Here’s a shocking truth: 95% of freelancers and consultants don’t have adequate business insurance, according to a recent study by Insureon. I was part of that statistic until I made a costly mistake that woke me up to the importance of protecting my business.
Why You Need Business Insurance
When I first started freelancing, I thought insurance was just an extra expense. I figured, What could go wrong? Then, a client sued me for a project that didn’t meet their expectations. Even though I believed I’d done nothing wrong, the legal fees alone cost me thousands. That’s when I realized that business insurance isn’t just about protecting your business; it’s about protecting your livelihood.
As a freelancer or consultant, you face unique risks. You might:
- Make a mistake that costs a client money
- Lose a client’s data or damage their property
- Get injured while working
- Face a lawsuit, even if you haven’t done anything wrong
Business insurance helps cover these risks so you don’t have to pay out of pocket.
Common Types of Business Insurance
There are several types of insurance that freelancers and consultants might need:
- Professional Liability Insurance: Covers claims of negligence, misrepresentation, or inaccurate advice. Also known as Errors and Omissions Insurance.
- General Liability Insurance: Covers third-party bodily injury, property damage, and advertising injury.
- Business Owner’s Policy (BOP): Combines general liability and property insurance into one policy. Often cheaper than buying the two separately.
- Workers’ Compensation Insurance: Covers medical expenses and lost wages if you or an employee gets injured on the job. Required in most states if you’ve employees.
- Cyber Liability Insurance: Covers data breaches and other cyber threats. Important if you handle sensitive client data.
- Disability Insurance: Provides income if you’re unable to work due to injury or illness. Doesn’t protect your business, but protects your income.
Choosing the Right Insurance
One common mistake I see freelancers make is choosing insurance based solely on price. Cheaper isn’t always better. A lower premium might mean less coverage, and that could cost you more in the long run if you need to make a claim.
Here’s what to consider when choosing insurance:
- Your Industry: Some industries have unique risks that require specific coverage. For example, if you’re a consultant who handles a lot of data, cyber liability insurance is a must.
- Your Clients: Some clients might require you to have certain types of insurance. Always ask about their insurance requirements before starting a project.
- Your Business Size: As your business grows, your insurance needs will change. Regularly review your coverage to make sure it’s still adequate.
- Your Budget: While you shouldn’t choose insurance based solely on price, you also need to make sure it fits within your budget. There are ways to save on premiums, like bundling policies or increasing your deductible.
How to Save on Business Insurance
Insurance is an investment in your business, but that doesn’t mean you should overspend. Here are some ways to save on premiums:
- Bundle Policies: Many insurers offer discounts if you bundle policies, like general liability and professional liability.
- Increase Your Deductible: A higher deductible means lower premiums. Just make sure you can afford the deductible if you need to make a claim.
- Shop Around: Don’t just go with the first insurer you find. Compare quotes from several insurers to find the best deal.
- Maintain a Good Credit Score: Insurers often use your credit score to determine your premium. A higher score can mean lower premiums.
Making a Claim
If you need to make a claim, act fast. Most policies have a time limit for filing claims. Here’s what to do:
- Notify Your Insurer: Contact your insurer as soon as possible. They’ll guide you through the claims process.
- Gather Evidence: Collect any documents, photos, or other evidence related to the claim. This could include contracts, invoices, or photos of damaged property.
- Cooperate with the Insurer: Your insurer might ask for additional information or interviews. Cooperate fully to help speed up the process.
- Keep Records: Keep records of all communications with your insurer, including dates, times, and what was discussed.
Insurance is there to protect you and your business. Don’t be afraid to use it when you need it. Remember, the goal of insurance isn’t to make a profit; it’s to help you recover from unexpected events.
Don’t make the same mistake I did. Don’t wait until it’s too late to get business insurance. Protect your business, your income, and your peace of mind. Get insured today.
