A lot of freelancers—such as writers, graphic designers and coders—work from home, coffee shops or their clients' offices. They don't often have very much overhead, while others like musicians, photographers and event planners have equipment that costs thousands of dollars. Whether your freelance business has just a computer and printer or a room full of equipment, all freelancers should have a business insurance policy. Some clients will request to see proof of a policy for peace of mind, knowing that if someone gets hurt while dancing on your portable dance floor at their wedding, your insurance policy will cover the expenses.
Among the types of business insurance that are available for freelancers are:
Income Protection Insurance: Freelancing is great because you're the boss and set your own hours. However, there's nobody to fall back on when you're laid up in bed with a serious illness or injury. Income protection will usually give you 50 to 80 percent of your income until you're back to work. If you don't have an emergency fund to fall back on, consider this policy a must-buy.
General Liability Insurance: Any business owner, including freelancers, should have a general liability policy. This will protect your finances if you're found liable for causing injury to a person or property. You never know when an accident will happen, and it may be out of your control. But this coverage helps keep you from having to spend your life savings on lawyers if the worst happens.
Home Office and Equipment Insurance: Even if your only work tools are your laptop, buying a new one will set you back several days' worth of work, at least. Not to mention the opportunities you're missing out on while buying a new one. Insurance that covers your home office and equipment helps cover items if they're damaged or stolen. Don't rely on your renters or homeowners insurance to cover this; it isn't likely to cover items used for your freelance business.
Tax Investigation: Tax laws are complicated and while you do your best to make sure you're reporting your income and expenses correctly, you never know when the IRS will do an investigation or find a mistake that you made. Even if you hire a tax preparer and have a low possibility of making an error, insurance helps ensure that you have the financial resources to cover your legal fees and time away from work.
Your independent insurance agent can help you understand which types of business insurance are right for your specific situation.
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