Freelancer Business Insurance Guide
There are many advantages of being a freelancer — from choosing your clients and having an opportunity to earn more to being your own boss when selecting your working hours. However, these perks are only worth it if you have protected yourself as a freelance worker.
Since freelancers or small business owners require certain safeguards to keep their business secure, the importance of freelance insurance cannot be denied, regardless of the number of clients you have or your location. Keeping that in mind, here we will look at some of the best options for freelance business insurance coverage for beginners and experienced remote workers.
Some options we will cover include personal insurance, business owner’s insurance, general liability insurance, professional liability insurance, and many others. We will also share some information on how these various insurance policies work for freelancers, their benefits and costs, and what gig workers do when they’re unemployed.
So, stick around till the end.
Why Do Freelancers Need Insurance?
Certain insurance policies, like commercial property insurance and professional liability insurance, are commonly used by freelancers or those stepping into the gig economy. Freelance insurance policies protect you from losses and lawsuits that can’t be covered by personal insurance.
Business insurance for freelancers is definitely worth the investment. No wonder there is a growing trend of getting liability insurance for freelancers.
The following are a few other good reasons why you should opt for business insurance for freelancers:
No Protection via an Employer’s Insurance Policy
Since you’re going solo as a freelancer, you won’t have the cool shade of an employer’s insurance policy to hide under whenever things go wrong. Employer’s policy actually covers a lot more than you may initially realize.
Freelancer Insurance Protects You From Lawsuits
No matter what industry you are operating in, as a freelancer, you are fair game for lawsuits, which is a common hazard faced by freelancers.
You may be sued if you cause a client property damage, injury, or financial harm. Then what? You’ll pay for the costs out of your pocket unless you have a freelance business insurance policy. It protects one from client lawsuits and other common hazards for small businesses.
Also, most freelancers don’t make enough money to see them through a legal battle. That’s when professional liability insurance or errors and omissions insurance (E&O) kicks in to cover the costs.
Personal Insurance Policies Won’t Usually Cover Claims Related to Business
There is a good reason why there are different types of insurance policies for your wants and needs. For instance, homeowner’s insurance won’t help you if your car gets damaged (although you could get a bundled coverage from your insurance provider).
Many freelancers assume that their personal insurance policy will provide them coverage for their freelance gigs. That being said, while a personal insurance policy may offer some coverage for property loss, it won’t be of any use for filing business-related liability claims.
Picture this: your client slips and injures themselves in your home office. Guess who is paying for medical bills? Suppose you only have homeowner’s insurance, and the injured client files a claim with your insurance provider to cover medical expenses. Unsurprisingly, the claim will be rejected, and you’ll have to pay the client’s medical bills out of your own pocket.
On the other hand, if you invested in freelance business insurance, it would have covered the costs for you.
Freelancer Insurance Protects You From Property Loss
Just when you thought that’s about all a freelancer business insurance policy can offer you, there’s more.
Usually, employees can benefit from the employer’s commercial property insurance, which protects business property such as computers, furnishings, and other equipment from break-ins, fire, and other events. Unfortunately, you won’t receive that benefit as a freelancer.
While traditional homeowner’s insurance or renter’s insurance may provide coverage for business property, the truth is, it’s very limited and may not be enough to cover all the possessions.
Freelance Insurance May Help You Secure a Job
There is a growing number of freelancers taking full advantage of the gig economy. However, some rules need to be followed when it comes to getting new clients.
For instance, it’s not always enough to have a shiny CV or portfolio to attract a new client. Some clients would also want to know if they are in safe hands and could require a certificate of insurance before signing on any new freelancer. In contrast, for other clients, it’s considered a contractual obligation.
Keeping that in mind, if you don’t secure freelance business insurance, you could get a refusal because the insured candidate would be given an advantage.
What Are the Most Common Freelance Business Insurance Policies?
General Liability Insurance
The general liability insurance policy offers protection to your business from claims over bodily injuries and property damage caused by your work or occurring on your premises.
Freelancers who have rented office space or work from their home office should get general liability insurance to protect themselves from pricey claims. Also, if you want to rent an office space, a general liability policy will be required for signing a lease.
Professional Liability Insurance
If you haven’t guessed it yet, the professional liability insurance policy offers coverage for legal costs in case you’re accused of making a mistake that led to the financial loss of a client’s business.
Here is an example of when professional liability coverage comes into play.
Suppose you are a freelance web developer who stated a specific date in the contract for the client’s website to be up and running. If you fail to deliver the product and disappear, the client could sue you, in which case the professional liability insurance would kick in and cover all your legal expenses.
The importance of getting professional liability insurance cannot be denied and is an absolute must-have for freelancers. It doesn’t matter whether you offer web development, designing, programming, accounting, or other services.
Commercial Property Insurance
Some freelancing folks might wonder why they would need commercial property insurance as a freelancer.
This type of coverage is required even for freelancers who work from home, mainly because the traditional homeowner’s or renter’s insurance may not cover all your business property or cover it only to a certain extent.
