Freelancers Insurance: The Ultimate Guide 2020

This guide has everything you need to know about Freelancer’s Insurance: what it is, how it works, how to get it- literally everything!

Most employers get their workers insured to stay ahead of insurance problems and if anything were to affect their business, but what if you don’t have an employer? Can you have corporate insurance even though you work without a boss?

You can! A freelancer’s insurance is your answer.

But what is it, and how does it work? This ultimate guide has answers to all your questions about freelancer’s insurance, companies, unions even the basic ones like ‘what is the meaning of freelancer?’ Stay with us, because this guide is everything you need to know.

Let’s dive in.

What is a Freelancer and how it works?

A freelancer person is also known and referred to as self-employed: someone who makes their own work schedule, decides who to work with and has no one to report to. He is literally the boss of his work. Freelancers usually have an online presence, most of them work-from-home because they have the internet to coordinate and provide their services to clients.

A freelancer can have a team he can assign work to, and may have scheduled appointments, but generally he serves as a one-man army. But that also means that clients have one person to report to and the freelance person will be answerable to them.

Do Freelancers need Insurance?

Well, yes.

Like all other professions and people who need financial backup if things were to go sideways, freelancers also need insurance. And sometimes if that were to happen, freelancers aren’t able to lift themselves up.

Let’s see it this way. Your workspace caught fire and your laptop got wrecked. Will you be able to get a new laptop and a workspace within a week or less to keep working? What if your clients don’t wait that much? You could not only lose your clients but also money.

Or let’s say your client sues you for improper services provided to them, or maybe damaged products which has in turn caused a lot of loss for the client. Will you be able to handle an expensive lawsuit or hire a lawyer to fight your case?

In all of these situations, you need a huge sum of financial backup. For huge business owners it might be possible for them to get behind such expenses, but for freelancers, it’s not an easy job.

A freelancer’s insurance is your answer. To save you from unexpected financial expenses that affect the running of your business, you need a proper freelancer’s insurance plan.

How to File Taxes as a Freelancer?

Whether you’re a self-employed freelancer or working as an employee, your status will affect how your taxes flow. Paying taxes is not only necessary legally, but also your responsibility as an earning citizen of the State.

If you’re earning anywhere around $400 a year from your freelance work, you will be required to pay a tax amount of 15.3%.

Since freelancers don’t have a steady or fixed income each month, the best way is to take out 25% of each paycheck you receive and set it aside as a tax amount. So in the months that you earn less, the other months will compensate when you’re accumulating your total tax money for the year.

In 2020, there are four tax deadlines that you need to be mindful of:

First Payment July 15, 2020
Second Payment June 15, 2020
Third Payment September 15, 2020
Fourth Payment January 15, 2021

Self-Employed Health Insurance Deduction

While we’re on the topic of taxes, there is a special health insurance deduction for freelancers! Since self-employed people don’t have an employer to cover for health insurance and they are likely to pay for the costs themselves, the State favours them by reducing the tax amount.

This is only for people who do NOT have a health insurance plan or a policy that attaches them to their spouse. And, deduction is only possible on how much you earn in the business.

For example, if your freelance business earned $14,000 profits for the year and your total cost of health care insurance premiums is $10,000, you can take the full amount of the deduction. But, if your profit is only $9,000, you can only take a deduction of $9,000.

This is literally the basic of how a tax deduction works for self-employed people.

How to be a Freelancer?

Working from home seems like a dream job for some people, not having to wake up on a shrilling alarm and dressing up formally, going to work by traveling distances and then coming home exhausted seems like the same monotonous routine every day.

And in such a way working as a freelancer seems ideal; you’re literally your own boss.

How do I start working as a Freelancer?

By knowing the internet. By knowing digital media. By being able to sell your services online to a bunch of clients who are not even in the same country.

The other side of the fence always looks greener, and on this note it is important to know that being a freelancer doesn’t mean you’re idle or free.

