Freelancer Insurance – cost and types of policies
Freelancer insurance is a category of self-employed insurance covering everything, from health insurance to insurance for any work accident or mistake.
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We will discuss all the types of insurance a freelancer might need.
First of all, let’s make it clear: In the US if you want to be a freelancer, you are falling into the category of self-employed people, what is a self-employed category?
Insurance requirements for the self-employed
A freelancer is a person who works for him or herself rather than as an employee of a company.
Although freelancers can take on contract work for organizations or companies from time to time, they are basically self-employed.
According to the legal definition, “self-employed” refers to a person who works in some business or profession as a sole proprietor, a partner in a partnership, an independent contractor, or consultant.
In practice, this means that if you are a freelancer, you are both a business owner and an employee in that business.
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You have to take care of your rights, including providing your own health care insurance.
As well, you need to make sure you are protected while working.
Types of insurance for freelancers
There are different types of freelancer insurance.
If you are thinking of becoming an independent worker and enjoying the benefits of “being your own boss, ” you should do it in the safest way possible.
If you already have a business and it’s going well, you can always protect it by freelancing insurance.
There’s the old saying, “if you don’t make mistakes, you don’t take anything”.
A consequence of some unforeseen event in the course of your work can be bodily injury, property damage, or both.
Some of these mistakes can cost you a lot of money unless you protect yourself beforehand.
As a freelancer, you have to think beyond just the work itself.
It would be best if you found a way to do your job without the risk of losing everything in lawsuits or money claims.
As a self-employed person, the first thing you need is health insurance.
Now you are not a part of a big corporation that is taking care of you.
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You have to think about everything yourself.
Besides health insurance, you probably need other insurance types.
It depends largely on the type of your activities.
So, let’s go step by step and see how much it will cost you to be a freelancer with the necessary protection.
If you are self-employed, you need to choose the best health insurance plan for yourself.
As a freelancer, you qualify for Individual Health Insurance Marketplace.
About the Individual Health Insurance Marketplace.
Under the ACA, each state has a health insurance market, also known as an exchange, where people seeking coverage can go online to purchase health insurance.
Some states have created their own health insurance market; where states have not yet done so, the federal government administers the market.
Please think of the market as an online health insurance center that makes it easy for you to search for health plans in your state and choose the right one for you.
The market is a new way for people to get health coverage.
Market membership also determines whether you are eligible for health coverage through a public health program such as Medicaid.
Remember that you do not have to research your state’s insurance market for insurance coverage.
However, you can buy coverage elsewhere, e.g., From an agent, broker or insurance company online.
But if you want to help lower your expenses according to your income, this is the only place to do it.
Each plan offered on a state’s Marketplace website is a qualified health plan, which means that it is reviewed to ensure that it meets the ACA requirements for benefits, costs, etc.
Please note that you can only use the Marketplace until you are eligible for Medicare.
The Marketplace is primarily aimed at people under the age of 65 who need insurance.
In general, if you are 65 years of age or older and applying to the market, your are encouraged to sign up for Medicare.
Interacting with your state’s health insurance market involves the following steps:
You can visit the website of your health insurance market and see the plans available.
To find your state’s Marketplace site, start with HealthCare.gov or HealthLawAnswers.org.
On your state’s Marketplace website, create an account and find out if you are eligible for financial assistance, and you can review each plan that offers what you need.
See the price, including the premium, if you are eligible for financial assistance, and see what is covered so you can make the right decision about which plan you want to buy.
Compare benefits and prices together.
Every marketing plan must cover significant health benefits, including doctor visits, hospital treatment, emergency care, prescriptions, preventative care and more.
The differences between the plans are in what is covered and core benefits, provider networks, and how you and the plan share expenses.
For example, if you want to pay a lower premium, you could consider a higher deductible if you use health coverage for other than preventative services.
The monthly premium can also be reduced if you qualify for savings programs.
This all depends on your income and household size and will be explained to you when filling the Marketplace insurance application.
You can also check if you qualify for Medicaid – government health insurance given in case of low income.
When it comes to eligibility for this program, your income must be below a certain level, varying from state to state.
Also, your qualification depends on the number of people in your household.
What is the cost of health freelancer Insurance?
Now we come to the question that everyone who is thinking about freelancing wants to know.
How much does the necessary insurance cost as a freelancer? As previously mentioned, your premium depends on several factors – your income, household size, do you qualify for any savings programs.
On average, freelancers in the United States pay $500 per month, which is $6,000 annually.
If you qualify for any savings program, your premium can be as low as $200 per month.
To check if you qualify for this type of program, you can visit https://www.medicaid.gov/
What you need to consider when it comes to health insurance is your location.
For example, if you live in New York or Texas, your premium can even go up to $800 per month.
On the other hand, living in Colorado or New Hampshire will allow you to get health insurance for approximately $300 per month.
So, when registering as a freelancer, take this into account.
Other types of insurance for freelancers
Besides health insurance, there is essential business liability insurance.
To protect your business and have coverage for any injury or damage that can result from your work, you need to have liability insurance.
Depending on the type of freelance job you are performing, you will need a tailored type of freelancer insurance.
Here we will discuss some of the types, so you can decide what suits you the best.
General liability insurance for freelancers
General liability insurance covers financial losses resulting from any claims made against you for bodily injuries, property damage, medical expenses, libel, slander, defending a lawsuit, etc. It is the most comprehensive insurance for freelancers, and it’s essential for all types of business.
For example, imagine that a customer slips while leaving your office and breaks his or her leg.
That would be considered a bodily injury.
The customer can decide to sue you for medical expenses, and this is why you need insurance.
