Liability insurance is just as important for a small business run as a sole-proprietor as it is for large company with many employees. The purpose of liability insurance is to help protect you and your business from job-related problems that could possibly put you out of business.  It is critical for any contractor to have, and is actually required by many states in the United States in order for you to be a legal contractor. Be sure to research the contractor laws in your state to see what your requirements are. A liability insurance policy can protect you in a number of ways:

1. Personal injury: This involves slander, libel, and other types of damage to a person’s or business’s reputation.
2. Bodily injury: This deals with protection in case of any job-related injury to a non-employee.
3. Medical payments: This can help cover medical expenses incurred because of someone injured at your workplace.
4. Advertising injury: If your customer claims a loss due to any products or services you have advertised.
5. Independent contractors liability: Independent contractors you have hired should have their own liability insurance, but this adds another level of protection.