If you have a skill- any skill, you need to search for the relevant market online. There are people willing to pay hundreds of dollars for your skill that you may think is pretty cliche or normal. Writers, graphic designers, teachers, course instructors, artists, buyers and sellers of products and services have ALL made their way to the digital platform. And most of them are freelancing!

There are lots of freelance work websites that support freelancers by providing them genuine clients who pay them for their services. Platforms like Freelancer, Fiverr, Upwork  are to name a few. All you have to do is create an account, create your gigs trying to sell your talent and then start tapping clients.

Penetrate into the market, find out what people are looking for, what price they’re willing to pay, what other people are there in the field and just dive in. Take baby steps but be passionate about your work.

The first few years will be the toughest when it comes to making a client base; why should a client trust you out of all the other people? That is where you need to convince them that you’re the best candidate. Offer them lead magnets and give them an incentive, build your portfolio so that they know you’re not a scam.

You will lose clients and you will lose work too, some days there won’t even be any work- but don’t sit back and whine about it. Build a better profile, tap bigger clients and once you’re able to retain them with the quality of your services, you will see growth and success in your business.

Being a freelancer is tough initially when you’re establishing yourself and entering the market, but once you’ve made your ground, you will realize how amazing it is. Sitting at home, working at your own comfort and that too without having to answer to nasty bosses!

How to Legally start a Freelance Business?

Starting a freelance business also has legal requirements, but that doesn’t mean you need to hire legal experts to help you out. Just knowing the basics will help you out a lot. Essentially there are two things you need to be mindful of:

  1. Brand identity and filing for LLC: Choose a brand name and logo that is absolutely unique and not used by anyone else (if it is, the already established company could sue you for copyright infringement). Do a quick name/domain search to be sure that no one is using your name and idea. After you’re done with that, register your freelance business as LLC by applying directly with the process by the Secretary of the State. This is also done online if you’re unable to get it done physically.
  2. Taxes: Like it has been mentioned above in the article, taxes are important even if you’re a self-employed freelancer.

Even though you’re working from home, working as a freelancer requires a lot of discipline and routine, you can’t mix personal life with your work, not even for a day. Have a designated workspace for yourself where there are minimal distractions and make sure you give all your time and effort to your work.

Freelancers Union

Freelancers Union is a non-profit organization working in the United States that focuses on the wellbeing and financial stability of freelancers. Having monthly meetings, this organization advises freelancers on their partnership options, advocacy, insurance options and basically raising the voice and standing up for freelancers as a whole ever since 1995.

According to their data, almost 7% of the independent workforce in America are freelancers, with every one out of three people self-employed. Moreover there are more than 500,000 members associated with Freelancers Union with almost half in New York alone.

Freelancers Union Health Insurance

Freelancers union health insurance is a department managed in the organization that not only gives information about the options available but also health plans that suit your needs. To find out freelancers union insurance rates, you can click here and get all the information you need.

Freelancers Insurance Company

Founded in 2008 by Sarah Horowitz, Freelancers Insurance Company was an impressive portal that advocated and presented for the rights of freelancers. She understood years back how freelancers needed a portal to unite and thus, under the parent company Freelancers Union, she created Freelancers Insurance Company to provide insurance benefits to the self-employed.

More than 25,000 people have purchased their insurance plans through Freelancers Insurance Company over the years.

The organization has played a vital role trying to bring to light the issues that freelancers face and how important it is for them to get insurance. By advocating for their benefits in front of media and policymakers, Freelancers Insurance Company has surely played its part in the society.

Types of Insurance for Freelancers

If you’re a freelancer you need to know exactly what coverage is provided under the certain types of freelancer insurances. Let’s have a detailed look at each type.

Freelance Liability Insurance

This is also referred to as third-party insurance- if someone on your property gets injured and requires medical assistance. For instance if a client gets bitten by your dog, or slips on the stairs of your premises and breaks a bone- you will need this type of insurance to pay for their medical bills.

There is another personal injury insurance sole trader which is covered in the health insurance for freelancers plan. More about this later on.

