One of the best things about freelance life is the freedom it affords you. Even when you’re working on a long-term project, being your own boss means you can make decisions so that every day is different. Having this sort of diversity in your work can be an incredibly liberating feeling.
With freedom, though, comes a greater responsibility to protect yourself as you operate in the professional world as a lone ranger. One way to do this is by investing in insurance cover specifically designed to safeguard those working in a freelance capacity (or similar).
There are different types of business insurance available for freelancers, so if you do decide to go ahead and buy cover, your personal circumstances will probably affect which one you go for. In no particular order, these include:
- Professional indemnity
- Income protection
- Public liability
- Product liability
- Personal accident
- Portable equipment
- Legal protection
- Cyber and data risk
But first, let’s take a look at why investing in relevant insurance cover could be a good idea, even if it does feel like a financial burden.
The benefits of insurance for freelancers
Buying insurance can seem like just another cost to add to your growing list of monthly expenses, we get it. However, there are a whole host of advantages that insurance cover allows you to unlock, including:
- Financial support if you suffer loss of income
- Legal protection if a customer wants to take action against you
- Protection for your business-critical equipment and workspace
- Added security for sensitive data and information
- Ultimate peace of mind
Plus, insurance typically comes in tiers with different levels of cover, so you can control how much you choose to invest versus how much security you want.
What type of insurance should a freelancer have?
Now we’ve explored why freelancers benefit from insurance, let’s take a closer look at 10 different types of cover worth doing some research on.
This type of insurance helps to cover the cost of settling any claims clients might want to make against you. If you’re a freelance HR consultant, for example, and one of your clients says that your guidance harmed their business or an employee, they may wish to take action.
Professional indemnity cover helps you deal with the financial repercussions of this situation. This is arguably one of the most highly recommended forms of insurance for freelancers and certainly worth investing in.
Income protection insurance
If you become unable to work, perhaps because you’re ill or injured for example, for a prolonged period of time, income protection insurance is there to ensure that you still have some money coming in while you’re out of action.
This is particularly beneficial for freelancers who don’t have the safety net of sick pay that those in employment do.
If you conduct most of your work from home, or with minimal face-to-face contact with your customers, you don’t really need to worry about this one.
However, for those freelancers who do a lot of public-facing work, this type of insurance cover is worth considering.
It helps protect you if a client wants to make a claim or sue as a result of being hurt or injured on your premises. It covers both the legal fees and compensation you might have to pay out, so it can be well worth the small investment.
If you sell a product, such as skincare, food, or gadgets, product liability insurance helps protect you if a customer wants to make a claim on the grounds of your product injuring them or damaging their property.
It also applies to services, such as personal training or wedding videography, where customers could claim your advice or equipment caused them or their belongings harm.
Contents insurance is similar to home insurance in that it serves to protect the belongings you keep on your premises. In fact, some items might crossover so be sure to check your home insurance policy first if you work from home a lot.
Contents insurance is more tailored to business-related items such as equipment, technology, and safety gear. This type of cover also protects against fire, theft, and accidental damage.
Personal accident insurance
As a freelancer, if you’re injured at work, there’s no such thing as putting your feet up and sleeping soundly knowing that sick pay has got you covered.
That’s why personal accident insurance is so important, so that you can make sure there’s still some money coming your way while you’re incapacitated. This type of cover will provide you with applicable payments until you can get back to business.
Portable equipment insurance
Freelancers often need to lug equipment around with them, which puts your invaluable tools at risk every time you step out of the door. Think photographers, mobile pet groomers and sports trainers as classic examples of freelancers who need to transport tools in order to do their jobs.
Portable equipment insurance safeguards you if your equipment gets damaged at work and needs replacing.
Legal protection insurance
Dealing with legal matters can be extremely daunting as a freelancer entirely responsible for yourself and your business. That’s why seeking professional help is always the best course of action, but this does come at a cost. Legal protection insurance helps cover this cost if or when you come to need it.
Cyber and data risk insurance
In the digital world, your personal data and information need as much protection as possible, as does your customers’, and particularly in a climate of heightened fraud and cybercrime.
This type of insurance helps to cover the cost of recovering lost data, making up for lost income, and any GDPR claims you might face.
As you might know, IR35 has been implemented by HMRC to clamp down on so-called ‘disguised employment’. Understanding whether you’re ‘inside’ or ‘outside’ IR35 can be confusing, but it’s important to get it right in case you are investigated.
IR35 insurance covers the fees of a professional dealing with the investigation process for you, so that you don’t have to take time away from your workload and deadlines.
This list of recommended insurance for freelancers is by no means exhaustive. There are several other types of cover that you might wish to look into, such as private healthcare insurance, life insurance and business insurance. If you’re unsure, seek professional advice before making any decisions.
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