A handbook on Insurance For Freelancers

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Albert Einstein once said life is like riding a bicycle; to keep your balance, you must keep moving. The recent pandemic has taught us the same, to maintain balance and keep moving. Covid-19 has brought about a shift in the way organizations hire, and have realised that adaptation is the key to growth.

As an organization, if you are considering hiring freelancers, then there are a few things that you should keep in mind. Insurance for freelancers is one such key point of discussion.

This article will throw light on various types of freelance insurance. We will take a deep dive into the two must-have insurances – business and health insurance for freelancers.

What is Freelancers Insurance?

According to Investopedia, the definition of insurance is  Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.  If we go by facts, a recent survey by Gartner CFO  states that around 74% of the workforce will be working from home permanently. A significant portion of this workforce will be freelancers.

Freelancer insurance will vary according to the nature of the work that they do. Often freelancers think they do not need business insurance. Business insurance for a freelancer is imperative to protect them from accidents occurring at work

It is no news that freelancers have to do their own invoicing, maintaining accounts, and filing freelancer’s taxes apart from doing the work they are supposed to do. A freelancer has to manage their own insurance unlike a self employed individual.

There are a few things that you should keep in mind before onboarding a freelancer. Key points like insurance for freelancers cannot be overlooked.  Having a ready-to-refer guide on insurance for freelancers is a great way to get started, especially if you want to position yourself as an employer of choice.

In this article, we will help you understand the various types of freelance insurance. Also, we will help you take a deep dive into the two categories – business and health insurance for freelancers.

Types of Insurance for Freelancers

The Global freelance platform market size is projected to boom at a CAGR of 15.3% during 2021-2026. This number has to be taken into consideration by the companies hiring freelancers. The responsibility of insurance for freelancers rests on the individual themselves.  But knowing the best freelance insurance options available will come in handy.

The insurance market is afloat with various choices. Any guidance from the employer will be welcome.

It is best to guide freelancers to assess the possible risks that they could face while working independently. Evidently, there isn’t an all-inclusive list – for the best freelance business insurance or best freelance health insurance options yet. A smart piece of advice would also be to ask freelancers to look at the offerings of every insurance policy closely – be it business, health or personal.

Two main types of insurance that freelancers can opt for are:

  • Health Insurance
  • Business Insurance

Here are some perks of health insurance for freelancers:

Money Management

A freelancer has to have their own back. Medical expenses can eat away a chunk of savings. In such a scenario managing the monetary resources and planning is crucial. Health insurance for freelancers keeps them prepared for unanticipated medical emergencies

Uncompromised Healthcare

More and more people are now choosing to freelance. The perks of freelancing entices them over a 9-5 work schedule. Freelancers work at their own pace. A lot of freelancers also tend to travel while they work hence health care cannot be overlooked. Health insurance provides adequate cover for accidents, critical illnesses & lifestyle sickness. This comes at a reasonable premium when taken at the right time.

Taxes

Some countries have made it compulsory to have health insurance coverage so a freelancer can avoid tax penalties and save some money. Some states offer tax deductions on health insurance. This is, even more, an incentive to have health insurance for freelancers.

Now let’s understand the benefits of business insurance for freelancers:

Protection from Third Party Liability

As a freelancer, business insurance is vital. Freelancers may or may not have their own tangible workspace. But they may have costly equipment and devices that may get damaged. It is also likely that a freelancer may face a lawsuit for something far more serious for which they shall be prepared.

Loss of Data

A freelancer’s work largely depends on the World Wide Web. They use numerous tools and resources related to work.  But despite being cautious, there is a possibility that things can go wrong without notice. The freelancer may end up losing the work that they have created. In such a scenario, having business insurance can hedge these unknowns so they are focussed on creating work for you.

Protection from unforeseen circumstances:  We are living in unpredictable times. Events such as accidents, data security, relocation of business operations can disrupt work deliverables. A good business insurance helps protect against these eventualities.

Types of Insurances For Freelancers That You Can Offer

An organization must care for the people who work with them, whether full-time employees, remote workers or even freelancers. With so many companies offering additional perks to freelancers, it is good to be ahead of the game and help freelancers manoeuvre their way through the insurance maze.

It is worth mentioning here that The Affordable Care Act (ACA) has formed an exchange. Here freelancers can explore, and match their requirements. They can buy the right health insurance policy with the right guidance. Health insurance plans are divided into 5 categories. Here the premium price and coverage increase as the level increases. Bronze plans are at the bottom of the rung, with 60% coverage; Silver gives 70%, Gold is 80%, and Platinum is 90%. The bottom-most category – Catastrophic, is for single individuals. They could be either who are under the age of 30 or have a hardship exemption.

More importantly, as an organization, you need to understand that there are specific policy options that will be more important and unique to freelancers.

Let’s look at some alternatives for the best health insurance for freelancers:

COBRA

If someone has recently left a permanent job and has started freelancing then there is a possibility they may be eligible for COBRA. According to COBRA (Consolidated Omnibus Budget Reconciliation Act) a rule passed by Congress in 1986, where when an employee leaves the organization he was working for and were covered under health insurance, will continue to have access to that health insurance for the next 18 months. But not everyone is aware of this. As an employer, you can guide them about the coverage of such an existing Freelancers health insurance.

Join their spouse/ parents

If a freelancer’s spouse is working for a company that provides health insurance, it is best to tell them to take benefit of that policy. Most organizations have comprehensive family insurance plans. This is a smart choice because such plans have lower premiums. After all, the employer also chips in the premium amount. In the case of parents’ health insurance policies, dependent children can avail the benefits. Children up to the age of 26 can avail the benefit of their parent’s health insurance policy.

