Use a business owner’s policy (BOP), not just your homeowner’s insurance, if clients visit your home office.
The Client, The Fall, and the Policy That Wouldn’t Help
I ran my consulting business from my home office. A client came over for a meeting, tripped on my front steps, and broke their wrist. They sued me. I thought my homeowner’s insurance would cover it. It did not. My policy had a “business pursuits” exclusion, and they would not cover liability for a business visitor. I needed a Business Owner’s Policy (BOP). For a small premium, a BOP would have provided the general liability coverage I needed for my home-based business, protecting my personal assets from my professional life.
Stop assuming your personal auto policy covers you while driving for Uber or Lyft. Get a rideshare endorsement instead.
The Uber Ride That My Insurance Ignored
I started driving for a rideshare app on weekends to make extra money. I had a great personal auto policy, so I figured I was covered. I got into an accident while I was on my way to pick up a passenger. Both the rideshare company’s insurance and my personal insurer denied the claim. My personal policy had a clear “livery” or “business use” exclusion. The app’s insurance had not yet kicked in. For just a few dollars a month, a “rideshare endorsement” from my own insurer would have closed that dangerous gap and saved me from a five-figure bill.
Stop thinking your general liability insurance covers your professional advice. Get errors & omissions (E&O) insurance instead.
The Bad Advice and the Useless Policy
I am a marketing consultant. My general liability (GL) policy was great; it protected me if a client slipped and fell in my office. Then, I gave a client some bad strategic advice that cost them a lot of money. They sued me for professional negligence. My GL policy wouldn’t touch it. It covers bodily injury and property damage, not financial loss caused by my professional mistakes. For that, I needed a separate Errors & Omissions (E&O) policy. It’s the one policy that protects your brain, not just your office space.
The #1 secret for affordable health insurance when you’re self-employed is to maximize your use of a Health Savings Account (HSA).
How I Turned My Health Insurance Into a Retirement Account
As a freelancer, health insurance was my biggest expense. I almost bought a low-deductible plan with a high premium. Instead, I chose a high-deductible health plan (HDHP) that was HSA-eligible. The premium was much lower. I took the money I saved and maxed out my HSA. The money went in tax-deductible, it grows tax-free, and I can use it for medical expenses tax-free. It’s a triple-tax advantage no other account offers. It lowered my taxable income and is now a powerful, flexible retirement account disguised as a health plan.
I’m just going to say it: The “insurance” offered by gig economy platforms like Uber or DoorDash is full of gaps and is not a substitute for your own policy.
The On-Demand Insurance That Wasn’t There When I Needed It
I drove for a rideshare company that advertised it provided “insurance.” I felt protected. After an accident, I discovered the truth. Their insurance is a complex web of coverages that only apply during specific “periods” of the ride. There was a huge gap when I had the app on but was still waiting for a ride request. During that period, I had zero coverage from them, and my own personal policy wouldn’t cover me either. That “free” insurance is a Swiss cheese policy; you need your own rideshare endorsement to plug the holes.
The reason your homeowner’s claim was denied is because the stolen laptop was used primarily for your business.
The Laptop That Had Two Jobs and No Coverage
My home office was burglarized, and my high-end laptop was stolen. I filed a claim with my homeowner’s insurance. It was denied. My policy had a sub-limit of only $2,500 for personal property, but an even lower limit of just $500 for “business property.” Because the laptop was the primary machine I used to run my freelance business, the insurer classified it as business property. My personal policy was not designed to cover the tools of my trade. For that, I would have needed a separate business insurance policy.
If you’re still not carrying your own disability insurance, you’re one illness away from having zero income.
The Freelancer’s Paycheck That Vanished
As a self-employed graphic designer, my income depended on my ability to work. I had no employer to provide me with sick days or disability insurance. I thought I was invincible. Then, a sudden illness left me unable to work for six months. My income went to zero overnight. My savings were gone in a flash. My freelance “freedom” had become a terrifying financial freefall. A personal disability insurance policy would have provided a monthly paycheck, a safety net that is absolutely essential when you are your own and only employee.
The biggest lie you’ve been told is that forming an LLC is a substitute for buying liability insurance.
