Here are some of the most important insurance policies self-employed people, entrepreneurs, and freelancers should consider taking out.
There are many positives to being a freelancer or self-employed. One benefit is having more control over your work/life balance. Of course, you can’t have the good without the bad. One of the downsides of being your own boss is that you’re responsible for everything a boss is, including finding the right self-employed insurance and freelancer insurance programs. Here are some of the most important insurance policies self-employed people, entrepreneurs, and freelancers should consider taking out.
The most important insurance policies for self-employed freelancers
The insurance coverage you need generally depends on the nature of your work and your chosen profession. However, we’ve identified several insurance plans that every freelancer should consider to protect themselves against potential problems and lawsuits that come with the challenge of self-employment.
Professional Liability Insurance
Professional liability insurance is the top priority for professionals. Anyone selling a professional service of some kind requires professional liability insurance, which sometimes goes by the name Errors and Omissions Coverage.
It doesn’t matter if you’re a designer, programmer, writer, accountant, or anything else that falls under the “gig economy” offering independent professional services. You have to take steps to protect yourself. This insurance policy is that protection.
Professional liability insurance policies cover freelancers that make mistakes affecting the bottom line of a client. For example, suppose you were a web designer. You take on a contract to develop and publish an eCommerce site in time for Black Friday. You fail to complete the website in time and get sued by the client. Your professional liability insurance comes in to cover legal fees associated with the suit and the potential payout if the client wins.
General Liability Insurance
General liability insurance is another integral insurance policy for business owners. This insurance policy protects business owners against third-party damages and customer injuries. Some freelancers are legally required to have this insurance. For example, freelancers that rent office space to work in should have this insurance policy in place before signing a lease.
Commercial Property Insurance
Most freelancers benefit from having commercial property insurance, even those who work from home and don’t own “commercial property.” Your standard renter’s insurance or homeowner’s insurance may not cover damages related to business properties.
The term “business properties” refers to more than just real estate. Suppose your computer equipment was damaged or got stolen. That counts as commercial property, meaning that your regular insurance wouldn’t cover it.
We recommend holding a commercial property insurance policy to ensure that everything related to your business is safeguarded. You don’t want to wait until it’s too late to learn that your computer, printer, or other important equipment aren’t covered by your home policy.
Fidelity Bonds
Self-employed contractors typically need to purchase fidelity bonds. These bonds act as an agreement between the freelancer, the insurer, and the client. Most people are aware of surety bonds. These bonds are a part of the process of working with construction contractors.
Buying a bond means that the insurer pays a certain agreed amount to a client if you fail to deliver on the promises made in the contract with the client in question. If you’re a freelancer in financial services or IT, then fidelity bonds are a great option. These bonds offer protection against data breaches, fraud, and theft for clients.
Cyber Liability Insurance
Cyber liability insurance is becoming more important in a world filled with new digital threats. IT freelances regularly work with customer data. Working with this data brings the risk of potential data breaches and cyberattacks.
Suppose you were assigned to process and handle card payments for a client. You could be held responsible for damages if the personal information under your command is compromised or stolen. Your cyber liability insurance policy should cover the expenses related to notifying clients of breaches, hiring forensics teams to investigate the breach and take steps to prevent it from happening again, and pay the civil damages and legal fees associated with the breach.
Health and Disability Insurance
Affordable health insurance is a major concern for freelancers. Around a fifth of freelancers say that it is their main concern. One of the downsides of self-employment is that you don’t have an employer to cover your insurance or any other employee benefits.
Freelancers need to put a lot of thought into finding the best health insurance plan for themselves. Freelancers should also take time to consider the possibility of disability insurance. Freelancers don’t enjoy the liberty of workers comp and other similar insurance plans. If a self-employed person is injured and unable to work, they have to pay for themselves even though they might be unable to work.
Final thoughts
Being self-employed comes with a lot of freedom and autonomy. It also comes with added responsibilities. As a freelancer, you owe it to yourself, your business, your clients, and your family to invest in proper insurance. Protect yourself with health insurance and protect your business with liability insurance. Consider other insurance programs based on your industry and working life.
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