Freelancer Insurance Guide: All You Need to Know to Stay Safe

What’s one thing you hope you’ll never need — but when you do, it can be a lifesaver? That’s right: insurance. 

Many underestimate just how critical insurance for freelancers can be. It’s a non-negotiable part of protecting your business, your finances, your health, and your professional reputation. Besides, it's a smart business move — many large clients often require proof of insurance before starting a contract. 

Whether you’re a freelancer, an independent contractor, or self-employed, here's what you need to know about the types of insurance that can safeguard your career. 

Why freelancers need insurance 

When you work for yourself, there’s no employer covering your health insurance, paid sick leave, vacation time, retirement plan, or unemployment benefits.

Freelancing gives you the freedom to choose your schedule and workload, but it also means the responsibility for both your personal and professional safety falls entirely on you. And if life has taught us anything, it’s that things can go wrong when we least expect them. Here are some examples:

• Copywriter. You’re on a trip with friends and break your arm, limiting your ability to type. You’re out of work for at least eight weeks.
• Web developer. A company hires you to build their website. You forget to apply security patches, and hackers steal customer data. The company sues you for negligence.
• Plumber. You're hired to install a water heater in a basement. A small mistake leads to a slow leak. Over time, mold develops, and the client takes legal action for property damage. 
• Photographer. You shoot a wedding, but someone spills water on your camera. The SD card is ruined, and the photos are lost. The couple sues for causing them emotional distress and breaching the agreement. 

These scenarios could go horribly wrong and lead to major financial losses. That is exactly why you need insurance. Let’s break down what types of insurance freelancers typically get.

Health insurance 

Medical care can cost a fortune, so health insurance is an absolute must. But getting one without an employer’s support can be pretty expensive. If you can’t join a family plan, consider the options below.

Private health insurance

There are many companies offering private health insurance plans — Blue Cross Blue Shield, Oscar Health, Kaiser Permanente, etc. They’re usually on a pricier side with flexible packs based on your needs and preferences. 

Considering a private plan? Check out this compilation of the best health insurance companies for self-employed by Forbes to get started. 

Health savings account

Giorgi Petrov, CMO of AIG MARKETER and an experienced freelancer, recommends looking into Health Savings Accounts (HSAs). To qualify, you must be enrolled in a High Deductible Health Plan (HDHP) — also known as an HSA-eligible plan. 

An HSA enables you to contribute pre-tax dollars, which can be used tax-free for qualified medical expenses, and even invested. Any gains grow tax-free. You can use the HSA for both healthcare savings and long-term financial planning. Keep in mind the annual contribution limit though — it is $4,300 for individuals and $8,550 for families. 

Freelancers Union insurance plans

Freelancer Union is a non-profit dedicated to help and support independent workers specifically. They collaborate with platforms like Stride Health or Guardian to help pick the right insurance plan.

Before you see the approximate costs, the Union requires you to submit a lot of data about yourself and your medical background. For example, your weight, height, or whether you’ve taken certain medication in the last 5 years. 

Affordable Care Act marketplace 

Contrary to popular belief, the Affordable Care Act (ACA) marketplace is not just for the unemployed. Freelancers, as well as those without access to employer-sponsored insurance, may qualify too. 

You can check out the plans and prices by visiting HealthCare.gov and entering your zip code. Depending on where you live, you might be redirected to a state exchange — such as Get Covered NJ, Covered California, or Nevada Health Link. 

General and professional liability insurance

Each occupation has a unique set of risks. According to Jaime Arias, President of Dynamic Insurance Solutions, freelancers, if they absolutely have to choose the bare minimum, should go for professional and general liability coverage. 

• Professional liability (aka errors and omissions) insurance

If physical risks are unlikely in your industry, you probably need professional liability insurance more. It protects you from claims if you miss a deadline, for example, or if your client believes your work caused them damage in one way or another. 

I went with Hiscox for my professional liability insurance, and I've been happy with them. They specialize in providing coverage for small businesses and freelancers, and their policies are customizable.

{{Georgi Petrov}}

• General liability insurance 

This one is especially important if your work involves being on site or working with materials. For example, if you’re a construction worker, logger, or fitness instructor. It’s designed for situations where you do damage to a client's property or someone gets injured during a session.  

If your job requires your physical presence plus intellectual work, say you’re an interior designer or event planner, think about getting a combination of both insurance types.

Business insurance

Business insurance is pretty much a combination of general liability and property insurance. You can get a tailored bundle depending on what you do. For example, a photographer can insure their camera gear, lighting kits, and editing equipment. Or, an electrician may want to get coverage for their expensive tools and devices.