Freelancers Union Disability Insurance

For freelancers, there is no paid sick leave in case they were to fall sick or worse, disabled. In such cases, you’re likely to lose your clients or not gain any new ones because you’re not working! So the freelancers disability insurance covers your paycheck for the time that you’re sick or disabled and can’t work.

The insurance policy however starts after 30 or 90 days after you’ve fallen sick depending on the type of plan you choose. The best way to choose an insurance plan is to go for a plan with 50% your income: if you earn $60,000 per year, an option of $2500 per month will work well for you.

Professional Liability Insurance

This is the kind of insurance which protects you under negligence. Imagine you provided graphic designing services to someone and you didn’t realize but the final product was a close replica of some other company. Now the company has sued your client for copyright infringement and your client sues you for negligence. This could very well be a lawsuit slapped on your desk, but as a freelancer are you able to break through these claims? Probably not.

This is why you need professional liability insurance! This will cover you under charges of slander or negligence and will also provide you professional financial assistance.

Freelancers Health Insurance

Not having an employer will also not get your health insurance on behalf of your company, but there are many health insurance for freelance writers and others that you can go for like attaching yourself to a spouse who’s getting health insurance from their company, or a freelancer’s union health insurance which has lots of health insurance plans. We’ll go into more detail about this later in the article.

Sole Proprietorship and Small Business Insurance

Having a small business get established takes a lot of painstaking effort; years of hard work to have that small business of yours running, and usually on sole proprietorship.

Sole proprietorship businesses are the ones with one single owner, which means all profit and loss is handled by that one person. So if you’re a sole small business owner, can you handle the blow of unexpected liability or legal costs? Probably not.

This is why small businesses need public and product liability insurance for sole traders. Let’s go into more detail.

To register a sole trader company, you can do so online by applying for a business license. And you will need to acquire a tax ID and permits too. For more information you can click here.

Sole Trader Public Liability Insurance

A sole trader’s insurance works the same way under the bigger umbrella of freelancer’s insurance, where unexpected costs like public liability or slander or legal cases are covered. A sole trader professional indemnity insurance is a very important factor here; which covers your business against charges of negligence on your part.

Businesses are bound to make mistakes, and a freelancer is no different. So if you’ve made a mistake of negligence and a client sues you, this sole proprietorship business insurance will cover you against the charge.

Work insurance for self employed is basically a general liability insurance for sole proprietorship that will cover other basic things like loss and damage to your assets or property or other miscellaneous things where it might be hard for you to revive back financially. So a general liability insurance for freelancers will cover the cost for you.

Sole Proprietor Health Insurance

Having sole ownership in the business brings its own level of ups and down, where taxes may be easy to many, health insurance shopping could be hard.

Being covered under a suitable health insurance plan is very important, having a financial cushion in case a mishap were to affect your health badly. Medical expenses, hospital visits and even routine checkups are also covered under health insurance.

Deductibles are a good option and probably what helps sole proprietors bear a low level of premiums each month. A deductible amount is the set amount that you have to pay first before the insurance policy helps you out. So if your deductible amount is set for $2000, all medical expenses will be first paid under those $2000 before the insurance company chips in.

And the rule is simple. Higher the deductibles, lower the premiums. As a sole proprietor, you pay your own health insurance premiums.

Sole Proprietor Workers Comp Waiver

A workers compensation insurance sole trader is basically a form of insurance which provides benefits to employees if they were to fall sick or disabled, or are harmed through the nature of work at the premises. They will not only be given medical compensation but also a monthly income for the time that they have taken off from work.

This is not applicable to certain type of people such as:

  • Business owners
  • Longshoremen
  • Volunteers
  • Independent contractors
  • Federal Employees

But is this worker’s comp waiver applicable to sole proprietors?

