It can be extremely exciting to start your freelancing business. You get to do what you love, create your own hours and schedule, and be your own boss.
No more tedious power moves and burnt-out weeks with toxic coworkers. You 100% own your own time now.
As with every dreamy work scenario, it comes with a price.
When you’re a w2 employee, you often get several benefits baked into your salary and overall work agreement. You also get easy access to insurance like life insurance, health insurance, and dental & vision insurance. Sometimes, your employer might even cover the entire bill.
When you’re a freelancer, you’re responsible for finding and setting up your own insurance. This includes insurance that you would never think twice about getting as a w2 employee.
Let’s dive into the different insurance options and what types of insurance every freelancer needs to protect themselves and their business, and get a little peace of mind.
When you work as a freelancer, you don’t get access to employer-sponsored health insurance. If you’re in the U.S., you’ll have to use Healthcare Marketplace to find a health plan that both fits your budget and covers your medical needs which can be challenging.
It isn’t news that healthcare in the U.S. is expensive, and even more so when you don’t have access to private insurance through employer-sponsored health plans at a discount due to their negotiation power. Your state may also have plans available for certain income limits that are either free or at a discount.
Health insurance alone can cost anywhere from $100 to as much as $1,000 or more per month for individuals and families.
Vision & Dental
You’d think that vision and dental insurance should be included in your health insurance since they are in fact a part of your health, but thanks to for-profit healthcare, our system lumps them into their own separate insurances. However, some health plans on the marketplace do lump dental and vision into the plan, depending on your state.
You can find vision and dental plans starting at $13 and $25 per month with the Freelancers Union.
Life insurance is an essential type of insurance for anyone who has a family that will be left to pick up the pieces if anything were to happen to them. Life insurance helps them to pay for a funeral, burial, and handle any outstanding debts, etc.
It’s also used to provide some financial benefit to dependents upon an unexpected death so money in the household won’t be the main concern during a life-altering tragedy in the family.
Ladder Life is a popular life insurance option for freelancers and other self-employed persons. Their plans start at $5 per month.
General Liability Insurance
One of the most important insurances for freelancers is general liability insurance.
This type of insurance can protect you and your business from things like accidents in the workplace such as property damage or injuries. This can come in handy even if you don’t work in an actual office and work remotely.
This type of policy also protects you from the following:
If you were to write a negative comment or if you’re being accused of using someone else’s trademarked material, general liability insurance can help legally cover you.
The Freelancer’s Union has curated a selection of both general liability insurance and something they call “writer’s insurance” for starter options. Click here to check both of those options out.
Professional Liability Insurance
Even though general liability insurance can help protect you from things like slander and copyright or trademark infringement, it can’t cover you when you get sued. That’s where professional liability insurance comes in.
It can help cover legal bills, lawsuits, and claims that are related to your professional services. Professional liability insurance can also help cover lawyer bills.
You can get a quote for professional liability insurance through a provider like Geico. Another name that this type of insurance is often called is Errors & Omissions Coverage.
Last, but not least, cybersecurity insurance might be a worthwhile investment. This type of insurance comes the most recommended for freelancers that work in either healthcare or financial services due to the high risk of data breaches in those sectors.
Since the majority (if not all) of a freelancer’s work is done primarily online and not in a 100% secured network like it would be if you worked for an employer with a dedicated secured network, the chance of you facing a data breach are common. And the impacts of a breach like that could be catastrophic.
According to the internet security firm, Kaspersky Labs, the average cost of a small business data breach is $86,500. Imagine if you faced a breach like that. Would your finances be able to bounce back or would they be wiped out?
If you store any sensitive customer data like credit card numbers or wire information, you could benefit from this type of coverage. However, there are sensible ways to protect yourself from having to secure any sensitive info in the first place. You can use third-party tools like Stripe to process payments and never give out any direct financial information, nor accept it from your clients. And for any sensitive access information, use a tool like LastPass.
If you think you might still need this type of insurance, check out CoverWallet for as low as $25 per month.
Is Insurance Necessary?
The short answer is yes. The long answer is this entire article. When you’re starting a blog or freelance business, add insurance to your possible costs.
Life is unexpected and there is only so much that you can plan for. Accept the things you can’t control but be prepared for them with insurance.
It’ll help put you a bit at ease in this new adventure of working freelance and moving away from the cushy w2 employee world.
Plus, you’ll be a smarter business person for it.