The Lawsuit That Pierced My LLC’s “Armor”
I formed an LLC for my freelance business, thinking it was an impenetrable shield that protected my personal assets. I felt so secure, I didn’t buy liability insurance. When I was sued for negligence, the lawsuit named not only my LLC but also me personally. I learned that the “corporate veil” can be pierced, especially if you are the one who personally made the mistake. The LLC provides some protection, but it is not a substitute for a good Errors & Omissions policy. The LLC is the armor; the insurance is the shield. You need both.
I wish I knew that my E&O policy was “claims-made” and I’d need tail coverage if I ever stopped working.
The Work I Did in the Past That Came Back to Haunt My Retirement
I had a great “claims-made” Errors & Omissions policy for my entire freelance career. The day I retired, I canceled it to save money. A year later, a former client sued me for a project I had completed two years prior. My old insurer wouldn’t cover it because the claim was filed after my policy was canceled. To be protected from my past work, I would have needed to buy a special, multi-year “tail coverage” policy upon retirement. My attempt to save money had left my entire life’s work completely exposed.
99% of freelancers make this one mistake: not having a business interruption clause in their business policy.
The Fire That Burned My Office and My Income
A fire in my apartment building forced me to evacuate my home office for a month. My renter’s policy paid for my hotel, but it didn’t pay for my lost income. Because I couldn’t work for a month, my freelance income went to zero. I later learned that a good Business Owner’s Policy (BOP) includes “business interruption” coverage. This would have paid me for my lost profits and operating expenses while my business was shut down. I had insured my stuff, but I had forgotten to insure my actual income stream.
This one small action of getting a rideshare endorsement on your personal auto policy will save you from a catastrophic claim denial.
The $15 Endorsement That Saved Me From a $50,000 Bill
I started driving for a food delivery service. I called my auto insurance agent, and for an extra $15 a month, he added a “rideshare endorsement” to my personal policy. A month later, I was in an accident while on a delivery. The delivery app’s insurance was fighting me, but it didn’t matter. My own insurer, because of that endorsement, stepped in and covered the entire claim. Without it, my personal policy would have denied the claim for “business use,” and I would have been on the hook for a massive, five-figure bill.
Use a Solo 401(k) to save for retirement, not just a SEP IRA, for higher contribution limits and loan options.
The Retirement Plan That Let Me Save Like a Big Company
As a freelancer, I first opened a SEP IRA for my retirement savings. It was good, but the contribution limits were based only on my “employer” contribution. Then I discovered the Solo 401(k). This plan allowed me to contribute both as the “employee” and the “employer,” effectively doubling my potential savings and letting me put away far more money each year. It also allowed me to take a loan from my own account, a feature the SEP IRA doesn’t have. It’s a supercharged retirement plan designed specifically for the self-employed.
Stop thinking your homeowner’s policy covers your Airbnb guests. You need a specific home-sharing or commercial policy.
The “Guest” Who Was Actually a Business Liability
I started renting out my spare room on Airbnb to make some extra money. I thought my homeowner’s insurance would cover any problems. When a guest slipped and fell, suing me for their injuries, my insurer denied the claim. They cited the “business pursuits” exclusion. The moment I started accepting money to rent out my room, I had engaged in a commercial activity, and my personal policy no longer applied. I needed a specific “home-sharing” endorsement or a commercial policy to cover my new side business.
Stop assuming your health insurance from the ACA marketplace is too expensive. Subsidies can make it very affordable.
The “Unaffordable” Plan That Cost Me $50 a Month
When I first became self-employed, I panicked about the cost of health insurance. I went to the ACA marketplace website, assuming it would be thousands of dollars a month. I plugged in my estimated income. I was shocked to find that because of the premium tax credits and subsidies, I was eligible for a great PPO plan with a monthly premium of only $50. The “unaffordable” boogeyman I had been dreading was a complete myth. For millions of self-employed people, the marketplace is the key to getting high-quality, affordable health coverage.
The #1 tip for a freelancer is that E&O insurance is not optional; it’s the cost of doing business.
The Insurance That Protects Your Reputation and Your Bank Account
As a freelance writer, I thought my only risk was a client not paying me. Then, a client sued me, claiming a factual error in my work had caused them financial harm. I had no Errors & Omissions (E&O) insurance. The legal fees alone were crippling, even though I eventually won. I realized E&O is not a luxury; it’s a fundamental cost of doing business for anyone who provides advice or a professional service. It protects you from the one thing that can destroy your business overnight: a single, honest mistake.
I’m just going to say it: You need to buy your own workers’ comp policy, even if you’re a sole proprietor, to get into certain job sites.
