Why Gig Workers Need Business Insurance (and How Much They Should Buy)
As a freelancer , you are essentially a sole proprietor providing services on a freelance or contract basis. While the gig economy offers greater flexibility, it also means you don’t have the same protections as a traditional employee. This is why it is extremely important for gig workers to have proper business insurance.
Without the right insurance, you could be held personally liable for things like injuries, property damage, or professional errors that may occur while working a gig. The cost of a liability claim can quickly wipe out your savings if you are not properly insured. Here are the main types of insurance that gig workers should consider.
General liability insurance
This provides protection if someone is injured or their property is damaged as a result of your business activities. For example, if you spilled coffee while working as a cleaner and stained a client’s expensive rug, general liability would cover the cost of repair/replacement.
Most gig workers should have a general liability policy of at least $1 million, with costs typically ranging from $300 to $900 per year depending on your profession and location.
Professional liability insurance
This is also called errors and omissions (E&O) insurance. It covers you if a client claims that your work was performed incorrectly or negligently and resulted in financial loss. This is important for any workers providing professional services such as consulting, IT support and accounting.
A typical policy costs $500–$1,000 per year for freelancers and can be increased for higher coverage needs.
Workers’ Compensation Insurance
If you are injured on the job, workers’ compensation provides medical coverage and replaces lost wages while you recover. It is required by law for many contractor positions such as construction, delivery, moving/hauling services and more.
Costs vary widely by state, profession and salary amount, but for sole proprietors are typically less than $1,000 per year.
Where to buy insurance
Luckily, there are insurance companies and brokers that specialize in affordable policies designed specifically for self-employed individuals, freelancers and gig economy businesses. A few top options with consistently high customer satisfaction ratings include:
Shop around and compare rates, coverage and support to find the right policy for your job and budget. Having the right insurance gives you the protection you need and allows you to grow your freelancing business with confidence.
Moreover, here are the best retirement accounts for self-employed people.