Given today's volatile job market, many people are trying freelance work on for size. The world of freelancing comes with many benefits, such as determining when and who you work with and allowing you greater flexibility and more control over your work-life balance. However, as an independent contractor, you’re susceptible to the risks of a traditional business without the workforce or resources to back you up. To negate these risks, freelance workers need insurance.
Why Do Freelance Workers Require Insurance?
Whether you’re a photographer, writer, or personal trainer, you have assets vital to your operations that you must safeguard. If a fire or natural disaster were to damage your home office and the contents within, home insurance most likely won’t cover your business-related belongings. Freelancers are also at risk of lawsuits, such as if a client believes you are responsible for their financial losses. If the prospect of a lawsuit isn’t enough for you to invest in insurance, there are also liability risks to freelancing, including security breaches, cyber theft, and copyright infringement.
What Types of Insurance Policies Do Freelancers Need?
Depending on your field of work, there are different policies you may require. For instance, if you’re a web developer, cyber insurance will protect you from the monetary repercussions of a cyber breach, or if you’re a personal yoga instructor, professional negligence liability insurance will protect you from negligence claims if your client should become hurt. However, policies all freelancers can benefit from include:
- General Liability Insurance: If someone is seeking compensation for an injury incurred upon your property or for damages caused by your work, general liability insurance covers you. This policy can also protect you from libel, copyright infringement, and claims of slander.
- Professional Liability Insurance: This type of business insurance – also known as errors and omissions insurance – will cover the legal costs if a client faults you for their financial losses.
- Commercial Property Insurance: This will cover any expensive equipment in your home, or if you have a commercial property – such as an office – this policy will cover damages or theft.
- Commercial Auto Insurance: Freelancers sometimes need a vehicle to deliver services or visit clients. If used for business purposes, your personal auto insurance may exclude coverage if an accident occurs during a business trip. Commercial auto insurance covers you in this instance.
These fundamental insurance options are often offered in a business owner's policy bundle, and sometimes insurance companies will offer incentives for bundling, such as a discount.
Can a Freelancer Expect to Afford Insurance?
Freelancers often sacrifice income for freedom, so they're usually working with a tight budget. Fortunately, depending on the type of business a freelancer is running, they wind up paying lower costs than most companies since freelance work often poses fewer risks than businesses. Insurance companies sometimes offer customizable business insurance policies for freelancers, so depending on your needs, you could be paying as little as just a few hundred dollars a year. It’s a small price to pay for peace of mind and financial security.
When considering all the risks a freelancer is subject to, it becomes apparent why freelance workers need insurance. Being the one solely responsible for your income is a big task, so it’s important you’re outfitted with the appropriate insurance. World Insurance has decades of experience ensuring businesses and independent contractors are equipped with the right commercial insurance for their needs.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.