The Policy That Was My Ticket to the Job
As a self-employed electrician, I don’t have any employees, so I never thought I needed workers’ compensation insurance. Then, I won a big bid to work as a subcontractor on a major commercial construction project. The general contractor told me I couldn’t set foot on the job site until I provided a certificate of workers’ compensation insurance, even for myself. It was a non-negotiable requirement. That policy wasn’t just about protecting me from injury; it was the key that unlocked the door to getting bigger and better jobs.
The reason your equipment claim was denied is that you didn’t have an “inland marine” policy to cover it outside your home office.
The Stolen Camera That Wasn’t “At Home”
I’m a freelance photographer. My homeowner’s policy covered my camera equipment while it was in my house. But my job requires me to take my gear out on location. One day, my camera bag was stolen from my car while I was on a shoot. The claim was denied. My homeowner’s policy had a very low limit for “off-premises” business property. To properly insure my gear wherever I took it, I would have needed a separate “inland marine” or “commercial floater” policy. It’s the only policy that travels with your equipment.
If you’re still delivering food for Grubhub on your personal auto policy, you are completely uninsured during those deliveries.
The Delivery That Drove Me into Debt
I started delivering for a food app to make some side cash. I thought my personal auto insurance would cover me. It didn’t. I was in a small accident while on a delivery. The first thing my insurer asked was if I was using the car for business. When I said yes, they denied the claim, citing the “business use” exclusion. The delivery app’s insurance was secondary and had huge gaps. I was on the hook for the entire repair bill. For a few extra dollars, a rideshare endorsement would have protected me completely.
The biggest lie is that you don’t need business insurance until you’re “big enough.” You need it from the first dollar you earn.
The “Small” Project That Led to a Big Lawsuit
I was just starting my freelance web design business. I took on a small, “low-risk” project for a friend’s company. I didn’t have E&O insurance yet; I figured I’d get it when I was more established. A small mistake in the code ended up causing a huge problem for my friend’s business, and he had to sue me to recover his losses. The size of your business has no bearing on the size of a potential lawsuit. You are a professional from your very first project, and you need professional protection from day one.
I wish I knew that my disability policy didn’t cover my partial inability to work, only my total disability. I needed a residual disability rider.
The Injury That Cut My Income, but Not Enough for My Insurer
As a self-employed consultant, I suffered an injury that didn’t stop me from working, but it did force me to cut my hours in half. My income was slashed by 50%. I filed a claim with my disability insurance, but it was denied. My policy only paid a benefit if I was “totally disabled.” Because I could still work part-time, I wasn’t eligible. I needed a “residual” or “partial” disability rider, which is designed to pay a partial benefit to cover a partial loss of income. It’s an absolutely critical feature for a freelancer.
99% of gig workers don’t understand the three coverage periods for rideshare insurance and where the gaps are.
The Three-Part Journey and the Uninsured Gap
I learned the hard way that rideshare insurance is a confusing, three-part system. Period 1: App on, waiting for a ride. Here, the rideshare company provides only low-limit liability coverage, and my personal policy provides none. This is the biggest gap. Period 2: Ride accepted, on the way to pick up. The company’s full coverage kicks in. Period 3: Passenger in the car. The full coverage continues. The only way to be fully protected during that dangerous “Period 1” gap is to have a specific rideshare endorsement on your own personal policy.
This one habit of keeping meticulous records of your business vs. personal mileage will be critical for your auto claim.
The Logbook That Saved My Claim (and My Tax Return)
As a freelancer, I use my personal car for business all the time. I have a simple habit: I use a mileage tracking app on my phone. When I was in an accident while driving to a client meeting, the first thing my insurer wanted to know was whether the trip was for business or personal use. My logbook was the perfect, undeniable proof. It not only saved my insurance claim by proving the trip was for business (and covered by my commercial policy), but it also gave me a perfect record for my IRS tax deductions.
Use hired and non-owned auto liability if you ever have an employee or contractor run an errand for your business.
The Sandwich Run That Became a Lawsuit
I asked my assistant, a 1099 contractor, to run to the store to pick up sandwiches for a client meeting. She drove her own car. On the way, she caused an accident. The injured party sued not only her but also my business, since she was acting on my behalf. My business liability policy did not cover it. I needed a specific, and very cheap, coverage called “hired and non-owned auto liability.” It’s designed to protect the business when someone is driving a car you don’t own for your business’s benefit.
