Do freelancers need insurance?
More and more people are exiting the corporate world and taking the plunge into freelancing. Approximately 57 million Americans now make up the freelance economy, representing 35% of the U.S. workforce, according to a 2019 study from Upwork and the Freelancers Union.
Many people are drawn to freelancing because of the freedom it affords. After all, being a freelancer lets you determine your own work hours and who you want to work with. On the flip side, as an independent contractor, you’ll be running your own business – and just like any business, that comes with risks.
Whether you’re already a freelancer or you’re considering leaving the corporate world, the right liability insurance policies can help protect you. Here’s what you need to know.
Why you need freelance insurance
If you have assets that need safeguarding, you already have all the incentive you need to carry freelance insurance. Consider the following scenarios:
- If a fire or natural disaster destroys your place of business, how quickly could you bounce back? Consider that if you work from a home office, your home insurance likely won’t cover all of your business property and activities.
- If you make a mistake, a client could claim that your services caused them financial losses. Could you afford an expensive lawsuit?
If the possibility of a lawsuit doesn’t convince you to carry freelance insurance, think about how you want your clients to perceive your business. Prospective clients prefer freelancers with contractor insurance because it’s often a trademark of professionalism, financially responsibility, and trustworthiness.
Whether your field of work is web design, software development, or consulting, you’ll face liabilities related to your job, including data theft, security breaches, and copyright infringement. And because the people who hire you are your clients, their insurance probably won’t cover you. In fact, many client contracts require you to have your own insurance before you can begin work.
Moreover, some clients have insurance that requires them to work solely with freelancers who are insured. Before a client signs a contract, they may request a certificate of liability insurance as proof that you’ve purchased an insurance policy. Not having the right coverage or enough coverage can keep you out of the running for a competitive contract or assignment. Having the right business insurance, on the other hand, sets you apart from other freelancers. It makes you look more professional, which can lead to more business opportunities.
What kind of freelance business insurance do I need?
Finding the right insurance for your area of expertise can help protect your business. For instance, if you’re a web designer, cyber liability insurance can help shield you from expenses related data theft and loss, as well as security and privacy breaches. If you’re a software developer, technology errors and omissions insurance can help cover claims of negligence in your professional work. (See Insureon’s freelance business insurance guide for more details.)
Several types of insurance are relevant no matter the type of freelance work you do. As a freelancer, you should consider purchasing:
General liability insurance. This policy kicks in when someone seeks compensation for a bodily injury they suffered on your premises or property damage caused by your work. General liability insurance may also cover claims of slander, libel, or copyright infringement.
Property insurance. If you own commercial property or expensive equipment, property insurance is a worthwhile investment. It pays to repair or replace assets damaged by certain events, such as fire or theft.
Professional liability insurance. Also called errors and omissions insurance, this policy covers legal expenses when a client claims your negligence caused financial losses.
Commercial auto insurance. Many freelancers need to use a vehicle to get to and from clients and meetings. If you use your vehicle for business purposes, be aware that your personal auto policy may exclude accidents that happen during business trips. Commercial auto insurance can fill that gap.
These policies represent the most fundamental coverage options for independent businesses. In fact, small business owners purchase general liability and property insurance so frequently that companies bundle them together in a business owner’s policy.
Compare freelance insurance quotes from trusted carriers with Insureon
Complete Insureon’s easy online application today to compare freelance insurance quotes from top-rated U.S. carriers. Once you find the right policy for your freelance business, you can begin coverage in less than 24 hours.