How Much Does Business Insurance Cost for Freelancers? - Zupnick Associates

(by Andres Rojas)

Being a freelancer is about having the freedom to choose when, where, and who you work for. But no decision is more important than which insurance you pick.

Let’s face it, things are never as simple for freelancers as they seem. Money issues, accidents, professional liability, and legal claims could all hurt your business when you least expect it. So you need the best coverage you can get.

Buying small business insurance can protect your business in a time of need. But freelancing isn’t a normal business. So let’s start by defining freelancing before we get into details.

Freelancer vs. startups: what’s the difference?

Both freelancers and startups are small businesses. Indeed, people often confuse them. However, both types couldn’t be more different.

startup is a fledgling business created to share an idea with consumers. Many famous companies — like Apple or PayPal — started as startups. However, most of them fail before they can become full-fledged companies.

Both independent workers and startups must manage their businesses and build a brand. However, startups have a wider range of responsibilities. Among other things, startups:

  • Sell products or services.
  • Must raise money to cover their costs until they make a profit.
  • Have employees.
  • Are accountable to its shareholders.
  • Earn monthly revenue.
  • Have a high chance of failing.

Freelancers, by comparison, don’t have managers or shareholders to answer to. Compared to startups, freelancers:

  • Sell their time and experience.
  • Don’t need to rent office or building space.
  • Enjoy several tax cuts and benefits for independent contractors.
  • Work alone.
  • Can choose or leave their clients at will.
  • Depend on a paycheck.

Freelancers represent a growing part of our workforce

Nowadays, you’re more likely to find people working on their own than ever. Thanks to online platforms like Zoom, Trello, or GitHub, freelancers can work anytime, anywhere. As of today, 36% of Americans are independent contractors, and that number will only grow in the future.

Freelance workers are also highly paid – especially now that COVID has made it hard for a company to hire an in-house staff. Indeed, 75% of American freelance workers said they’re earning more by working on their own.

On average, freelancers make $39,000 a year. However, this number varies by occupation. Some careers, for example, can make close to $100,000 a year – especially if they work on an IT-related job.

However, freedom brings risks. As an independent contractor, you’d get into a lot of trouble if your computer or your car broke down in the middle of a job.

Failing to meet a deadline could cost you money, your reputation, or even expose you to a professional liability claim.

Buying the right small business insurance policy can protect you from these types of dangers and more.

Find a policy that covers you against professional liability 

Being your own boss is one of the greatest feelings ever. That is, of course, until you run into troubles.

If you get sick while working for a company, HR can cover your health and living expenses while you get on your feet. But what if you were working on your own? Then you’ll only have your own savings to get you out of hot waters.

Insuring your business against professional liability is the best investment you can make. By insuring yourself you will ensure that your business grows without needing to tap into your savings if push comes to shove.

Some basic insurance requirements every freelance business should meet include:

  • General liability insurance: protects you in case you damage your clients’ property, hurt them, or infringe their copyrights by accident.
  • Professional liability insurance: everybody makes mistakes from time to time. Fortunately, this policy will cover you in case of malpractice.
  • Cyber liability insurance: it will protect you from responsibility in case a hacker steals your client’s data from your computer.
  • Business interruption insurance: will help you if you can’t work due to a natural disaster, riot, etc.
  • Auto insurance: will pay for your repairs in case your car is damaged in a business-related accident.
  • Health insurance: most freelancers don’t have access to a company’s pool of health insurance benefits. However, many freelancers can still qualify for both ACA and non-ACA health insurance policies.

Do you need help finding small business insurance?

Finding first-class professional liability insurance that meets your needs is a long, difficult process. Plus, between running your own marketing, delivering your work, and paying taxes, you probably have more than enough on your plate.

There’s no need to overburden yourself with more tasks than you can handle. Instead, talk to a broker you trust and let him find you the best coverage available while you focus on what you do best.

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