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Ask any freelancer about the toughest parts of their profession, and they’ll probably list “getting insurance” as one of them. While there are many perks to being self-employed, easy access to insurance is not necessarily one of them — and getting insurance can be trickier for freelancers than it often is for people with more traditional jobs.
No one loves paying insurance premiums, but you’ll still need it if you’re self-employed — in fact, especially then. Whether it’s health insurance, auto insurance, or insurance for your home office, it pays to be protected. Let’s take a look at some of the kinds of insurance you’re likely to need when you’re your own boss.
One of the big benefits of a full-time job working for someone else: health insurance often comes as part of the deal. Of course, that’s not the case when you’re self-employed. You’ll need a good health insurance plan, especially if your spouse or partner doesn’t have health insurance through their job.
While it may be tempting to forego health insurance if you’re young and healthy, this is overall a terrible idea — even with insurance, medical bills can be formidable; without it, you could easily be bankrupted by them.
Distinct from health insurance, disability insurance helps ensure you’re taken care of in the event of a serious injury or illness that prevents you from working or reduces the amount you’re able to work. Even if your condition is only temporary, being out of work can be devastating to your cash flow, especially when you’re self-employed.
Disability insurance usually replaces a portion of your regular working income (50 to 60 percent), so you would still have to think carefully about budgeting — but it’s a lot better than having nothing or draining your savings account.
Your premiums for disability insurance may vary based on factors like your health and job profession — self-employed workers in a high-risk profession may end up paying higher premiums than those with a freelance “desk job.” However, that isn’t the case for all insurance carriers, so make sure to shop around while you’re looking for the best deals on insurance.
Commercial Auto Insurance
It’s a given that if you own a vehicle, you need auto insurance. But do you need commercial auto insurance if you’re a freelancer? The answer is: it depends!
If you’re working primarily from home and rarely, if ever, use your vehicle for business purposes (for example, only occasionally running to the office supply store), then regular auto insurance is probably enough. But you may want to investigate more comprehensive, commercial auto insurance if, for instance:
- You commute regularly as part of your job.
- You transport passengers, equipment, or other goods as part of your job.
- You use your vehicle for frequent business travel.
- You use your vehicle to meet clients and / or do consultations.
As with auto insurance, not every freelance job will require liability insurance. But even if you don’t think you need it, it’s a good idea to shop around and consult with your insurance carrier to see if it would be a good idea. Simply put, liability insurance means being protected if you’re held personally liable for a wrong, injury, accident, or other unfortunate circumstance.
But liability doesn’t have to mean danger to life and limb. You could also be sued for a breach of contract, patent or copyright infringement, faulty products that you sell, and so on. Many freelancers are sole proprietors of their businesses, which means they can personally be held liable for any judgments against them in cases like this. When it comes to the question of whether you need liability, it’s better safe than sorry.
Commercial Property Insurance
Property insurance is another situation where the insurance you’ll need depends on your job. If your freelance work involves an office or facility outside the home, expensive tools or equipment, or other significant amounts of property not covered by home insurance, then chances are good you’ll want commercial property insurance so you’re not paying out of pocket if it’s damaged, lost, stolen, or destroyed.
Worker’s Compensation Insurance
In years past, a typical freelancer couldn’t really expect to have worker’s compensation insurance — that was a benefit reserved for regular “day job” employees. But with the gig economy rapidly changing the state of the American workforce, more and more companies are seeing the benefits of offering worker’s comp to their freelancers.
Much of the time, a freelance worker who’s injured on the job would simply have to absorb those costs themselves. But some companies are seeing the benefit of offering worker’s comp to freelancers and independent contractors, such as retaining their services after they recover from their injury or staying competitive by offering the same insurance benefits to freelancers that they do to regular employees.