There are over 9.5 million self-employed workers in the country. This figure is expected to increase by 7.9 percent by 2026. This means that more and more people are opting to be self-employed.
The freedom of self-employment comes with perks such as setting your own working hours, deciding who to work with, and can also be financially rewarding.
However, in business, there are things you can’t predict, nor control. These are the risks that come with self-employment and can easily turn your American dream into a nightmare.
Therefore, if you’re self-employed, you should purchase insurance covers for yourself, your family, and your business. There are different kinds of insurance available to the self-employed, and knowing which one you need can save you a lot of money.
Read on to discover the seven types of insurance you need.
What Are the 7 Kinds of Insurance for Self-Employed People?
Consider the following covers:
1. Property Insurance
Whether you own or lease your working space, property insurance is vital for your business. This type of self-employed insurance covers inventory, work equipment, signage, and furniture in case of theft, fire, or a storm. It also provides coverage for your clients if they’re harmed in any way by the service you provide.
However, some natural calamities that cause mass destruction like earthquakes and floods aren’t covered with this insurance.
2. Liability Insurance
Liability insurance for self-employed individuals protects you from lawsuits for personal injury, negligence claims, and property damage claims. There are two types of liability insurance you can purchase for your business – general liability insurance and professional liability insurance.
General liability insurance covers damages and physical injuries that may result from your services. It also covers you in the event that you’re sued for slander. This kind of cover is purchased in a business owner’s policy or as a stand-alone insurance policy.
Professional liability will protect you if you’re charged with misconduct or negligence. This insurance covers against financial loss. It varies from industry-to-industry, thus, it’s important for your business to have its own customized policy.
Whichever liability insurance you choose, this cover is vital for protecting you from the above unforeseen circumstances. To learn more about public liability insurance, check out this article.
3. Workers’ Compensation Insurance
Workers’ compensation insurance is an essential cover if you’re planning to hire employees in your business. This covers medical benefits, wage replacement, and death benefits in case an employee dies while working for your business. In order to enjoy these benefits, the employee should surrender their right to sue you in these instances.
This cover is important for you and your business as it’ll protect you from legal complications that may result from your workspace. It is compulsory by the law, and non-compliance penalties can be rigid.
4. Health Insurance
A health insurance plan is important for you and your family for medical emergencies or routine medical care.
Apart from putting your family at risk, you may face penalties from the government if you don’t have a health cover. However, paying for your own health insurance if you’re self-employed is more expensive than having it deducted from your paycheck.
Fortunately, health insurance premiums for the self-employed get a tax deduction. This deduction lowers how much you owe in taxes to the state.
If you want to save on insurance costs, choose a high-deductible health plan. This means you have the option of opening a health savings account which isn’t taxed. If you’re in the market for a comprehensive but affordable cover, shop around to get the best self-employed insurance rates.
5. Disability Insurance
Disability insurance for self-employed people provides income for you and your family in the event of an accident or health condition that stops you from working. More than 51 million adults don’t have disability coverage.
This is a huge risk!
There are two kinds of disability insurances – long-term and short-term. Short-term covers you for three to six months. If you have an emergency fund, you don’t need a short-term disability insurance cover.
Long-term disability insurance is a more flexible form of disability insurance. It offers an efficient way to protect your income in case you get an accident. For example, if you get injured in your line of work and can’t continue working in that field anymore, this policy kicks in to cover a portion of your income per month as you transition to a different field of work.
6. Life Insurance
If your family relies on proceeds from your business, they need life insurance coverage in case you die unexpectedly. If you’re planning to buy life insurance, you’ll have to decide between a whole life policy and term policy.
A term policy covers you for a certain period of time and if you die within this term, beneficiaries receive the pay-out. A whole life policy is intended to cover you for life and lets you build the cash value in your insurance policy.
7. Commercial Auto Insurance
If you plan on using vehicles for your business activities, they have to be fully insured. In case of an accident, this kind of insurance protects your business against liabilities.
It isn’t enough to cover third-party injury, vehicles also need separate comprehensive insurance if an accident occurs.
If your employees use their personal cars for business, their own vehicle insurance should cover any damage caused by an accident. In the event that the employees have inadequate coverage or no coverage at all, you should purchase a non-owned auto liability to protect your business.
Keep in mind that this insurance also covers your delivery personnel.
Get Insured Today!
Now that you know which kinds of insurance you need, you can make better financial decisions. The right type of insurance saves you money and takes care of any unpredicted risks.
At first, you may find it hard trying to fit insurance into your budget, but in the long run, they’ll protect your business from huge losses. Consult your insurance company to find out which type of insurance is best suited for your business, and get them as soon as possible.
For more insightful reads about your finances, check out our latest blogs in our “Money” category.