The number of self-employed workers in the U.S. stands at 15 million but Freshbooks forecasts that an additional 27 million workers will go the self-employed route over the next two years. This is due to many people placing more value on maintaining flexibility and freedom. While being in control of your earnings can be rewarding, it is important to remember that high rewards comes with higher risk. Even as you try to safely transition your career into self-employment, the unexpected can happen and you will need an insurance policy that can protect your business, your health and your income.
Property Insurance
This type of insurance is essential especially if you have business property such as office equipment, inventory or other assets. For the cost of $500 to $1000 annually, this product can cover the cost of damage to your business due to a fire accident, vandalism, theft etc. You may also want to include business interruption as part of the policy in order to insure your earnings if the business is unable to operate. While insuring your business’s buildings is not mandatory, if you have a mortgage your provider may require a cover to be in place.
Short-Term Disability
A health insurance may cover your medical bills, but if you’re too sick or injured to work how will you generate enough income to sustain yourself ? Depending on your coverage, a disability policy will replace your income by paying about 60% of your usual income. The catch is that the payments can only last from nine weeks to a year and so it is important that you have an emergency fund in place.
Health and Relevant Life Insurance
In the regular work force, many employees find that medical insurance is included as part of their benefits package. However, as a self-employed person you will have to get your own coverage. Getting health insurance is not just important for you, but for your family as well. A policy will ensure protection for you and your family, covering everything from routine medical care to emergencies. On the other hand, life insurance can be similar to a typical employment-based life insurance policy in that your business pays the premiums instead of you. This policy is a tax-efficient way for your family to receive financial support in the form of a lump sum in case something happens to you.
General and Professional Liability
A product liability claim on average can cost about $35,000. This can cause huge losses to your business if you have no policy in place. Therefore, a general liability insurance is needed to protect your business from third party claims for property damages or bodily harm that may have been caused by your products or services. A professional liability (also known as errors and omissions insurance) is a must have if you offer advice or certain professional services. This type of policy will cover the cost of legal fees and compensation in case a client charges you with negligence, misconduct or mistakes made by you. In addition, if you want to land contracts with government agencies and enterprise clients, you’ll most likely need to present proof of liability insurance in order to bid.
Other types of Insurance that you may need
Based on your company’s specific needs, a business owner’s policy can reduce costs by packaging all the required coverage a business owner may need. If you handle sensitive client information, a data breach insurance can protect you in case of digital or physical theft.
If you are venturing into self-employment you will definitely need some type of insurance. It is also a good idea to review your coverage frequently in order to ensure that you have policies that meet your needs and can be sustained financially.
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