Insurance as a Freelancer: What You Need and Who Asks for It

Most US freelancers who work alone aren't legally required to carry business insurance, but you'll often need it anyway. Clients, freelance marketplaces, landlords and lenders can ask for proof before they'll work with you. For most freelancers, the usual starting point is professional liability (also called errors and omissions, or E&O), which covers mistakes in your work. General liability handles injuries and property damage. After that, look at what your home policy, your contracts and your health plan leave uncovered.

Do freelancers legally have to carry insurance?

Usually not, if you work alone. The U.S. Small Business Administration says you "may be legally required to purchase certain types of business insurance," and tells owners to buy whatever the law requires first, then cover other risks. For a solo writer, designer, developer or consultant with no employees, that's often very little. Workers' compensation rules (coverage for employees hurt on the job) change once you hire people, and they vary by state, so check with your state's labor or insurance department before you bring anyone on.

The real pressure comes from the people who pay you. Insureon notes that marketplaces like Fiverr and Upwork sometimes require freelancer insurance before you can list your services, and that on Fiverr you need enough general liability coverage for the common risks of your type of service. TechInsurance adds that a landlord or lender may ask for a certificate of insurance as proof of general liability or property coverage. That's a one-page summary of your coverage, issued by an insurer or agent.

Larger clients ask too. A corporate procurement team or agency will often send a vendor agreement with an insurance section spelling out the policy types and limits you must hold. If you want that kind of work, get the policy in place before you bid, not after you've won the job and the client's legal team is asking for your certificate. The guide on what client contracts require for E&O covers those clauses in more detail.

Which matters more for freelance work, general or professional liability?

If you work at a desk, professional liability usually matches your real risk. The NAIC (the National Association of Insurance Commissioners, the group of state insurance regulators) describes it as coverage for wrongful practices by professional service providers, with consultants as one example. It covers claims that your work cost a client money: a missed deadline, a bad recommendation, a coding error, an ad campaign that blew through the client's budget. Upwork's guide says it pays legal defense costs, settlements or judgments when a client says your mistakes, or your failure to meet expected standards, caused them a financial loss.

General liability covers a different kind of problem. Insureon describes it as covering third-party accidents, like a client who trips and gets hurt at a freelancer's home office. It also responds when you damage someone else's property, say by knocking a projector off a client's conference table during an on-site workshop. If clients never visit you and you rarely go to their offices, that risk is small. You may still need the policy, though, because contracts and platforms often ask for it by name.

Won't a homeowners or renters policy cover your laptop and home office?

Probably not enough. The NAIC points out that business property coverage is limited and that standard homeowners and renters policies don't include professional liability. The Insurance Information Institute warns that people running a business from home may be underinsured for their business equipment. If your income depends on a laptop, a second monitor, a camera kit or a drawing tablet, you'll feel that gap fast after a burglary or a burst pipe.

You've got a few ways to close it. The SBA lists home-based business coverage added to a homeowners policy as a rider, which can protect a small amount of business equipment and add liability coverage for injuries to other people. The Insurance Information Institute describes in-home business policies that go further on equipment and liability, though they vary a lot by insurer. A business owner's policy, or BOP, bundles property, business interruption (lost income while you can't operate) and liability into one package. TechInsurance says a BOP combines general liability with commercial property at a discount.

Here's the part many freelancers miss: none of those options automatically includes professional liability. A BOP can protect your gear and handle a slip-and-fall claim, but it won't help if a client says your work cost them a quarter's revenue. If professional mistakes are your main risk, you'll usually need E&O as a separate policy or an add-on.

Do you need cyber coverage if client files live on your laptop?

If you hold client data, it's worth a serious look. Developers with admin access, bookkeepers with bank logins, marketers with customer email lists and consultants with private strategy files all carry real breach risk on one laptop. TechInsurance says first-party cyber liability insurance helps freelance businesses recover from data breaches and cyberattacks. First-party means it pays your own costs, such as restoring data and notifying the people affected. Third-party cyber coverage pays when a client sues you over a breach.

Some insurers sell E&O and cyber together for tech freelancers, which helps when one incident is both a mistake and a security failure. Read the definitions carefully, though, because what counts as a "breach" or "covered data" differs from policy to policy. If you work in IT, the guide on errors and omissions insurance for IT consultants explains where E&O stops and cyber coverage takes over.

What does freelancer insurance cost?

It depends on what you do, where you live, your revenue, the limits you choose and your claims history. The NAIC notes that the type of business greatly influences liability premiums, so a freelance copywriter and a freelance IT security consultant shouldn't expect the same quote.

Two insurance marketplaces publish freelancer prices. Insureon lists general liability at $45 per month, professional liability at $88 per month and workers' comp at $54 per month. TechInsurance lists general liability at $29 per month, E&O insurance at $59 per month and workers' comp at $32 per month. These are rough reference points drawn from each site's own customers, not quotes, and your price could land well above or below them. The guide on professional liability E&O insurance cost explains what pushes E&O premiums up or down.

Bundling can help. Insureon notes that many small business owners buy general liability and commercial property together in a business owner's policy, which costs less than buying each separately.

What should you check in a client contract and policy before signing?

Start with the contract, since it tells you what coverage you actually need, then match the policy to it. The SBA recommends working with a reputable licensed agent, because commercial insurance agents can help fit policies to your business. Bring the client's insurance clause along.

• Required policy types. Note every coverage the client names, such as general liability, professional liability, cyber, auto or workers' comp. Missing one can hold up your first invoice.
• Limits. Check the per-claim limit and the total (aggregate) limit the contract requires, and confirm your policy meets both.
• Additional insured. Some clients ask to be added to your general liability policy as an "additional insured," which extends your coverage to them. Ask your agent whether your policy allows it and whether it costs extra.
• Indemnity and liability caps. An indemnity clause means you agree to pay the client's losses tied to your work. Ask whether your E&O covers what you agreed to, and consider asking for a clause that caps your liability at the fee.
• Claims-made wording. Many professional liability policies only cover claims filed while the policy is active. Ask about the retroactive date (how far back covered work can go) and what happens to claims from old projects if you cancel or switch insurers.

It's also worth asking how fast the insurer or agent can issue a certificate of insurance, and whether the client needs to be named on it.

A few plain questions for the agent round things out. Does the policy cover the exact services you sell, including newer ones you've added? Does it cover work for clients in other states or countries? Are subcontractors you hire covered, or do they need their own policies? And what does it exclude that freelancers in your field commonly run into?

What about health insurance and income if you can't work?

Business liability policies won't pay your medical bills or replace your income. HealthCare.gov says you can enroll through the individual Marketplace if you're a freelancer, consultant, independent contractor or other self-employed worker with no employees. Its small-business pages add that a business with no employees other than the owners or their spouses can't get SHOP small-business group plans. You can enroll in Marketplace coverage during the yearly open enrollment period. Outside that window, you need a qualifying life change, such as losing other health coverage, so plan the timing if you're leaving a staff job.

There's a tax side too. The IRS lets eligible self-employed people figure a self-employed health insurance deduction on Form 7206 and report it on Schedule 1 (Form 1040). One condition is a net profit for the year on Schedule C or Schedule F. The IRS says the policy can be in the business's name or your own. Ask a tax professional how this applies to you, especially if you also qualify for Marketplace savings.

Disability insurance is the coverage freelancers skip most often. The SBA lists it among the coverages owners may need, and Upwork's guide counts it among the main policies for freelancers. If a broken wrist or a long illness would stop your billable hours, get a quote. Unlike an employee, you've got no sick pay to fall back on.

As your client work grows, the consulting business insurance guide shows what coverage each stage of a job needs.