Stop assuming your client’s E&O policy covers you. You are an independent contractor and need your own.
The Client’s Policy That Threw Me Under the Bus
I was a freelancer working on a big project for a major corporation. I assumed I was covered under their massive Errors & Omissions policy. I was wrong. A problem arose with my work, and a lawsuit was filed. The corporation’s insurance company defended the corporation, and then they turned around and sued me personally to recover their losses. As an independent contractor, I was not an “insured” under their policy. I was a vendor. I needed my own E&O policy to protect myself from my own clients.
Stop thinking you don’t need liability insurance because you have a great contract. A contract doesn’t stop someone from suing you.
The Ironclad Contract and the Lawsuit It Couldn’t Prevent
I have an ironclad contract, written by a great lawyer, that all my clients sign. It includes a limitation of liability clause. I thought this meant I didn’t need E&O insurance. Then, a disgruntled client sued me anyway. My contract was my best defense, and it ultimately saved me, but it did not prevent the lawsuit from being filed. I still had to hire a lawyer and spend tens of thousands of dollars to defend myself. An insurance policy doesn’t just pay the judgment; it pays the massive cost of the legal defense.
The #1 secret is that you can deduct 100% of your health insurance premiums as a self-employed person.
The Tax Deduction That Paid for My Health Insurance
The high cost of my monthly health insurance premium was a huge source of stress as a new freelancer. Then, my accountant told me about the self-employed health insurance deduction. Because I was my own business, I was able to deduct 100% of my premiums from my income, which significantly lowered my overall tax bill. This powerful, above-the-line deduction effectively made my health insurance much more affordable. It’s the single biggest tax advantage available to the self-employed, and many people don’t even know it exists.
I’m just going to say it: Relying on GoFundMe as your disability plan is not a strategy.
The Crowdfunded Catastrophe
My friend, a self-employed artist with no disability insurance, was in a serious accident. His family had to resort to a GoFundMe campaign to try and cover his medical bills and living expenses. It was a heartbreaking and humbling experience for them. The campaign raised a little money, but it was a drop in the bucket compared to the years of lost income he was facing. Crowdfunding is not a plan. It’s a hope. A real disability insurance policy is a contractual guarantee that a paycheck will be there when you need it most.
The reason your Airbnb damage claim was denied by your homeowner’s insurer is the “business use” exclusion.
The Party My “Guest” Threw and the Claim My Insurer Denied
I rented my house on Airbnb while I was on vacation. The renters threw a massive party and caused thousands of dollars in damage. I filed a claim with my homeowner’s insurance. It was denied. They cited the “business use” exclusion. The moment I accepted money to let someone stay in my home, it became a business, and my personal policy no longer applied. The “Host Guarantee” from the platform was a slow and difficult process. A real commercial or home-sharing policy was the only thing that would have truly protected me.
If you’re still not using a separate bank account for your business, you’re making it harder to prove business expenses and buy the right insurance.
The Messy Bank Account and the Denied Deduction
For years, I just ran my freelance income and expenses through my personal checking account. It was a mess. When I was audited by the IRS, it was a nightmare to try and prove which expenses were for business. When I went to buy business insurance, I couldn’t give the agent a clear picture of my revenue. The simple act of opening a separate, dedicated business bank account was a game-changer. It created a clean record for taxes, made my bookkeeping simple, and established a professional foundation for my entire financial life.
The biggest lie is that you need a physical office to need business insurance. Online businesses have cyber and liability risks.
The Online Business and the Very Real Lawsuit
I run a completely online business. I have no office, no inventory, no employees. I thought I didn’t need insurance. Then, my website was hacked, and all my customer data was stolen. I was hit with a class-action lawsuit. I was also sued for libel because of a negative comment I made about a competitor in a blog post. I learned that online businesses have very real, and very expensive, risks. A cyber liability and a general liability policy with personal injury coverage were the protections I desperately needed but didn’t have.
I wish I knew that my general liability policy excluded damage to digital property. I needed cyber liability.
The Virus I Sent and the Data I Destroyed
As an IT consultant, I accidentally introduced a virus into a client’s network, which destroyed a huge amount of their data. The client sued me for the cost to recover the data. My general liability (GL) policy refused to cover it. GL covers damage to tangible property, like a broken server. It has a specific exclusion for damage to electronic data. For that, I would have needed a separate cyber liability or tech E&O policy. My general policy was designed for the physical world, not the digital one where I actually worked.
