The Ultimate Guide to Liability Insurance for the Self-Employed

If you work for yourself, you’ve probably wondered a) what the heck is business insurance, and b) if you need it. You’ve come to the right place.

If this is your first time delving into the very confusing and sometimes overwhelming world of business insurance, have no fear. Insurance experts speak their own language, which makes it hard to understand everything you need to know. That’s where I come in. My name is Hannah Sullivan and I promise to break down liability insurance in a way that any normal human could understand.

Because you’re reading this article, I’m guessing you’re not an insurance expert. So I won’t speak in technical jargon, and therefore, you won’t have to decipher it.

Here, you’ll learn what kinds of insurance you need when you’re self-employed. Plain and simple. You came here for some info, not a headache! Alright, here we go.

I work for myself. Do I need insurance?

If you are a business of any sort, then yes, you should have business insurance. It doesn’t matter if you’re working solo, with a tight crew, or a huge team. If you make money doing what you do, you’re a business.

We all know starting a business ain’t easy, so why not protect your hard work?

 

What kinds of self-employed people need insurance?

All kinds of self-employed people. Here are a few that come to mind:

• Independent contractors
• Home-based businesses
• Entrepreneurs
• Startups
• Small business owners
• Freelancers
• Consultants
• 1099ers
• Mompreneurs
• Side jobbers
• Solopreneurs
• New businesses
• Old businesses

 

But where to begin?

First, assess your risk. Regarding your business, not your health (yep, I’m not talking about those late night pizza and taquito runs).

Understanding your liabilities is important because it affects what types of insurance policies you may need. Your coverage needs depend on the line of work you do. IT consultants face different risks than carpenters. Liability insurance applies to both, but general liability might be more necessary for a carpenter, while professional liability might be more applicable for a consultant. Every business has its own unique risks. It’s a snowflake. Your insurance plan should protect you from liabilities that may arise from your business. This is where an insurance agent can help out big time.

Get a free business insurance consultation.

 

Elements that can affect risk include:

• How many employees you have (including part-time, full-time, contractors, and subcontractors)
• Interacting with the public
• Your industry
• Where you work
• Whether or not you’ve had insurance claims in the past
• The type of building you work in
• Your business assets

An insurance underwriter will assess your risks and come back to you with a quote, including the rates and terms of the policy (or policies) that fits your operation best.

 

Liability insurance for the self-employed

If you haven’t already gathered, liability means “risk.” Owning a company has risks, and that’s why liability insurance is a great place to start if you’re self-employed. Three popular liability policies include professional liability, general liability, and cyber liability insurance.

 

Professional liability insurance

This coverage doesn’t apply to everyone. However, if you provide expert services or advice for a living, it’s very important. People like consultants, designers or photographers can seriously benefit from professional liability.

Professional liability insurance (also known as errors and omissions) protects you in the event that a client claims your business failed to deliver a promised service, made a mistake, or was negligent.

Non-insurance speak: Professional liability is basically protection against an unhappy client. It’s that simple.

If you’re an IT consultant, you offer professional recommendations for a living. If your advice results in any type of loss (financially or otherwise) for your client, you may be facing a lawsuit. And that would suck.

Your unhappy customers could very well sue you, and paying the damages out-of-pocket could cause a hit to your operation. But with professional liability insurance, the cost would be taken care of.

Let’s get on the same page here: having someone else pay for expensive, crappy, situations is pretty much always better than paying out of your own personal pocket, right?

Note: Defense costs are pretty much included in all policies, so I’ll stop mentioning it.

 

What is a general liability?

Basically, a general liability policy covers your bases for an assortment of random things that can go wrong when you own a business. For example, you’ll be protected from financial loss if you happen to face a property damage or bodily injury claim.

Additional benefits of general liability insurance include nonphysical risks, like personal and advertising injuries.* 

*Non-insurance speak: General liability also covers claims involving copyright infringement, slander, libel, and false advertising.

 

Cyber liability for self-employed businesses

You might be thinking, “That sounds pretty intense. It’s probably for big companies, not smaller shops.” Well, that’s not the case. Cyber liability insurance protects any business — large or small —  in which a customer’s personal information may be exposed. Or worse, stolen.

Okay, that does sound a little intense. But here’s the deal: Anyone who uses technology to do business should have a cyber liability policy.

Statistically, hackers go after smaller organizations. Why? Because larger operations usually do have strong security systems in place.

You should think about getting cyber liability insurance if your business handles sensitive customer data (even something as simple as credit card information).

 

Cyber liability has an assortment of benefits, but here are a few:

• Reputation management
• Third-party services
• Equipment for business interruption
• Cyber extortion
• Regulatory fines and legal costs
• Customer notification
• Forensics investigation
• Identity theft
• Credit monitoring

 

Okay, so now what?

Now that you have more of a grasp on whether liability insurance policies might be a fit for you and your business, you’re ready to get an online business insurance quote.

Comprised of experts with over 30 years experience, Pogo Insurance works with the top national carriers, with very competitive rates. The experts work for you, not a commission. All quotes and advice are free.

Not ready to get a quote? Learn more about other business insurance policies Pogo offers here.

We hope you enjoyed this promoted article as much as we did! This article originally appeared on Pogo.”