Insurance as a Freelancer What You Need to Know

Image of Kimberly Joyce
Kimberly Joyce
55

Insurance can benefit both you and your employer, and here's how!

What unique attributes can you carry with you that will set you apart, allow you to charge more and be in high demand at the same time?

I recently read a great piece written by Rachel Peters. She did a terrific job summarizing some of the key differentiators among freelancers that will help determine how much you’re able to charge for your services. If you’re like most independent contractors you’ve spent most of your career honing your industry specific skills. You’ve made a name for yourself and you’re really looking to stand out in the “C” of talent. The “C”, of course, stands for contractor or independent contractor and, to borrow a stat from Rachel, sources put totals near 53 million in the US alone. So how in the world can you stand out in “C” of talent? What else can you do?

Though there are many things you can do, the following paragraphs will focus on what I believe to be one of the more overlooked factors: liability (professional and general) & insurance. I’ve probably just lost half of you, but if you’re still reading, take a few minutes to read on and learn how you can use insurance coverage as protection, but also to set yourself apart.

 

How Insurance Can Benefit Both You and Your Employer

Insurance? Ick! Nobody wants it, but everybody needs it. True, it’s an additional expense. True, it’s a hassle at times, but what if you could use your insurance coverage as a tool to get more work? What if I told you your coverage (or lack thereof) could be the difference between getting the job and not? It’s true, we all need insurance. Well written, it provides very necessary protection against unplanned and unfortunate events that could be catastrophic. It also shows a company with whom you’re interested in working that you’ve thought about them, their needs and what additional costs you might be handing them. Did you know if you don’t have insurance coverage, the company you’re looking to work for has to include what they pay you in the amounts used to calculate their premium? Yep, every uninsured contractor they hire costs them premium dollars. I just saw a client write a check for $35,000, just from hiring independent contractors. If you have your own coverage, save the money your company gives!

It also shows you’ve considered the business of your business. Placing your own coverage means you’ve considered your own risk, and decided you don’t want anyone else responsible for protecting you. What if you’re sued as an individual and the company for which you’re working doesn’t have coverage for independent contractors? Believe it or not, some don’t, even though they hire independent contractors regularly! Worse, some think they do, but haven’t bothered to read their policy where specific exclusions relative to performance of independent contractors exist. How do you know what coverage they carry and how do you know it will adequately respond in the event something goes wrong? Sadly, you don’t, unless you have your own coverage.

 

General Liability vs. Professional Liability

Without getting too technical here, I also want to discuss the basic difference between general liability and professional liability. The former provides protection if you injure someone or damage their property. The later protects you in the event your actions, or failure to act, cause a pure financial loss. I contend you need both, but some jobs require more than the other. For instance, a manufacturer of hammers probably has more exposure to bodily injury than pure financial loss. In all my life, I’ve never seen a hammer that didn’t work. Have you? However, if you’re an attorney, you’re more likely to cause someone a financial setback than you are to physically harm them or their property. Of course, that’s an over-simplification, but make sure to ask your broker to explain each in detail before you decide to purchase.

 

Finding Inexpensive Insurance

Finally, insurance is accessible inexpensively. Annual policies that combine both general and professional liability can be written for companies and individuals often for less than $1,000. It may sound like a lot, but that might be the best $1,000 you or your business ever spends. Remember, there are a lot of hidden benefits to having your own liability insurance. Set yourself apart, take control of your risk and watch the work roll in!

 

18
Image of Susan Wittan
Susan Wittan

Mastering Your Phone Interview: A Recipe for Success

Most people find interviews in general to be nerve racking and quite frankly intimidating. But when...

Read more
Career Mentors can be very helpful.
Image of Liz Lokey
Liz Lokey

How to Find a Career Mentor

There are times throughout your career when you feel unsure of what your next step should be. Maybe...

Read more