99% of consultants don’t have enough E&O coverage for the size of the projects they are working on.
The “Small” Mistake and the Million-Dollar Consequence
I’m a consultant, and I carried a standard $250,000 Errors & Omissions policy. I was working on a project for a huge, multi-million dollar corporation. A small mistake on my part caused a major project delay, which resulted in a massive financial loss for my client. They sued me for over a million dollars. My “standard” policy was a drop in the bucket. The amount of E&O coverage you need shouldn’t be based on your own small business; it should be based on the size and financial risk of your biggest client.
This one small action of reading the “professional services” exclusion in a general liability policy will convince you that you need E&O.
The Two Sentences That Showed Me the Gap
I thought my general liability policy was enough. Then I read the exclusions page. It had a section called “Exclusion – Professional Services.” It clearly stated that the policy would not cover any liability arising out of the rendering of, or failure to render, professional services. In two sentences, it created a massive hole in my coverage. It was the policy telling me, in no uncertain terms, “We cover you for slips and falls, but for mistakes related to your actual job, you are on your own.” That’s what E&O is for.
Use a short-term disability policy to cover the elimination period of your long-term disability policy.
The Bridge Over the 90-Day Gap
My long-term disability policy is fantastic, but it has a 90-day “elimination period,” meaning I have to wait three months before the benefits start. That’s a huge, income-free gap. To solve this, I bought a separate, inexpensive short-term disability policy with a 90-day benefit period. If I get sick, the short-term policy will start paying me after a week or two, and it will stop paying right when the long-term policy kicks in. It’s the perfect, affordable bridge to get me over that dangerous, three-month financial chasm.
Stop assuming your client’s contract requiring you to have insurance is just a formality. They will ask for a certificate of insurance.
The Contract I Signed and the Proof I Couldn’t Provide
I signed a huge contract with a new client. Buried in the fine print was a requirement that I carry a $1 million E&O policy. I figured it was just boilerplate and signed it, even though I didn’t have the insurance. A week later, their legal department sent me an email: “Please provide your certificate of insurance.” I was caught. I had to scramble and buy an expensive policy at the last minute. That requirement is not a formality; it’s a non-negotiable prerequisite, and they will always ask for proof.
Stop thinking your homeowner’s policy’s liability coverage protects you if a delivery person for your business slips on your steps.
The FedEx Driver and the Business Visitor
A FedEx driver was delivering a package of supplies for my home-based business. He slipped on my icy front steps and was injured. He sued me. My homeowner’s insurance company denied the liability claim. They argued that because he was there for a business purpose, he was a business visitor, not a personal one, and the “business pursuits” exclusion in my policy applied. A separate business owner’s policy (BOP) would have provided the liability coverage I needed for the delivery man who was coming to my home for my work.
The #1 tip for a home-based business is a BOP, which bundles property and liability coverage affordably.
The Perfect Package for My Home Office
I was confused about what insurance I needed for my home-based business. My agent showed me a Business Owner’s Policy (BOP). It was the perfect, all-in-one solution. It provided general liability coverage to protect me from client lawsuits. It provided business property coverage for my computer and my inventory, with much higher limits than my homeowner’s policy. And it even included business interruption insurance. A BOP is a simple, affordable package designed specifically for the unique needs of a small, home-based business. It’s the best of all worlds.
I’m just going to say it: The freedom of being self-employed comes with the responsibility of managing your own risk.
The Day I Became My Own CEO and Risk Manager
When I left my corporate job to become a freelancer, I was so excited about the freedom. I could set my own hours and be my own boss. Then I realized I was also my own HR department, my own finance department, and my own risk manager. There was no one to provide me with a 401(k), a health plan, or a disability policy. The freedom of self-employment is not free. It comes with the immense and serious responsibility of building your own safety net from scratch. You are the only one who can protect yourself.
The reason your health insurance claim was denied is that you traveled out of your HMO’s network area. A PPO is better for freelancers who travel.
The HMO and the Out-of-State Client
To save money, I bought an HMO health plan. It was great, as long as I stayed in my city. Then, I had to travel to another state for a client project. I came down with a bad case of the flu and had to go to an urgent care clinic. My HMO denied the claim. It was not an “emergency,” and the clinic was out-of-network. A PPO plan, while more expensive, would have provided me with a national network of doctors, giving me the freedom and protection I needed as a traveling professional.