For instance, if your work laptop or any other equipment gets stolen or damaged, commercial property insurance will cover it even if you are operating from home.
Business Owner’s Policy
What sets a business owner’s policy (BOP) apart from the rest is that it combines commercial property insurance with general liability insurance under one umbrella. This is the ideal option for those freelancers who think they will require both policies for their business.
Cyber Liability Insurance
Data security is an issue that not only large enterprises have to deal with since it also impacts small business owners and freelancers.
The cyber liability insurance policy covers financial losses related to data breaches and cyber events. It pays for notifying clients of data breaches and hiring a computer forensics team to locate the breach and prevent any further damage. In addition, cyber liability insurance coverage also pays for any legal expenses following a cyber attack.
Non-Owned Auto Insurance
Non-owner auto insurance is basically a liability policy for those who don’t own their own vehicle but drive someone else’s. Non-owned auto insurance may be required if you borrow or rent a car. This inexpensive insurance policy covers bodily injury, property damage, and legal fees if you are sued for causing an accident.
How Much Does Freelance Insurance Cost?
When it comes to the rates of freelancer business insurance, they mainly depend on the type of freelancer insurance you go for and several factors set by the insurer.
For example, freelancers pay $400 per year for general liability insurance from Pogo insurance company.
At the same time, the cost of professional indemnity insurance for freelance translators varies from $20 to a few hundred dollars a month. Professional indemnity insurance covers the legal costs incurred in your defense and provides compensation to your client in case you provide inaccurate advice.
One of the most common questions asked by freelancers is, “How can you freelance when the cost of insurance is so high?” The answer is simple. You practically can’t help investing in freelance business insurance. Mainly because if you don’t get freelancer business insurance, you will have to pay for any expenses you incur out of pocket.
When Might Freelancer Business Insurance Be Required?
Getting freelance business insurance is recommended to safeguard one’s freelancing business. Additionally, there are situations when the lack of a freelancer business policy could cost you your clients’ business.
The following is a quick breakdown of the various situations when freelancer business insurance is not an option but rather a requirement.
General liability insurance or professional liability insurance are typically required for freelancers who provide technical services, such as website development or programming. Clients will ask for a certificate of liability insurance before you even sign the contract. But that’s a good thing because these policies protect both you and your client if a project goes south.
Loan and Lease Agreements
Freelancer business insurance is required to take out a loan or sign a renter’s lease. Again, the liability insurance policy will protect you and the landlord or loan provider.
If you are a freelancer, you already know that such sites as Upwork or Fiverr may require proof of freelancer business insurance before you can list your services on the freelancer marketplace.
For instance, Fiverr requires their freelancers to have general liability insurance. On the other hand, with Upwork, you’ll need to purchase any liability, workers’ compensation, health, unemployment, or other types of insurance.
What Can Gig Workers Do if They Are Unemployed?
One question asked a lot lately, thanks to the COVID-19 pandemic, is, “If you work freelance, can you still receive unemployment benefits?”
Contractors, freelancers, and other kinds of gig employees typically don’t qualify for unemployment benefits in the event they lose their jobs. But due to the coronavirus pandemic and the passing of the Coronavirus Aid, Relief and Economic Security Act (CARES) Act, many of these individuals will be able to seek out compensation.
According to the U.S. Department of Labor, freelancers can apply for temporary Pandemic Unemployment Assistance (PUA). It’s offered to self-employed, independent contractors, etc., who got unemployed due to COVID-19, and who are not eligible for regular or extended unemployment benefits.
When it comes to freelance insurance, it’s always a good idea to purchase one.
It saves you from having to make out-of-pocket payments to clients for their medical bills in case they get injured in your home office or rented space.
Additionally, you don’t have to worry about paying for a new computer, printer, or any other equipment necessary for your freelancing gig if it gets damaged or stolen.
It also ensures that all other costs are covered, including loss due to unexpected events or legal fees and compensation for a client’s financial loss.
What insurance should I get as a freelancer?
It’s advised to always get a freelancer business insurance just in case since it can protect you and your assets and safeguard you from losses if your client gets injured in your home office or rented space. It can also pay for fighting a long and costly legal battle.
Depending on the services you offer, you may require any of the following freelance business insurance policies:
- General liability insurance
- Professional liability insurance
- Commercial property insurance
- Business owner’s insurance
- Cyber liability insurance
- Non-owned auto insurance
Are freelancers insured?
Since freelancers take sole responsibility for their work, freelance insurance is essential.
Why might a freelancer get personal accident insurance?
Personal accident insurance is required since it provides financial assistance to you and your family in case you get into an unforeseen accident that may cause death or permanent disabilities.
Do I need insurance if I am self-employed?
While insurance is not always required, it’s necessary to purchase one to protect yourself and your clients from losses and lawsuits that wouldn’t be covered by your personal insurance.
For example, general liability insurance can help cover the costs of medical bills in case your client gets injured in your home office or rented office space.