Well, legally, if a freelancer or sole proprietor does NOT have any employees working for them, they are automatically waived off. This is the rule in most states across the country. But if you have any employees working for you, chances are that you are legally required to buy workers compensation insurance sole trader. To get this waiver you will have to fill in a proper form regarding your state and probably have to give a small fee. When all this is done, you will be legally exempted from a worker’s comp waiver because you don’t have anyone employed under you.

Self-Employed Health Insurance

Earlier in this article it was only discussed briefly as one of the types of insurance that freelancers may get. Let’s get into more detail about what is health insurance and how it works for freelancers.

Health insurance freelancers cover the health and any medicinal expenses that may arise with them. For instance if someone falls sick or is disabled due to an accident, they will need off from work, which means no income! And if you’re running a small business you’re already managing your expenses on a tight branch. So the health insurance company will cover the costs of:

  • Hospital visits
  • Surgeries or treatments
  • Prescribed medicines
  • Routine checkups
  • Other miscellaneous medical expenses

How do Freelancers get Health Insurance?

Now that we know how essential it can be for freelancers to get health insurance to cushion the blow of financial expenses, the next question is how do freelancers get or qualify for health insurance.

There are certain options under some legal Acts in the country which make it easier for freelancers to opt for suitable health insurance plans.

  1. Affordable Care Act (ACA): Under the ACA, a healthcare market is formed where people enrol themselves to get the most suitable plans for themselves. Ideally the best time to get health insurance under this act is during the start of November for coverage plans that begin in January. If in case you somehow miss the deadline, you can apply for a special enrollment plan and see if you qualify for the options there. This is also known as the freelancers union insurance obamacare.
  2. Spouse’s Plan: If your spouse works with a company of at least 20 employees, they must legally be covered for health insurance by their company. For freelancers there is an option to attach with the spouse’s policy and chances are you will be liable to pay very low premiums. Since the spouse’s premiums are already paid by the company, you can fit yourself in for a low rate of premiums too.
  3. COBRA: Short for Consolidated Omnibus Budget Reconciliation Act, COBRA gives the option to freelancers to convert their existing plans. For instance if you were previously covered under the employer’s compensation and now you plan on leaving them to start your own venture, you can convert the group plan into an individual one. However having an individual plan under COBRA may be more expensive for people, and it also only provides temporary coverage of upto 18 months. Experts really discourage people from opting for COBRA so it is better that you weigh all your options before converting.
  4. Group memberships: Even if you’re a freelancer who works alone, if you apply for membership with professional associations that support self-employed people, you can get a health insurance group plan from them too.

These are some health insurance options for self-employed that have made it easier for freelancers to get health insurance plans, all you need to do is weigh down which plans suit you and the nature of your business best.

Best Health Insurance for Freelancers

Under the ACA, when you enter the health insurance marketplace, you will be asked to compare options based on the cost, level of premiums and how it suits your needs. The biggest advantage is that healthcare can’t be denied to you if you’re diagnosed with a preexisting health condition. There are five different kinds of affordable health insurance for freelancers that are in the exchange marketplace and you can choose which one suits your pocket.

Here are some best health insurance for self employed plans.

Category Insurance pays You pay Cost
Catastrophic 50% 50% Cheapest
Bronze 60% 40% Affordable
Silver 70% 30% Midrange
Gold 80% 20% Expensive
Platinum 90% 10% Most expensive

This is a rough idea of how insurance plans play out, and you can decide which one is easier and convenient on your pocket. Of course the platinum plan looks the most desirable where you only have to pay 10% of the self-employed health insurance cost, but don’t forget that it has the most expensive rates of premiums set.

Loans for Self-Employed

Being self-employed can have you ripped off of so many state and organizational advantages that you may have otherwise had. The biggest question that most self-employed people ask is whether they qualify to ask for personal loans? What about mortgage loans? How does self-employed insurance come into play?

Is there a personal loan for self employed? Yes. There is.

Qualifying for a loan depends on the income stability as well as a good credit score. Even though being a self-employed freelancer doesn’t have a consistent amount of income each month, if you prove to the lending company that you earn enough each month to be repaying the loan, and that you have a good credit score, you can easily qualify for a personal loan.