If you’re still mixing your business and personal assets, you’re risking “piercing the corporate veil” of your LLC in a lawsuit.
The Bank Account That Destroyed My Liability Shield
I had an LLC, but I was lazy. I paid for my business expenses from my personal checking account and vice-versa. When my business was sued, the plaintiff’s lawyer argued that I was not treating the LLC as a separate legal entity, but as my personal piggy bank. The judge agreed. He “pierced the corporate veil,” and the lawsuit came after my personal assets. My failure to maintain a strict separation between my business and personal finances had rendered my expensive LLC legally worthless.
The biggest lie is that you can just add a “business pursuits” endorsement to your homeowner’s policy and be fully covered.
The Endorsement That Was Just a Band-Aid
My agent told me I could just add a “business pursuits” endorsement to my homeowner’s policy for my small business. It was cheap and easy. But when I had a claim, I discovered its limitations. The endorsement only provided liability coverage; it did nothing to increase the tiny limit for my business property. And it didn’t provide any coverage for professional negligence (E&O). It was a small patch for a big hole. A real, separate Business Owner’s Policy (BOP) was the only way to get the comprehensive protection I actually needed.
I wish I knew that I needed to specifically list my expensive camera gear on an inland marine policy.
The Gear That Walked Off My Job Site
As a freelance videographer, my most valuable assets are my cameras and my lenses. They travel with me everywhere. My business owner’s policy covered them while they were in my home office. But when my gear was stolen from a job site, I learned it was not covered. I needed a separate “inland marine” or “commercial floater” policy. This is a special type of insurance designed specifically to protect business equipment that moves around. My standard policy was designed for an office that stays in one place.
99% of gig workers don’t know that the platform’s insurance is often contingent on you having your own valid personal insurance.
The Domino Effect That Voided My Coverage
I was driving for a rideshare app and got into an accident. I had let my personal auto insurance lapse because money was tight. The rideshare company’s insurer denied my claim. Their policy is “contingent.” It is only valid if the driver maintains their own, valid personal auto insurance as a primary layer. My failure to keep my own policy in force had created a domino effect, voiding the platform’s coverage as well. I was left with a wrecked car, a massive liability, and zero insurance from any source.
This one habit of reviewing your insurance needs every time you take on a new type of project will keep you protected.
The New Project and the New, Uninsured Risk
My freelance business was evolving. I started as a writer, but then I took on a new project that involved managing a client’s social media. I never thought to call my insurance agent. When I made a mistake that led to a lawsuit, my E&O insurer denied the claim. My policy only covered me for my work as a “writer.” My new work as a “social media manager” was a different professional risk that was not on my policy. Every new service you offer creates a new risk that needs to be insured.
Use a disability policy with an “own-occupation” definition, especially if you are in a specialized creative or technical field.
The Coder Whose Hands Gave Out
I’m a highly-specialized computer programmer. A repetitive stress injury made it impossible for me to type for more than a few minutes a day. My career was over. My disability insurance claim was denied. My policy had an “any-occupation” definition. The insurer said that even though I couldn’t be a coder, I could still work as a manager or a consultant. An “own-occupation” policy would have paid me because I could no longer perform the duties of my own specialized profession. For a specialist, it’s the only definition that matters.
Stop assuming your policy covers inventory stored in your garage. Check the sub-limits.
The Etsy Shop and the Uninsured Inventory
I ran a successful Etsy shop from my home, and I stored about $10,000 worth of inventory in my garage. A fire destroyed the garage and my entire stock. My homeowner’s policy only paid me $2,500. It had a specific, and very low, sub-limit for “business property.” To cover the full value of my inventory, I would have needed a separate business insurance policy with a higher property limit. My personal policy was not designed to cover the stock of my growing business.
Stop thinking you don’t need cyber liability insurance. If you handle any client data, you do.
The Stolen Laptop and the Client Who Sued Me
As a freelancer, I had all my client files and data on my laptop. When my laptop was stolen, it wasn’t just my loss; it was a data breach for all of my clients. One of my clients sued me for failing to protect their sensitive information. My general liability and E&O policies did not cover it. I needed a specific “cyber liability” policy. It would have paid for the legal defense, the cost of credit monitoring for my clients, and the regulatory fines. If you have a single client’s email address, you have a cyber risk.
The #1 secret is that many professional associations offer members discounted rates on E&O and disability insurance.
