In 2022, the United States government and the Internal Revenue Service view freelancers as independent business owners. Thus, entrepreneurs must adopt a small business owner mindset.
The Small Business Administration found that solopreneurs make up 81% of small businesses. In a litigious society, this opens freelancers to lawsuits. When something goes wrong, independent contractors can find themselves as defendants in court.
It’s easy to see insurance as an extra monthly expense. However, it’s also an investment. Insurance protects freelancers during business; it also protects them in case their health deteriorates.
Buying insurance when you’re a freelancer is part of doing business so is workers comp insurance for small business. We present nine options to consider.
Business Insurance
Since several states treat freelancers as business owners, they place additional requirements on them. For example, independent contractors must obtain business licenses.
Depending on the business license and state, freelancers might need to acquire insurance first.
Let’s look at five business-side insurance policies.
1. General Liability
Freelancers use their general liability policy when a personal injury case is brought against them by a plaintiff. Even if the plaintiff does not win their case, the defendant incurs legal fees.
Therefore, the policy covers freelancers against income losses.
Even solopreneurs can find themselves in a liability suit if their product or service caused physical harm or property damage to a customer.
2. Professional Liability
Professional liability insurance differs from general liability policies. The policy covers freelancers when a customer brings a negligence case against them. However, it focuses on financial losses instead of damages for personal injury.
Common cases this policy deals with involve copyright infringement or personal injury resulting from negligence.
3. Commercial Property
Freelancers who see customers in their office, worksite, or commercial space must carry commercial property insurance. If a customer suffers personal injury onsite resulting from negligence, they can file for damages.
The policy also covers damage to assets on the property such as machinery and equipment.
4. Cyber Security
The top freelancing jobs remain technology- and internet-focused. This opens freelancers to cyberattacks. If you own a bricks-and-mortar business and use software to manage it, you put yourself at risk too.
Customers have a right to their privacy. You must protect it by law.
5. Worker’s Compensation
Worker’s compensation insurance covers claims filed by employees against their employer in on-the-job injury cases. Some states require solopreneurs to obtain self-employed workers comp insurance too.
While some business insurance policies are optional, others are mandatory for freelancers.
Health Insurance
Now, let’s look at four insurance policies that protect freelancers and their families in case their health deteriorates.
1. Medical
Freelancers experience sickness, life-altering diseases, and health emergencies too. In some states, all adults must purchase or acquire a health insurance policy. Otherwise, the states penalize you.
Since freelancing has become more mainstream, governments, health insurance providers, and organizations have found ways to make medical insurance affordable for independent contractors.
Medical insurance helps keep copays, visits, and prescription costs low. Therefore, find the policy that suits your circumstances best.
2. Dental
Oral health is important for a person’s well-being as well. A teeth cleaning costs between $100 to $300 on average every six months. Dental costs become more expensive when the dentist discovers cavities, periodontal disease, or infections.
This is precisely why it is wise to check out this dentist in melbourne and maintain regular appointments to prevent expenses caused by complications.
The trick to keeping dental costs reasonable is prevention. Root canals with crown work cost $2,500 on average. If your gums require deep cleaning, the treatment costs $1,000 per quadrant on average.
While dental insurance doesn’t cover the entire costs of treatments, it can defray them.
To keep your mouth healthy and pain-free, pick up a dental insurance policy.
3. Disability
Most freelancers work in technology-focused fields. Therefore, they pose different physical risks. Other risks leave people disabled, too, such as genetic diseases, lifestyle choices, and accidents.
If a disability prevents you from working, a disability insurance policy can help cover your income. Moreover, you can supplement the policies mandated and provided by the government.
4. Life
Professionals recommend life insurance to individuals who have families or sizable assets. The policy pays for funeral costs that average $8,000 in the United States. Ideally, after the funeral costs, the policy will net some funds for the families.
Obtaining life insurance is part of estate planning and covers you in case of sudden death.
Conclusion
The costs of running a business add up quickly. Although insurance is a cost that doesn’t have an immediate payoff, it protects freelancers against significant income losses. Plus, policies also provide medical, dental, disability, and death benefits.