And it is not necessary that these will be more expensive for you. Based on your application and loan history, you may get a good amount of loan and a very suitable repayment plan along with it.

Mortgages for Self-Employed

What is important to know in this section of the article is that the nature of your job does NOT define whether you qualify for mortgages or not, only your ability to pay it back does. So it really doesn’t matter to the lender if you’re employed with a company or working as a freelancer just as long as your financial situation is managed and you prove to them you’ll be able to pay them back.

However, it still stands true that self-employed people look like risks for lenders to be investing in because of the unsteady income each month.

There are many options available for freelance mortgage, such as the no-documentation process where the lender will not ask for any proof of income, but since there is a lot of risk involved the interest rate could be a lot higher than those in normal plans.

So since self-employed people may get more interest rates and probably an expensive plan too, what should be done to make them look like attractive buyers?

  • Improving credit score and maxing it out will really help you in qualifying for a cheaper loan plan.
  • Having more amount set for down payment on the house will make you look like a strong candidate the banks will be investing in, because with a larger payment upfront you prove to them that you will stay financially strong even in tough times.
  • If all of your previous debt is paid off and that too on a very smooth score, the company will see that you take loan repayment seriously and won’t be cut off as a ‘bad debt’ in their books.
  • Providing proper documentation and having transparency in your plan will really help the lender see you as a genuine case and will easily give you a loan if you’re self-employed.

Private Mortgage Lenders for Self-Employed

There are some of the best lenders in 2020 that have been rated as per customer experience and the services they’ve received. Let’s have a look.

Company Best known for Avg. days to close loan Minimum credit score
Luxury Mortgage

 

Best Overall

 

30 – 40 620
Better.com

 

Best for Low Rates

 

21 620
Eave

 

Best Customer Service 21 620
Quicken Loans

 

Fastest Processing

 

30 580
Freedom Mortgage

 

Best for Custom Options

 

30 620
 Zillow

 

Best for Local Lender

 

21 – 30 680
Guaranteed Rate

 

Best for Personalized Support

 

28 – 32 620

How to get Group Health Insurance for Self-Employed?

If you’re self-employed, you should go for an individual health plan, a reasonable option of health insurance for entrepreneurs. While going for a group health insurance plan may seem like an absurd idea, it is very much possible in most States. The best way to do so is by hiring a freelance insurance agent or consulting with a professional insurance company which is not only able to guide you with plans but also gives you cheap suitable options.

Even if you’re a freelancer who has a one-man-show running, you’re a team of one. So you’re not entirely out of criteria when it comes to self-employed people choosing group insurance for freelancers.

The cost of health insurance for a family of 4 self employed are $285 monthly premiums with $9,371 deductibles. These are the rates in Florida with a short term plan, however in other states for a regular plan the amount is almost $1,168 per month for an average family of four people.

Tips for Freelancers when selecting Health Insurance

Selecting a health insurance plan could really be a tricky business, especially if you’re self-employed because you will have to shop around yourself until you find a suitable plan.

Even though it may be difficult, it isn’t impossible. Here are some basic tips that may be useful for you while selecting health insurance.

Consultation: Talk to people, talk to companies and talk to agents. Be transparent about your needs and exactly what you want in your health plan. Ask for changes in the plan and if it is possible for them to tweak it according to your needs.

ACA/COBRA: Talk about all your health insurance options for self employed and have an agent weigh them for you. Scale out the pros and cons of each option according to budget, convenience and your health needs.

Spouse plans: See if attaching yourself to your spouse’s health insurance plan works out best for you.

Compare rates: Many websites allow you to compare self employed health insurance rates online so that you have options and quotes to decide which one is cheaper for you too.

Insurance agent: Make sure your final decision is after you’ve hired an agent. While you can research and look for everything yourself, there are many loopholes that only an agent can guide you with. So make sure you both are working side by side to choose the best plan.