The Group Discount I Didn’t Know I Had
I was shopping for my own E&O and disability insurance, and the quotes were high. I was complaining about it to a fellow member of my professional association. She told me to check the association’s website. I was amazed to find that they offered high-quality E&O and disability plans to their members at a significant group discount. The rates were a fraction of what I was being quoted on the individual market. It’s one of the most valuable and under-utilized benefits of joining a professional group.
I’m just going to say it: Most self-employed people are one lawsuit or one illness away from financial ruin.
The Tightrope Walk Without a Net
Being self-employed is like being a high-wire artist. It’s exciting and freeing. But for many, it’s a walk without a safety net. A traditional employee has a net of benefits below them: health insurance, a retirement plan, disability insurance. A freelancer has to build their own net. Without liability insurance, disability insurance, and a solid retirement plan, you are performing a dangerous act with no protection. One slip—one lawsuit or one illness—and the fall is a long, and financially devastating, one.
The reason your rideshare claim was denied is that you were in “period 1” (app on, waiting for a ride) and your personal policy didn’t have the endorsement.
The Uninsured Gap Between Rides
I was driving for a rideshare company. I had the app on and was cruising downtown, waiting for a ride request to come in. I was rear-ended. The rideshare company’s insurance denied the claim because I didn’t have a passenger yet. My personal auto insurer denied the claim because I was using my car for business. I was in the infamous “Period 1” gap. A simple, inexpensive rideshare endorsement on my personal policy is the only thing that would have covered me during that specific, and very common, part of the job.
If you’re still not putting at least 15% of your income toward retirement, you’re ignoring your future self.
The Freelancer’s Biggest Financial Risk
As a freelancer, I was so focused on my income today that I completely ignored my income for tomorrow. I didn’t have an employer with a 401(k) match to force me to save. For years, I saved nothing for retirement. I finally realized that my biggest financial risk wasn’t a lawsuit; it was the certainty of my own old age. Forcing myself to automatically save at least 15% of every single check into a Solo 401(k) wasn’t just a good idea; it was the most important insurance policy of all—insurance against being old and broke.
The biggest lie is that you can save money by being underinsured. The cost of one uncovered claim will wipe out any savings.
The Premium I “Saved” and the Fortune I Lost
To save a few hundred dollars a year, I bought a business insurance policy with low liability limits. I felt like I was being frugal. Then, a single lawsuit resulted in a judgment that was $200,000 higher than my policy limit. I had to pay that out of my own pocket. The few thousand dollars I had “saved” in premiums over the years was a joke compared to the massive, uninsured loss I now had to cover. Being underinsured isn’t saving money; it’s a high-stakes gamble that will eventually cost you everything you were trying to save.
I wish I knew how to properly estimate my income for the ACA marketplace to get the right subsidy.
The Subsidy and the Surprise Tax Bill
I signed up for a health plan on the ACA marketplace. I underestimated my freelance income for the year to get a bigger monthly subsidy. It was great, until tax time. When I filed my taxes, my actual income was much higher than my estimate. The IRS made me pay back the extra subsidy I had received all year. It was a huge, unexpected tax bill. I learned to be much more careful with my income estimate and to update it on the marketplace throughout the year if I had a better-than-expected month.
99% of freelancers don’t have a succession plan or key person insurance in place.
The Business That Died With Its Owner
My friend was an incredibly talented and successful freelance consultant. His entire business was built around his personal brand and his relationships. When he died suddenly, his business died with him. He had no plan for who would take over his client projects. He had no “key person” insurance that would provide his family with a cash infusion to wind down the business and cover its debts. His thriving, one-man-show of a business just vanished overnight, leaving his family with a mess instead of an asset.
This one small action of talking to an independent agent who understands freelancers will be the best business decision you make.
The Agent Who Spoke My Language
I was trying to buy business insurance online, and I was completely lost. The questions didn’t fit my freelance reality. I found an independent insurance agent who specialized in working with self-employed professionals. It was a revelation. He understood the unique risks of my business. He knew about E&O, cyber liability, and disability insurance. He didn’t try to sell me a policy for a plumber. He helped me build a customized portfolio of protection that fit my modern, freelance career. That one conversation was the foundation of my business’s security.
Use a commercial auto policy if the vehicle is owned by and used exclusively for your business.
