Insurance for Freelancers: What Kinds of Insurance Make Sense for Freelance Workers
Freelancing is a rapidly growing sector of our workforce. There are now an estimated 42 million Americans working as independent contractors. And although freelancing offers a lot of advantages such as freedom and flexibility of work schedule, there are some challenges as well.
One of the biggest dilemmas for a freelance worker is what kinds of insurance they need to carry. Many independent workers have come from the corporate world where most of their insurance needs were already taken care of. In the freelance world, insurance is entirely up to us. So we best educate ourselves on what types of insurance it makes sense to carry.
Here is a look at 5 different types of insurance that every independent contractor should take a look at:
Health Insurance: For starters, every freelancer needs to have some kind of health insurance policy. If you cannot obtain health insurance from your spouse’s policy, then you will need to find it on your own. A good place to start is to check with your auto/homeowner insurance agent to see if they offer it.
Life Insurance: Since you no longer have the dirt cheap life insurance your employer used to offer, you will need to pick some up on your own. The amount depends on how many dependents you have, how young they are, and what level of income you would need to replace. The good news is that life insurance is getting more affordable all the time, and you should be able to pick up a term policy to cover your family without too much taken out of your monthly budget.
Disability Insurance: Are you the primary breadwinner in your house? If so, what would happen if you were no longer physically able to perform your work? For most of us, the answer is we would have no income! This is where disability insurance comes in. You may opt for short-term or long-term disability. The best strategy is to try to save an emergency fund (if possible) of 6-9 months of expenses for a short-term occurrence and purchase a less expensive long-term disability policy.
Errors and Omissions Insurance: Errors and omissions insurance (also known as indemnity insurance) is quite often overlooked by freelancers. And it may or may not be necessary, depending on the type of work you do. Assuming you are a writer, it is a good idea to consider it. Errors and Omissions insurance is similar to Malpractice insurance within the medical community. It would insure against a lawsuit filed by a client for some kind of negligence in your writing.
Contents Insurance: Do you have a home office? If so, you may want to consider adding a rider to your homeowner insurance policy to cover the specific contents within your office. If you are like me, you might have a desktop computer, laptop, printer, phone, desk, table, 2-3 filing cabinets, and some office supplies. All told, the value of your home office equipment could total $3,000 to $5,000. If you are not sure if this is covered within your homeowner policy, it is best to make sure of it now before anything catastrophic happens. Contact us today for more information.