If you work from home, don't assume your homeowners' policy covers business equipment — it often doesn't. You may need a business property endorsement or a separate inland marine policy. 

{{Jaime Arias}}

So, basically, get all the work-related things covered, whatever you do and wherever you go. This includes making sure your auto insurance covers your driving for business purposes. 

Cyber insurance

If you deal with client data, build websites, or work with payment systems as a solo worker, it’s important to have a safety net. The consequences of data leaks and other threats can be super harmful to your career and finances. 

Cyber insurance gives you coverage for potential losses resulting from a cyber attack, such as:

• Costs that are related to data breaches and leaked client data
• Ransomware demands
• Business interruption
• Reputational damage
• Legal fees and settlements

When you're working solo and don’t have an entire IT department to back you up, cyber insurance is non-negotiable. 

Disability insurance 

If you become sick or injured and can’t work, disability insurance can be a financial lifeline. It replaces a portion of your income — typically between 50% and 70% — so you can continue paying bills and supporting yourself while you recover. Keep in mind that most insurers want to see at least two years of consistent freelance work before issuing a policy. 

For the self-employed with recurring operational costs, there’s also Business Overhead Expense (BOE) insurance to consider. It keeps your business running while you’re out of action.

Just remember that while BOE keeps your business afloat, you’ll still need personal disability coverage to manage your own living expenses. By the way, you can often deduct BOE premiums as business expenses. 

Life insurance 

If you want your family or other dependents to be financially secure even in case of your death, think about investing in life insurance. There are two main types available — term and permanent life insurance. 

Term insurance covers you for a limited period, meaning you won’t get a payout in case your term is over. It’s normally cheaper and can be used to safeguard your underage kids in case of your passing or if you have, for example, a mortgage to pay. This way these responsibilities will be covered by an insurance company and not your family. 

Permanent insurance usually has higher costs. It covers you for a lifetime, and the payout is guaranteed as long as you pay your premiums. Unlike term insurance, this type builds cash value over time. Besides, you can use it to borrow against or withdraw. 

Tax audit insurance 

Freelancers often file their own taxes and claim deductions, which are generally more complex. So, the chances of making a mistake are pretty high. Having tax audit insurance can save you a lot of money in case of a tax audit. 

You may get legal support, representation, audit assistance, and help with legal fees — basically everything related to audit preparation. Note: this insurance type doesn’t cover for taxes, fines, or penalties imposed on your business following the audit. 

Tax audit insurance is common in the UK and Australia. But if you live in the US, try tax audit defense with companies like Tax Audit or Everlance, for example. It’s not an “insurance” technically but acts very similarly.  

Deciding on the provider 

You can get health insurance directly from a provider or via associations and unions like Freelancers Union I’ve mentioned above. Technically, these are all individual insurance types. However, there is a difference. 

If you go directly with a provider, you get more flexibility and customizability. You can make up your own package depending on your needs. Subsequently, you pay a higher price for such personalization. 

On the other hand, getting insurance through unions or other groups can be more affordable. That is because the package rates they offer are pre-negotiated similarly to employer-sponsored insurance. However, you may need to meet certain criteria to be eligible for group insurance packs. For example, maintaining a membership, being in a certain occupation, or having a minimum income. 

Factors affecting insurance costs 

Before an insurance company agrees to cover you, it evaluates your personal and professional profile. Freelancers often see a wide range of rates — and here’s what typically influences those costs:

• Type of work you do. Some professions are higher-risk than others. For example, a videographer handling expensive gear or a construction worker faces more exposure than a freelance writer.
• Annual income. It typically goes like this: the more you earn, the higher the premiums you pay, and the lower your income, the more subsidies you’re eligible for. 
• How much coverage you need. The greater the coverage you need (whether liability, health, or property), the more you’ll typically pay.
• Where you live. Insurance rates vary by state, and sometimes even between rural and urban areas. Local laws and market conditions play a big role.
• Your age and health. Younger, healthier freelancers often get better rates — especially on health and disability plans.
• Deductible size. Plans with higher deductibles usually have lower premiums, but you’ll pay more out-of-pocket before coverage kicks in.

Always compare quotes before committing. Ask freelancers in your field what they use, and consider speaking with an independent insurance broker for tailored recommendations. Bundling multiple policies from the same provider can also help you save.

When life happens, it’s the safety nets that keep you standing — and for freelancers, insurance is one of the most important. Whether it’s an injury, a legal dispute, or a cyberattack, the right coverage can prevent a crisis.

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