When you run a business, your risk exposure increases. If you are self-employed, the outcome of these risks can have serious repercussions.
Insurance for Self-Employed Folks
A survey from Qdos reveals more than half or 53% of those who are self-employed don’t think they need insurance. Even though there is a difference between thinking you don’t need it and having it, 29% say they don’t have insurance at all.
If you are a small business or a freelancer working as an independent contractor, clients are now demanding insurance before they hire you. So, knowing your liability exposure and insurance requirements can protect you from financial losses and potential lawsuits. The problem is most small businesses and independent contractors are not fully aware of their liabilities.
In an emailed press release, Seb Maley, CEO of Qdos, addresses the risks and liabilities for self-employed workers.
Maley says, “Self-employed workers are exposed to all kinds of risks on a daily basis – many of which they have no control over and cannot see coming. When running a small business, there’s no escaping the fact that you might have an accident and not be able to work, make a mistake for which you’re liable or even be investigated by the taxman.”
Maley adds if a small business doesn’t have the right insurance, the owner could be personally liable. And oftentimes the cost is more than owners can afford, which can result in the business shutting down.
The Reason for Not Buying Insurance
Surprisingly cost is not the top reason for not buying insurance. While only 25% believe it is too expensive, the majority or 53% don’t think they need it.
The reasons self-employed workers don’t buy insurance:
- 53% do not think they need it
- 25% believe it’s too expensive
- 17% have never considered it at all
- 8% are looking to buy it
- 1% can’t find the right policy
- 1% say they are self-insured
- 5% stated ‘other’ reasons
The survey also revealed 71% of the respondents hold at least one form of insurance. And the most common policy amongst this group is public liability insurance.
Additionally, 95% of those who earn more than $61K are more likely to have insurance, while those earning under that amount are less likely (63%) to have a policy in place.
Insurance in the Freelance Age
It is not always the case, but when a client requires insurance you have to buy it or lose out on the job. Increasingly clients are asking for insurance because of the work freelancers are performing.
This is especially the case for freelancers working with sensitive data in the healthcare, financial, and security industries. With highly skilled and specialized freelancers now part of the workforce, insurance will increasingly be a requirement. And if it is a big-ticket project which requires compliance, it will most definitely require insurance.
If a client requires insurance shop around because there are many affordable options out there. Don’t just give up without first checking what is available in your price range.
I think it’s a bit hypocritical to hire a freelancer (which means you don’t provide benefits, pay the employer half of payroll taxes, etc.) yet demand they have insurance to protect the company’s butt. You can’t have your cake and eat it too.
If they can forego it, they will. That’s just how it is. It is required for employment but optional for self employment.