What is self-employed business insurance?
Self-employed business insurance combines several types of business insurance policies designed to protect freelancers, side hustlers, independent contractors, consultants and other self-employed professionals from financial losses. Depending on your business, coverage could include general liability insurance, professional liability insurance, commercial property insurance, workers’ compensation insurance, or cyber liability coverage.
Do self-employed workers need business insurance?
If you’re self-employed, an unexpected claim or accident could lead to financial losses that may be difficult to pay out of pocket. Business insurance could help protect your finances and provide a safety net after the unexpected.
In addition, some clients may require you to carry business insurance before they’ll work with you. Financial lenders could require business insurance before you can get a business loan. And some types of business insurance protection could be a requirement for you to get a professional license in some states and in some professions. Business insurance coverage can also signal professionalism to prospective customers; it can show that you take your business seriously and they can count on you if something goes wrong.
Whether you’re a gig worker, independent contractor or small business owner, the right coverage can help you compete with confidence.
What could business insurance cover for the self employed?
For self-employed individuals, business insurance isn’t a single policy — it’s a combination of coverages that work together to protect you from common business risks.
Depending on the type of work you do, business insurance could help cover:
- Costs related to someone injured at your place of business
- Costs associated with property damage you suffer or cause
- Legal actions after professional mistakes, misrepresentation or negligence that cost a client money
- Theft or damage to your business equipment
- Work-related vehicle accidents
The coverage that’s right for you depends on your industry, the services you provide, whether you operate a home-based business or work on client sites, as well as other operational risks.
Common Business Insurance Policy Types For The Self-Employed
| | What could it cover? | Who needs it most? |
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General Liability insurance
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Bodily injuries to others, property damage, legal defense
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Most self-employed professionals
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Workers’ Compensation insurance
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Employee injuries and illness
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Business owners with employees (even part-time or seasonal)
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Professional Liability insurance (E&O insurance)
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Professional mistakes or negligence claims that cost a client money
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Consultants, knowledge workers, service providers
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Commercial Property insurance
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Equipment, inventory, tools, workspace
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Retailers, contractors, businesses with physical locations
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Cyber Liability insurance
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Data breaches, cyberattacks, client notification costs
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Professionals who store customer data or take online payments
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Commercial Auto insurance
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Work-related vehicle accidents
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Contractors, delivery and mobile service businesses
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General Liability insurance for the self-employed
General liability insurance could help cover costs if a non-employee is hurt at your business or if you damage property that doesn’t belong to you.
Some work opportunities, especially with larger clients or municipal agencies, won’t let you submit a bid or proposal or start a job without providing a certificate of insurance that proves active general liability coverage for your business.
Commercial Property insurance
Commercial property insurance could help cover your products, inventory or some of the other physical items you use for business — your laptops and other technology, business equipment, office furniture and some parts of the building itself.
Commercial property coverage could help cover business gear and goods after a covered event such as fire, theft, vandalism, storm damage or a burst water pipe.
Even if you’re self-employed, the business income interruption coverage of property insurance could help protect your income if you have to close temporarily for repairs.
Business Owner’s Policy (BOP insurance)
A Business Owner’s Policy (BOP insurance) bundles general liability and commercial property insurance into a single policy. It can be a cost-effective option for self-employed professionals who could benefit from the combined protection from multiple business risks.
Professional Liability insurance (E&O insurance)
If you’re accused of making a professional mistake that costs a client money, professional liability insurance (often called errors and omissions insurance insurance in some professions, or E&O) could help cover expenses if you have to go to court or pay to fix a problem.
Cyber Liability insurance
Cyber liability insurance could help protect your business if sensitive digital information — such as client data, payment details or personal records — is exposed in a data breach or cyberattack. It may help cover costs related to data recovery, client notification, legal fees and certain regulatory expenses.
Cyber insurance can be especially important for self-employed individuals who store customer information electronically or accept online payments.
Workers’ Comp insurance for self-employed business owners
Workers’ compensation insurance is almost always required if you have employees. But depending on your trade and contracts, coverage may be required for seasonal workers or part-time employees — even if you work alone most of the year.
Commercial Auto insurance
Commercial auto insurance could help cover expenses if you get into an accident while driving to meet clients, drop off equipment, make deliveries and a variety of other business tasks behind the wheel. You might not be covered by your personal auto policy if you drive a car, truck, trailer or other vehicle for business reasons.
How much does business insurance cost for self-employed professionals?
The cost of business insurance varies based on a number of factors, including your industry, location, coverage limits and claims history. Your monthly premiums could be affected by:
- Where your business is located
- What kind of work you do
- How long you’ve been in business
- Your number of employees
- Your claims history
- How high you set your coverage limits
- How many work vehicles you have
You can start a free, no obligation business insurance quote with ERGO NEXT. In about 10 minutes you’ll see the exact price you’ll pay, 100% online.
TIP: It’s important to provide the most accurate information about your business when you get a quote for insurance to make sure you get the coverage that is right for you and any claims are processed without delays.
What can happen if a self employed business owner doesn’t have insurance?
Without business insurance, a business owner may be personally responsible for:
- Legal defense costs
- Medical expenses from injuries to others
- Property damage claims
- Settlement payments
Depending on how your business is structured, a lawsuit or an unexpected claim could put your personal finances at risk, including your savings and other assets.