Dental Insurance for Freelancers

As a freelancer, you must have other things to worry about: a steady income, retaining clients, quality services, and in all this, you shouldn’t have to worry about your oral hygiene. Even saying the word ‘dental’ screams money! Dental services are extremely expensive in the country, even a regular consultation can cost you hundreds of dollars.

For freelancers, dental costs should be one less thing to worry about, because dental insurance exists. This type of insurance pays for regular checkups and teeth health and also treatments such as whitening and root canal.

If you have a health insurance plan, don’t confuse it with dental too- your health insurance plan does NOT cover dental costs unless explicitly stated in your plan otherwise. So what do you do?

One way of having a low cost dental insurance plan is to add it to your existing health insurance plan. This way you will be paying one set amount of premiums which will not only cover your health insurance but also dental costs. However, some health insurance plans may not allow you to attach a dental component to your plan, in such cases you can resort to the other option.

You can separately buy a dental insurance policy which will operate as a separate policy; buy a set amount and pay monthly or yearly premiums.

How do you decide which Dental Plan you need?

Having a dental plan which covers almost everything may look appealing: different treatments that are very expensive are now covered by your insurance company. But with an extensive plan come higher premiums! So how do you decide which plan works best for you?

Think about your dental history and the general oral hygiene of your teeth. Are they healthy? Do they ache a lot? Do you need fillings or crowns? Do your gums bleed much? Based on your history and past record it will be easier for you to determine which services you will need and that way you can choose a plan for yourself.

For a plan where you will require more preventative services, choosing a low cost insurance plan with a high deductible will be best for you. These preventative services include:

  • Examinations
  • X-rays
  • Teeth cleaning
  • Fluoride treatment
  • Sealants (for ages 0-18)

If you choose a low cost plan with a solid deductible amount, you will have to pay lower premiums!

If you already have a dentist, consult with them if their services are covered in the insurance network of the plan you’re buying. If not, you may have to look for other dentists which might affect your monthly budget too.

The best way is to ask around people and see what dental insurance plans they have and how it’s working for them. Shop around to see which ones will suit you before finalizing on a plan.

Cheap Car Insurance for Freelancers

Car insurance for freelancers is possible and actually mandatory to have one. Some States don’t let you drive a yard if you don’t have insurance. And being self-employed doesn’t change that; which means the rules and costs are also somewhat the same.

The rate that you’re required to pay as premiums will depend upon several factors such as:

  • Previous insurance record
  • Personal details such as age and experience
  • Driving record
  • Road violations
  • Habits such as drinking
  • Mileage

If you’re a freelancer who stays at home most of the time and doesn’t have much use of your car, chances are you will pay a low amount of premiums. But if the nature of your job still requires you to travel a lot to meet clients or perform other work related duties, the mileage of your car will be more which means higher premiums.

Moreover if the nature of your job requires carrying costly assets and other products in your car, the risk of theft or damage of the car increases which will also cost you an expensive plan.

The best way to go about this is telling your insurance company beforehand that you’re self-employed, there are chances they are able to extract better and more suitable plans according to your requirement. Moreover, you can also search online for the cheapest insurance quotes according to your state to get a better idea of what you will be expected to pay.

Conclusion

Freelancers have tough work too, just because they’re working from home doesn’t mean they are any less hard working or putting in any less effort in their work than people working in offices.

And just like other employees of the corporate world, freelancers also require work insurance, health insurance, car insurance, dental insurance and freelancer loans to help them support financially in case there are mishaps in the business.

This ultimate guide tells you all you need to know about insurance for freelancers and how to go about it. The internet is your best weapon not only to gain information but also to start earning money by freelancing. Don’t be afraid to start low, but be sure to start somewhere. The digital arena has lots of space for everyone; just know your worth and learn the art of pitching yourself to clients.

Nabeel Ahmad

Nabeel Ahmad

Nabeel Ahmad is the founder and editor-in-chief of Insurance Noon. Apart from Insurance Noon, he is a serial entrepreneur, and has founded multiple successful companies in different industries.

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