If you are gigger or freelancer, you have to watch your own back. And manage your own insurance, retirement funds, etc. Unlike a big company employee, nobody is going to provide you support and guidance.
And as my Uncle Emmett says, ‘you better be ready if you are ever sued by an client or a vendor.’ Even if you are just moonlighting or holding a temporary job as an Uber driver. Even if you think ‘it could never happen to me,’ it could happen so it is important to understand liability and how you could loose everything. Not just your business related assets but also your personal possessions. [Recently, a friend of mine started an LLC real estate business and did not have insurance. Her business partner was in a nasty divorce and brought down the company (as well as took some of my friend’s personal assets)
You need to think about a few types of insurance:
- General Liability Insurance which will cover you over legal hassles due to accident, injuries and claims of negligence. This also protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.
- Professional Liability Insurance: Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance). This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers. Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase malpractice insurance as a condition of practicing in certain states.
- Home-Based Business Insurance: Many 1099s work at home, so it’s important to be covered, especially cause homeowners’ insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. However, homeowners’ policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.
Remember: Just cause you create an S-Corp or LLC, doesn’t mean you are protected from being sued or other legal actions. Creating an LLC does provide some legal protection, such as contractual liability. This doesn’t cover you if you somehow accidently injust somoen else. You could be personally liable for this.
So it is very important to get some insurance for your business. Contact the same company/person who helped you with your home owners or renters insurance. Pay a few extra dollars to protect yourself. There’s one challenge, however. These policies can be very expensive for the gigger / freelancer.
It’s worth it!