One of the attractions of concert work is the freedom to control your own destiny. But because that control has limits, appropriate insurance coverage needs to be part of the picture, possibly including a business insurance policy.
You may not think of your small business as a business, but people who work for themselves need to make sure they are protected from risk – and that means purchasing adequate insurance coverage, says Shannon D. Farmer, a partner at the Philadelphia-based law firm Ballard Spahr.
Here’s how to determine if you need insurance coverage for your business and some tips on where to buy it.
Understand the risks
Self-employed people often understand their need disability insurance AND life insurancebut many industry workers don’t realize they may need additional insurance to protect them from other types of risks.
“Risk not only means risk of injury or death, but can also mean the threat of legal trouble,” says Leslie Tayne, founder and managing director of Tayne Law Group PC. “The type of field you’re in will help determine what type of business insurance makes the most sense for you,” she says.
For example, gig workers who drive a vehicle for work may want to consider commercial liability protection. If you’re simply commuting to and from work, your personal auto insurance will suffice. Tayne says. “But if you use your car more directly for work, including transporting customers or supplies, you may want to consider a business or commercial policy,” she adds.
For home repair contractors, landscapers and even dog walkers, general liability insurance, which covers bodily injury to third parties and property damage, could be important, says Scott Holeman, a spokesman for the Insurance Information Institute. Suppose a dog walker lets a dog go while he is in his care. If the dog gets hurt or injured, the dog walker could be sued. There may also be situations where the walker could be considered negligent if a dog in his care injures someone or damages property, Holeman says.
Meanwhile, for a freelance writer or photographer, professional indemnity insurance (also known as errors and omissions cover) might be a good choice, to provide protection in case someone takes legal action against you. “Not only can it cover damages caused by your negligence, but proof of insurance can help clients feel good about your work,” says Holeman. Depending on the professional, there may also be state licensing requirements, she says.
Identify your insurance needs
People who work remotely often rely on homeowners or renters insurance coverage to protect a home-based business. But this may not give you all the protection you need.
Things can be complicated when it comes to gig workers and property-related coverage. In general, renters and homeowners policies exclude assets belonging to the business such as technology, files and equipment. However, there are exceptions, so it’s important to carefully review a policy’s language and talk to your agent.
Next, you may have liability issues to consider. Standard renters and homeowners policies won’t protect a claim against your business if a customer slips and falls while visiting your residence, for example, because business liability generally goes beyond the scope of that policy. If you provide services directly to clients while at home, such as tax preparation or hair services, you may need specialized liability coverage.
To help determine their policy needs, The Hartford advises gig workers to ask themselves these questions:
— Do customers or clients come to my house?
— Do I store inventory or supplies in my home or at off-site work locations?
— Would I lose income if I had to close my business due to damage to my home?
— Do I have employees who work inside or outside the home?
— Do I keep customer or employee data on my computer?
The answers to these questions may suggest that your homeowners policy may not be sufficient to adequately protect you and that additional insurance may be warranted.
Define your policy
How coverage is packaged can depend on factors such as the carrier, your state and the type of business you run, says Madelyn H. Flannagan, vice president of agent development, training and research at Independent Insurance Agents and Brokers of America.
Typically, a homeowners policy only provides $2,500 of coverage for business equipment, which may be less than what a gig worker needs, according to the Insurance Information Institute. But you may be able to add an endorsement to your existing homeowners policy to increase your standard coverage for business equipment. You may also be able to purchase a homeowners liability endorsement, though that addition is generally only available to companies that have few business-related visitors, such as writers, according to the Institute.
According to the Institute, you may also want to consider a home business policy, which offers more comprehensive coverage for business equipment and liability than a homeowners policy endorsement. These policies, also called home business sponsorships, can be purchased separately from a homeowner’s policy.
There is also a stand-alone business insurance policy that can offer even more comprehensive coverage and can be tailored to your business, says Flannagan of Independent Insurance Agents and Brokers of America.
Where to buy coverage
Many people may have an existing relationship with an agent or company for their personal insurance needs, so it’s worth asking these professionals about the business coverage options they offer. Using an existing relationship may limit new documentation and may even get you a discount for holding multiple accounts with the same insurer.
A growing number of online business insurance options also offer greater flexibility to home workers. Many gig workers, for example, prefer to pay on an as-needed basis rather than annually, because their income is not guaranteed or consistent compared to a salary-based job, says Tayne, the lawyer. Their needs may also change more frequently based on the nature of their work, and many self-employed workers also prefer a more automated process, rather than speaking to a human representative, she says.
“This is key for gig workers, because time is money,” says Sofya Pogreb, chief operating officer of Next Insurance, which focuses on providing tailored insurance products to small businesses and the self-employed.
Digital insurtech companies, like Next Insurance, leverage emerging technologies including artificial intelligence and machine learning to make data-driven decisions. This allows them to provide customers with more personalized products, coverage and accurate risk-based pricing. The technology is also applied during the service/compensation process, Pogreb says. Insurtech companies may also be able to offer lower prices to consumers, in part because their overhead is generally lower than that of a traditional insurer.
While these policies certainly come at a cost, experts say the risk of not being adequately insured is much greater. “It should remind temporary workers that there is a higher level of personal risk working as a freelancer,” says Holeman of the Insurance Information Institute. “The bottom line as a gig worker is: Don’t put your career and your finances at risk,” she says.
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