This insurance is considered the essential type because it covers many unexpected things that might happen during your work.
Also, this type of insurance gives any of your contractors a higher level of security.
If you are working with dangerous tools, you are definitely risking getting injury claims.
General liability insurance can help you with some injury claims as well.
The cost of general liability insurance
The cost of general liability insurance depends on several things – the coverage you opt for, the type of business, the insuring company, and the location.
The average price of general liability insurance in the US is approximately $40 per month, which is $480 per year.
As mentioned, a lot depends on the type of business you are conducting.
If you are involved in a riskier business, such as landscaping, you will have a higher premium than someone who is working as a copywriter.
Also, the coverage limit determines your premium.
If you are aiming for a more extensive coverage limit, the premium will obviously be higher.
Some of the most common coverage limits are $1 million and $2 million.
Here you can find more detailed information about general liability insurance in your state.
Professional liability insurance for freelancers
Professional liability insurance covers financial losses that are the result of malpractice, errors, and negligence.
It is suitable for all the businesses that are providing services to their clients.
This insurance is also referred to as Errors & Omissions insurance.
Whenever you are working with people, there are chances for mistakes.
We are all humans, and errors happen.
The question is, after a mistake happens, who is going to pay for it.
Let’s say you are working as an independent financial adviser.
You advised your client related to investing, and your client lost the money.
He holds you responsible for this and takes you to court. It is why you need to have professional liability insurance.
For some professions, such as lawyers and medical workers, this type of insurance is mandatory.
Others can choose if they want to ensure their business.
The average cost of professional liability insurance is $60 per month or about $720 per year.
More about E&O insurance types in your state can be found here.
Home-based business insurance
One more type of business insurance that freelancers can consider is home-based business insurance.
Since the point of being a freelancer is being able to work remotely, many freelancers are establishing their offices in their homes.
Home-based business insurance is added to homeowner’s insurance and offers protection for third-party injuries’ business equipment and liability coverage.
Other than that, a business owner can buy an in-home business policy and secure his business this way.
This type of insurance is suitable if you have, for example, costly computers or tools for the business that you keep at home.
The price of a home-based insurance policy depends on how long you’ve been working from home, the type of business, the place you live, and your credit history.
The average cost in the US is $250 to $500 per year.
Income protection insurance for freelancers
Income protection insurance for freelancers works the same way as for any other profession.
If you cannot work due to illness or injury, you will get a regular tax-free income. This insurance is usually limited for a certain period.
In the US, it is usually referred to as disability income insurance.
There are two types: short-term disability insurance and long-term disability insurance.
Short-term insurance covers 9 to 52 weeks with a waiting period of up to 14 days.
When it comes to long-term disability insurance, you are covered from 30 days to few years, depending on the insurance agency.
This insurance usually pays 40-80% of your pre-tax income in case of inability to work.
The price of this insurance depends on your job, health, salary, and the benefits you choose.
Usually, the price is 1-3% of your annual income.
Every freelancer should consider this type of income since it can happen that a person cannot work for a month or two due to illness.
With this insurance, you won’t have to think about money for the rent or the bills.
You will have a backup.
Cyber Security Insurance
All companies or workplaces must protect against cyber-security omissions.
The possibility of hackers breaking into your system and accessing sensitive customer or employee information and data can expose you to legal action with the substantial court and penalty costs.
As well, your own financial information can be turned over to the wrong hands, and this could ruin your business.
Ways to purchase the insurance
After you reviewed all your options, you should decide which type of insurance you need.
When all the decisions are made, what is left is to purchase an insurance policy. This can be done in several ways.
The first way, the traditional one, is to go to any insurance company and get the policy.
They will show you the offer, you will sign the agreement, and voila, insurance is yours. However, this option is time-consuming and more expensive.
The second option, which is more suitable for any freelancer, is an online purchase.
You can find the company in any part of your state and purchase the insurance without your actual presence. You will have to provide some of your personal details, sign an online agreement, and make the purchase.
This way, you will save time, and more importantly, you will save money.
And the best thing – online insurance usually comes with additional benefits, so why not exploit the offer to the maximum!
The third way is to join any Freelancer organization.
This way, you will get access to offers, and potentially it can be cheaper. These types of organizations are usually established to protect freelancers and to give them guidelines.
Therefore, as a part of their offer, you can usually find health, dental, or any other insurance you need.
The organization itself is not an insurance provider, but it can connect you to an insurance company.
Conclusion about insurance for freelancers
You decided to take a step forward, quit your job and try to build something for yourself.
It’s great! But before doing so, make sure to understand all the responsibilities you will have as “the boss”.
First thing – you need to take care of medical insurance for yourself and possibly your family.
This is why you need to go through the offers carefully and find out what suits you the best. It would be best if you chose the freelancer insurance agency and the package that covers your medical needs.
You need to check what a certain package covers.
What types of medical checks, dentist services, etc. You need to check what you need to verify your health insurance.
After solving health insurance, you need to understand the nature of your business and find the most suitable type of business insurance.
Is it going to be general liability insurance, professional liability, or something else? The answer is simple – just check who your customers are, what your product/service is, and choose.
Put all this on the paper, and see what the cost of being a freelancer is.
Make sure to add on the list what would happen if you didn’t have the insurance. Some research shows that many freelancers give up on insurance because they see it as an expense. But let’s say that mistake happened and you are facing a lawsuit.
Now you wish to have that insurance.
Now you wish to pay $50-$100 per month, instead of millions in the lawsuit. Think twice before giving up on business insurance!
In the end, here is a link that can help you establish your business as a freelancer and make the first steps.