computer and the system crashes taking vital information with it? Who’s liable?

If your contractor doesn’t have insurance, then you could be in for a long day in court just to figure out who is responsible for paying the bills due to their mistakes. Make sure your contractor has a full set of insurance coverage before you hire him or her and avoid this problem completely.

What kind of insurance should an independent contractor have? It depends upon the type of work that contractor performs. The four big ones to consider include:

General liability to cover injuries or property damage caused for you by the contractor by misstep or mistake.

Professional liability to cover damages caused by work performed by the contractor.

Worker’s compensation coverage takes care of the cost of medical bills if injuries befall the contractor or his or her crew while on the job.

Fidelity bonds will cover you should a contractor steal from you or a client while performing their duties.

Now that you know that your contractor needs to be insured so that you are protected in case of injury or litigation, how do you find out for sure that your contractor is insured?

Of course, you can ask, but telling a judge “I thought he was telling the truth” won’t help deflect too much of your liability in the event of an accident. Ask instead to see their insurance certificates, one for each kind of insurance that you require your contractor to have (for example: general liability, professional liability, worker’s compensation, fidelity bonds).

Certificates are easily forged and even if authentic, they won’t tell you anything about exclusions or limits and especially if the coverage has been cancelled. Ask for copies of the policies as well and verify that the contractor is actively insured with the insurance provider. Pay attention to the details and have a lawyer look them over to make sure that you have nothing to worry about.

If you intend to use the independent contractor on a regular basis, consider requesting that you be named as an additional insured person on the policy. This will protect you in the event that a client for whom you employed the contractor to do work sues the both of you.