Types of Self-Employed Business Insurance

There are several types of self-employed business insurance available — each designed to provide protection against different risks that self-employed individuals may face. For instance, general liability insurance covers common risks such as third-party property damage, bodily injury and legal fees associated with lawsuits. Professional liability insurance provides protection if a client claims you made a mistake or were negligent in your professional services.

Although many types of business insurance are available, certain policies are essential to most self-employed workers. These essential types of insurance for self-employed address the most common risks, such as liability issues and property damage.

General liability insurance is a foundational type of business insurance for self-employed individuals. It provides protection against third-party claims of bodily injury, property damage and personal injury related to your business operations. For example, if a customer slips and falls at your office, general liability insurance would cover legal fees, settlements and medical expenses.

General liability insurance is essential for anyone who interacts with clients, customers or the public as part of their business. Coverage can also extend to advertising injuries, such as claims of defamation or copyright infringement. General liability insurance for self-employed individuals is often the first policy you should consider purchasing, as it covers a wide range of common risks.

Also called errors and omissions (E&O) insurance, professional liability insurance is crucial for self-employed professionals who provide services or advice. This type of self-employed liability insurance protects against claims of negligence, mistakes or failure to deliver services as promised. If a client believes that your work caused them financial loss, professional liability insurance would cover legal fees and any damages awarded.

Professional liability insurance is especially important for consultants, freelancers and other professionals who are held accountable for their expertise. Coverage typically includes legal defense costs, even if the claim is unfounded. Self-employed professional indemnity insurance is another term for this type of coverage, and clients often require it before they agree to work with you.

A business owner’s policy (BOP) combines several insurance types into a single package, often at a reduced cost than buying each policy separately. A BOP coverage usually includes general liability insurance for self-employed individuals, property insurance and business interruption insurance. These inclusions make it an excellent option for self-employed professionals who own or lease office space or equipment.

BOPs are designed for small to medium-sized businesses and can be customized to include additional coverages, such as self-employed injury insurance or data breach coverage. The property insurance component covers damage to your physical assets, while business interruption insurance compensates for lost income if your business is temporarily shut down due to a covered event.

Commercial auto insurance is essential if you use a vehicle for business purposes. Personal auto insurance typically does not cover accidents that occur while driving for business, so a separate self-employed car insurance policy is necessary. This coverage protects against liability for bodily injury and property damage, as well as collision and comprehensive coverage for your vehicle.

For self-employed professionals who drive frequently for work, such as contractors or delivery drivers, commercial auto insurance is crucial. It ensures that you are financially protected if an accident occurs while on the job. This insurance can also cover the cost of legal defense and medical expenses if you are sued following an accident. If you have employees who drive vehicles for your business, ensure they are also covered under your self-employed work insurance policy.

Even if you are self-employed, you may need workers' compensation insurance if you hire employees or subcontractors. This insurance covers medical expenses and lost wages if an employee is injured on the job. Some states require self-employed work insurance if you have even one employee.

For self-employed professionals, workers' compensation can also cover your own medical expenses and lost income if you are injured while working. It is an essential form of self-employed injury insurance, especially for those in physically demanding professions.

Commercial property insurance is essential for self-employed individuals who own or lease office space, equipment or inventory. This type of insurance for the self-employed protects the physical assets of your business from risks, such as fire, theft, vandalism and natural disasters. Having self-employed insurance that includes property coverage ensures you can recover financially if your business assets are damaged or destroyed.

For those who run a home-based business, it's important to note that homeowner's insurance typically doesn't cover business-related property. That's where self-employed insurance comes into play. A separate commercial property insurance policy will cover your business equipment, furniture and inventory, safeguarding your investments.

This type of self-employed insurance liability can also extend to cover loss of income if your property damage forces you to shut down your business temporarily. It ensures you're not left without an income while repairs are made or while you replace lost or damaged assets.

Self-employed individuals face unique risks that employees of larger companies may not encounter. As a self-employed professional, you are responsible for every aspect of your business, including its liabilities. Without business insurance for self-employed individuals, you could be exposed to significant financial losses if something goes wrong.

One of the primary risks for self-employed professionals is the potential for lawsuits. Whether it’s a client who claims your work caused them harm or a third party injured on your property, self-employed insurance can cover the legal fees and damages associated with these claims.

Self-employed individuals often rely heavily on their income to meet personal and business expenses. Self-employed life insurance, disability insurance and self-employed injury insurance can provide financial support if you are unable to work due to illness or injury.

According to the Internal Revenue Service (IRS), you are considered self-employed if you operate as a sole proprietor, independent contractor or member of a partnership that carries on a trade or business. Even if you run your own business part-time, you fall under the self-employed category. This means that, unlike traditional employees, you are responsible for protecting your business and personal assets against potential liabilities and financial losses.

Here are 10 common professions that typically fall under the self-employed category and need business insurance.

1. Freelancers (writers, designers, developers)
2. Consultants
3. Real estate agents
4. Independent contractors
5. Personal trainers
6. Photographers
7. Artists and musicians
8. Accountants and tax preparers
9. Hair stylists and beauticians
10. Handymen and home repair specialists

The self-employment insurance cost varies depending on several factors, including the type of business, the level of coverage and the specific risks associated with your profession. For instance, general liability insurance for a sole proprietor might cost around $28 per month, while professional liability insurance could cost about $80 per month.

Additional factors that can affect the self-employed liability insurance cost include your location, the size of your business and any claims history. It’s essential to compare quotes from multiple small business insurance companies to find the best coverage at the most affordable price.

Buying insurance as a self-employed professional doesn't have to be expensive. Here are several ways to save on business insurance for the self-employed.

• Bundle policies: Combining multiple insurance policies, such as general liability and property insurance, into a business owner’s policy can save you money on premiums.
• Increase deductibles: A higher deductible can lower your premium. Just be sure you have enough savings to cover the deductible if you need to file a claim.
• Maintain a clean claims history: Insurance companies often offer discounts to businesses with no claims history, as this indicates lower risk.
• Pay annually instead of monthly: Many insurance providers offer a discount if you pay your premium in full for the year rather than in monthly installments. This can save you money in the long run and avoid installment fees that may be added to monthly payments.