6 Important Insurance Policies Do Freelancers Need?

Do you understand the policies governing freelance insurance? With more people focusing on work/life balance and looking for ways to make the process of earning money more flexible, the number of people choosing freelance careers over traditional employment is steadily increasing.

Indeed, according to a recent Upwork survey, the majority of American workers will be freelancing in some capacity by 2027.

And, while you can work as a freelancer in almost any profession, such as a doctor, accountant, or plumber, the first thing most people think of when they hear the term is “computer jobs,” specifically IT professionals and software developers who can work from anywhere and at any time as long as they have a good Internet connection.

Even if the general perception is that freelancing is a glamorous lifestyle that allows you to travel the world and sit in coffee shops all day, the truth is that it is still hard work. Remember that as a full-time freelancer, you are a self-employed entity, which legally qualifies you as a small business owner.

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As a result, just like any other business owner, you should protect yourself as a freelancer with the right freelance insurance program.

So, if you’re considering leaving the corporate world to pursue the freedom and independence of work that comes with being a freelancer, or if you’ve recently done so, you’ll need to learn how to protect yourself, your business, and your assets with the proper freelance insurance.

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What exactly is a freelancer?

A freelancer is a self-employed independent contractor who works in a creative field such as audio or visual recording and editing, web design, graphic design, social media, copywriting, and copy editing.

Freelancers work part-time or on a contract basis.They may work for several clients at the same time, doing work for each of them as needed. They may work for a single client at a time, usually until a project or series of projects is completed.

Many freelancers set their own hours and rates, which can be hourly or project-based. Some freelancers have a regular, full-time job and use freelance work as a side hustle to supplement their income.

Why do freelancers need insurance?

You don’t have the benefit of working under the umbrella of an employer’s insurance policies as a full-time freelancer, which probably covers more than you realize. Whether you work in technology, consulting, building design, or another industry, business insurance protects you from losses and lawsuits that your personal insurance cannot.

Personal insurance policies do not typically cover business-related claims.

Many freelancers believe that their personal insurance policies will also cover their business, but this is not always the case. A personal insurance policy may provide some coverage for property loss, but it will not protect you from business-related liability claims.

For example, if a client of your event planning company slips and falls while visiting your home office for a meeting, they may file a claim with your insurance company to cover their medical expenses. If you only have homeowner’s insurance, the insurer may deny the claim because it was a professional meeting, forcing you to pay the medical expenses out of pocket.

Property loss is covered by freelancer insurance.

When you work as an employee, your employer’s commercial property insurance protects the company’s real estate and property, such as computers, equipment, and furnishings, against losses caused by fires, break-ins, and other unforeseen events.

If you work for yourself, you no longer have that protection for the laptop you use to run your app development company or the camera you use for every photography session.

Your homeowner’s or renter’s policy will most likely only cover a certain amount of business property. You may also be able to increase your limits for business equipment coverage by adding an endorsement to your homeowner’s policy.

Ultimately, depending on the amount of expensive tools and equipment you use for your business, you may need to consider a commercial property insurance policy.

You are protected from lawsuits if you have freelance insurance.

Loss, damage, or theft of business property is only part of the risk; you must also protect yourself from lawsuits. If you make a mistake or oversight, fail to follow through on a contract, or cause financial or physical harm to a client due to negligence, you may find yourself on the wrong end of a lawsuit.

Even if the court rules that they did nothing wrong, most freelancers lack the financial resources to fight a lengthy and costly legal battle. If you are sued, professional liability insurance, also known as errors and omissions insurance (E&O), can cover the costs.

Finding Important Freelance Insurance Policies

Obviously, the type of coverage you will need will depend on your profession and the type of freelance work you do. However, there are a few policies that almost every freelancer should have in place to protect themselves from costly lawsuits that could arise from some of the most common risks that freelancers face on a daily basis.

1. Professional Liability Insurance: Professional liability insurance, also known as errors and omissions coverage, is probably the most important insurance policy for freelancers because anyone who provides any type of professional services should have it.

You must protect yourself if you are a programmer, designer, writer, accountant, or any other independent professional offering your services in the gig economy. Professional liability insurance protects freelancers who are accused of making mistakes that harm their clients’ bottom lines.

For example, if you are a freelance web developer and signed a contract stating that your client’s website would be up and running by Black Friday, the client may sue you if you do not keep that promise. Professional liability insurance would kick in to cover legal fees and any eventual payouts resulting from such a claim.

General Liability Insurance: A general liability policy is one of the first policies that most business owners will purchase. It protects you from customer injuries or third-party damages. Before signing a lease as a freelancer, you should have general liability insurance.
Commercial Property Insurance: Even if you work from home as a freelancer, you may need to purchase commercial property insurance because a standard homeowner’s or renter’s insurance policy will not cover damages to your business property. This means that if your computer or other business equipment is damaged or stolen, you won’t be covered unless you have a commercial endorsement added to your homeowner’s or renter’s insurance policy. The safest and best option is to purchase a commercial property policy to ensure that all of your business-related property is protected.
Fidelity Bonds: Self-employed contractors are typically required to purchase bonds that serve as a three-way agreement between you, the client, and the insurer. Surety bonds are probably familiar to most people because they are a necessary part of doing business as a contractor in the construction industry. When you buy a bond, your insurer will pay your client an agreed-upon amount if you fail to deliver on what you promised to deliver in your contract with the client. If you work as a freelancer in the IT or finance industries, you should consider purchasing a fidelity bond to protect your client from fraud, theft, and data breaches.
Cyber Liability Insurance: Because many IT freelancers work with customer data, they are at risk of data breaches caused by cyber attacks. For example, if you handle and process credit card payments for your clients, you may be held financially liable for damages if this personal information is stolen or compromised in any way. In such cases, cyber liability insurance will cover expenses such as notifying clients about the breach, hiring computer forensics teams to determine how the breach occurred and what can be done to prevent similar issues from occurring again, and paying legal fees and civil damages if necessary.
Health and Disability Insurance: According to a recent survey, 22% of freelancers say that affordable healthcare is their top concern because they are self-employed and do not have an employer who provides health insurance or any type of employee benefits plan. Freelancers should consider not only finding a good health insurance plan for themselves, but also disability insurance, because they cannot rely on employer-implemented workers compensation insurance if they suffer an injury or serious illness as a result of their freelancing work.

What is the cost of freelancer insurance?

The cost of your Freelancer Insurance is determined by a number of factors. Your zip code, coverage limit, team size, and length of coverage all play a role in determining the risk associated with insuring your freelance consulting business.

Some Insurance companies, on the other hand, do not require you to commit to lengthy, costly policies. Through some Insurance companies app, you can get flexible Freelancer Insurance and customize your coverage down to the month, day, or hour. Furthermore, if you need to add Additional Insureds, you can do so at no extra cost with some Insurance companies.

Get a quote from Insurance companies to get an accurate idea of how much Freelancer Insurance would cost you and your company.

A freelancer liability insurance policy covers who?

Insurance companies offer freelance insurance that is tailored to the needs of professionals like you. They cover the following professions, as well as freelance work and other activities:

AV Installation
Artists
Bloggers
Consultants
Career Counselors
Installation of Car AV
Computer Service
Directors of Creative
Producers of films
Designers of Graphics
Sitters for the Home
Interior Designing
Consultants in Information Technology
Consultants in Marketing
Coaches for Life
Shoppers on their own and more.

In Conclusion

If you are a freelancer and would like to speak with a business insurance expert to ensure that you are purchasing the right coverage for your business needs, please contact any Insurance Brokers expert to discuss your freelance insurance options.