Freelancer

A freelancer is a self-employed individual who offers services to clients on a project, hourly, or contract basis. Freelancers operate as independent businesses rather than employees, which means they choose the work they take on, set their own schedules and rates, and often work with multiple clients at once.

Freelancers are common in creative, technical, and professional fields such as graphic design, web development, and consulting. Many freelancers work from home or shared workspaces, while others work onsite at client locations depending on the nature of the project.

The definition of freelancer vs. independent contractor is the same in terms of reporting income to the Internal Revenue Service (IRS), although there are differences between the two in the nature of their work.

The term “freelancer” is often used for those working in creative fields under short-term contracts, under agreements that define the scope of a project, its cost, or their hourly wage.

Independent contractors typically work under a contract with the client that specifies the scope of a project, their responsibilities, deadlines, and costs. Contractors may perform work on a long-term basis.

Freelancing allows someone to be their own boss and to choose which projects they work on, the amount of money they’re willing to accept, and where and how the work is performed.

As a business owner, you could be subject to lawsuits over injuries, property damage, or financial damage related to your work. If you were an employee, your employer would likely face this litigation instead.

For example, IT consultants who freelance could face a lawsuit if they recommend insecure software or overlook a security flaw that leads to a data breach.

Freelancer business insurance can reduce the financial risks of a costly lawsuit over the quality of your work. Some recommended policies for those just starting the freelance business include:

General liability insurance, which protects you from lawsuits over third-party injuries or property damage. If you damage someone’s property while working on a photo or video shoot, they could sue you for the cost of repairs. If a graphic designer exposes a client to cyber hacking or a loss of data, the client could sue for the financial damages it causes.

Professional liability insurance, also called errors and omissions (E&O) insurance, covers lawsuits related to mistakes in your work, missed deadlines, scope disagreements, or claims of negligence. If a client says your work caused financial harm, this policy helps pay for legal defense and settlements.

Workers’ compensation insurance, while not typically required for freelancers, can pay your medical bills and lost wages if you’re injured on the job.

Cyber insurance safeguards your business as cyber incidents continue to be a growing threat. A lost laptop, hacked email account, ransomware attack, or accidental exposure of client data can be costly. This is especially important for IT freelancers, marketers, web developers, consultants, content creators, and anyone who stores or transfers client files.

Complete Insureon’s easy online application to compare small business insurance quotes from top-rated U.S. providers. Once you find the right policy for your small business, you can begin coverage in less than 24 hours.