Personal Health Care Insurance coupled with Life Insurance

A freelancer’s life offers many benefits and freedom. As much as the freedom the life of a freelancer offers, certain important factors cannot be overlooked. Personal health care insurance for freelancers is vital. The health hiccups or even dental issues can strip one of their earnings. Having a personal health insurance plan that is the right balance between one’s requirements and budget is vital.

If a freelancer has dependents, it is wise to club the health insurance with life insurance. It is an astute choice to protect loved ones in case of an ill-timed demise.

Temporary Insurance

When a person transitions from a full-time employee to a freelancer, there are too many things on his plate. And there is a possibility that securing insurance is the last thing on their mind. And in such a scenario, it is best to take temporary insurance. As the name suggests, this is a temporary solution. As insignificant as it may seem, this insurance can be a blessing in disguise.

Types of  Business Insurance for Freelancers

Now let’s examine the types of business insurance for freelancers. The HR managers or Heads of organizations are entrusted with the responsibility of guiding the remote workers. They have to show the path toward the best insurance options for freelancers. Below is the list of business insurances for freelancers:

General Liability Insurance

The general liability insurance for freelancers consider the common mishaps that can occur in day to day running of a place of work. General liability insurance will safeguard the freelancer from hurt or asset destruction caused to the third party. This is also the best insurance for freelancers as it safeguards against:

  • Defamation or Slander – For example, if a freelancer gets embroiled in any controversy. Maybe a comment on social media taking the wrong turn. General liability insurance will safeguard the freelancer from hurt or asset destruction caused to the third party
  • Trademark & Copyright Violation – Tin case  a freelancer ends up using someone else’s copyright content by mistake and gets sued. In this case, the policy will provide protection from possible scenarios

Professional Insurance for Freelancers

This insurance policy safeguards the freelancer against mistakes made. This policy is suitable for freelancers who indulge in tangible work. An apt example here could be a photographer being sued by the client for the delay in submission of the work on time. A freelancer can face a lawsuit for errors or negligent work in a professional capacity. This insurance can also be referred to as freelance professional insurance.

Cyber and Data Security Insurance

As freelancers are dependent on the smooth functioning of the cyber world. This is the best insurance policy for freelancers. The biggest threat faced here could be that of a data breach. A freelancer does not have the luxury of a strong cyber security team. They have to safeguard their own data, which can be a very costly affair. A freelancer does not have the backing of an organization. Hence, he may or may not be able to handle the costs. If they have the right freelance insurance for their business, they will have a safety net.

Business Disruption Insurance

Insurance protects people from unseen, unexpected scenarios and there could be any kind of disruption from situations like robbery, wreckage, unrest, etc. Though this policy may not cover all the costs, it is beneficial, nonetheless. For example, if a freelancer lives in a flood-prone area they getting protection is vital. A certain specific set of freelancers benefit from this kind of policy.

Group Insurance

Certain states and countries offer group insurance to freelancers. This generally happens via the local business chambers. It is best to guide the freelancers to check if such a facility is available in their state and take it up.

Homeowners Insurance

This comes under the business insurance for the freelance category. A lot of freelancers’ homes double as their workspace as well. But basic insurance is not enough with expensive professional equipment. Hence it is important to advise the freelancers to check their coverage for the same.

Multiplier: Your Steadfast Partner For Providing Freelance Insurance Solutions

Multiplier is a business enabler. We make it easy for businesses across the globe to hire talent – be it employees, contract workers, freelancers, or remote workers. The nuances, however, are completely different when it comes to onboarding a freelancer v/s a full-time employee.

Here Multiplier comes into play to help companies mitigate the challenges companies face. Aspects like managing employee payroll, taxes, welfare, expenditures, and employee compliance with the local laws of the land are all taken care of by our Employer of Record solutions. Multiplier offers affordable employee onboarding solutions to companies across the globe, including benefits administration for Freelancers (local insurance), multi-currency payment and also managing freelancer’s timesheets.

At Multiplier, the Employer of Record solutions helps you to offload cross-border employment risks. We understand that managing a remote team is a challenge.  Setting work expectations, managing deadlines, keeping the communication channels open and the list can go on. Multiplier also offers widespread tips for managing remote teams.

Another possible question mark is on how to pay freelancers, especially when they are working from a country different than the employing organization. A company likely ends up paying more than what they planned for.

To know more about our Employee on Record solutions, book a demo, or to know more about our existing clients, please visit our website: www.usemultiplier.com

Frequently Asked Questions:

Q. What type of insurance do freelancers need?

The type of insurance every freelancer is different based on the type of work they are involved in. A freelancer needs to assess the best coverage for them vis a vis the premium they can afford.  It goes without mentioning that freelancers need to insure themselves professionally and on the personal front.

Types of Insurance could be classified into Personal and Business Insurance. The personal  insurance are as follows:

  • COBRA
  • Join spouse/ parents
  • Personal Health Care Insurance coupled with Life Insurance
  • Temporary Insurance

Types of Business Insurance a freelancer can opt for are as follows:

  • General Liability Insurance
  • Professional Insurance for Freelancers
  • Cyber and Data Security Insurance
  • Group owners
  • Homeowners Insurance
Q. Do freelancers need their own insurance?

Insurance offers protection against harm caused to a person individually. And hence it is imperative that a freelancer has their own insurance. Unless a freelancer is a part of a spouse insurance plan, they definitely need their own insurance.

Hiring and onboarding using Multiplier ensures you hire remote talent with locally compliant, fool-proof job contracts, offer emphatic benefits and disburse salaries accurately with absolutely nil errors in payrolls.