Everything You Need to Know About Business Insurance for Freelancers

There was a time when business insurance belonged to large companies, but even small businesses, including those run from home, have come to realize the value of getting insured.

Today, the gig economy has emerged as a form of the labor force that puts workers first, giving them benefits they didn’t have with traditional employment, such as choosing which projects to work on, their work hours, and so on.

These gig workers work as freelancers or subcontractors who aren’t considered part of a business or formal employees. They are simply hired on a short-term basis.

The thing is, the freelance work arrangement leaves you exposed to certain risks you wouldn’t have had to worry about in an employed setting.

Business Insurance for Freelancers

As a freelancer, you should see your work as a business, even if you are working from home.

Sure, you may not have or require any paperwork that makes your freelance job a formal business, but that’s one of the things that leave you exposed to risks.

If you are ever sued in a contract dispute or property damage, you will have to bear the cost of damages personally.

As such, you will need to turn your freelance venture into a formal business to gain access to business insurance and protect yourself.

Before we get into the types of business insurance freelancers can benefit from, let’s discuss business insurance.

What is Business Insurance?

Business insurance refers to a group of insurance coverages that protect a business from various financial risks, some of which could stem from property damage, lawsuits, natural disasters, contract disputes, etc.

It’s a type of insurance that also protects you as an individual from incurring personal financial loss in case of damages.

As a freelancer, you probably work under your name. That could be disastrous if you ever find yourself in legal trouble.

Types of Business Insurance for Freelancers

There are many business insurance policies, some of which freelancers can use to secure themselves from common risks associated with their profession.

While the type of coverage you go for depends on the freelance work you do, there are some general policies that pretty much any freelancer can benefit from, which are:

1.      Professional Liability Insurance

As a freelancer, you may not be at risk of causing physical harm to anyone or damaging someone’s property. You most likely run your business from home, but you are still not safe from lawsuits citing reputation damage.

Imagine a scenario where you help clients with advertising, and you use material they find damaging to their reputation. That’s where Professional liability insurance comes in to protect you.

The policy also covers negligence claims, which are all too common in the service industry. You can never know when a client will sue for mistakes or failure to perform.

2.      Business Interruption Insurance

Freelancers tend to have a hard time with consistent income. Having a business interruption cover would come in handy.

Since you are working on a by-project basis, your income depends on completing that project. If anything happens that interrupts your ability to work, you stop taking on more projects, which cuts short your income flow.

While there are special reasons, like damage to your equipment or theft of the tools you use for work, you may want to discuss acceptable reasons for losing business with your insurance provider.

3.      Cyber Liability Insurance

You probably don’t need this type of cover if your freelance business doesn’t involve working online, but if it does, know that you are ever at risk of a data breach.

In the event of a cyber-attack where client data is compromised, you could be held liable for the damages. And one thing is for sure, such damages are often costly.

Basically, if you handle sensitive data like client information that risks their security, you definitely need a cyber liability cover.

Finding the Right Business Insurance for You

The first step towards finding the right business insurance is knowing which policy suits you as a freelancer.

From there, you can look up insurance providers near you or an insurance agent to guide you further.

FindaPlan.com is a great resource if you need an online insurance marketplace for instant quotes and guidance on your unique insurance needs as a freelancer.


Conclusion

The value of insurance can’t be overstated! As a freelancer probably working on your laptop somewhere on a beach, business insurance may feel like an unnecessary expense.

However, all it may take is an honest mistake to get you into a legal dispute that may cost you your business or even life savings.