The Van That Needed Its Own Policy
I bought a cargo van that I used exclusively for my delivery business. I had the title in my business’s name. I tried to add it to my personal auto policy, but my insurer refused. They told me that because the vehicle was owned by the business and used for commercial purposes, it needed its own, separate commercial auto policy. A personal policy is for your personal life. A commercial vehicle, which is on the road all day, represents a much higher risk and requires a policy that is designed and priced for that risk.
Stop assuming your personal umbrella policy will cover your freelance work. It won’t.
The Umbrella That Didn’t Cover My Biggest Risk
I had a $2 million personal umbrella policy. I felt completely protected. Then, I was sued for negligence related to my freelance consulting work. My personal umbrella insurer denied the claim, pointing to the “business pursuits” exclusion. It was an absolute and ironclad exclusion. My personal umbrella was a fantastic shield for my personal life—my home and my car—but it provided a grand total of zero coverage for my professional life. For that, I would have needed a separate commercial umbrella policy.
Stop thinking you can’t get benefits like a traditional employee. You have to create your own safety net.
The Day I Became My Own HR Department
When I left my corporate job, I left behind a whole world of benefits: health insurance, a 401(k), disability insurance. As a freelancer, I realized I had to become my own Human Resources department. I had to go out and buy my own health plan. I had to set up my own Solo 401(k). I had to purchase my own disability and liability insurance. You can absolutely get the same, or even better, benefits than a traditional employee. But you have to have the discipline to build that safety net for yourself, piece by piece.
The #1 tip for E&O is to get a policy that covers your legal defense costs outside the limit of liability.
The Legal Bills That Didn’t Eat My Coverage
I was sued for a professional error. The lawsuit dragged on for a year, and the legal bills were enormous. Thankfully, my Errors & Omissions (E&O) policy had a provision that paid for my defense costs outside my policy limit. The insurer spent $100,000 on lawyers, and then they paid the final $200,000 settlement from my policy. My friend’s policy was different. His legal fees were paid from his policy limit. His $100,000 in legal bills left him with only $150,000 of his $250,000 policy left over to actually pay the claim.
I’m just going to say it: The gig economy is a great way to work, but it shifts all the traditional employment risks onto the individual.
The “Freedom” That Came With a World of Risk
I loved the freedom of being a gig worker. I could set my own hours and be my own boss. But I slowly realized what that “freedom” really meant. It meant I had no employer-sponsored health insurance. It meant I had no workers’ compensation if I got hurt. It meant I had no disability insurance if I got sick. It meant I had no 401(k). The gig economy is a brilliant business model for the platforms. It allows them to shift all of the risks and costs of having an employee from their corporate books onto the unprotected shoulders of the individual worker.
The reason your disability claim was denied is that you couldn’t prove your income loss because your bookkeeping was a mess.
The Messy Books and the Unprovable Income
As a freelancer, I was terrible at bookkeeping. I mixed my personal and business accounts and never kept good records. When I became disabled and filed a claim, my insurer asked for my financial records to prove my “loss of income.” I couldn’t provide them with a clean, clear record of what my business was actually earning. My messy books made it impossible to prove my loss, and my claim was denied. I learned that for a self-employed person, clean bookkeeping isn’t just for the IRS; it’s a critical part of your own insurance protection.
If you’re still not carrying general liability insurance, you can be barred from bidding on many corporate or government contracts.
The Insurance That Was a Key to a Bigger Door
I was trying to grow my small consulting business. I had a chance to bid on a huge project for a Fortune 500 company. I had the skills and the experience. But on the first page of the application, there was a non-negotiable requirement: I had to provide a certificate of insurance showing I had a $1 million general liability policy. My small, uninsured business was not even allowed to enter the game. General liability insurance wasn’t just about protecting me from risk; it was a professional credential, a key that unlocked the door to bigger, better clients.
The biggest lie is that the insurance you need is too expensive. The cost of not having it is your entire business.
The “Expensive” Premium vs. the Business-Ending Lawsuit
I put off buying Errors & Omissions insurance because the premium seemed like an “expensive” and unnecessary cost. I was a small, one-person business. Then I got hit with my first lawsuit. The cost of hiring a lawyer to defend me, even though I eventually won, was more than ten years’ worth of the “expensive” premium I had been avoiding. The cost of insurance is a small, predictable, and tax-deductible business expense. The cost of a single, uncovered lawsuit can be the end of your entire business and your financial future.
I wish I knew to get a health plan with a nationwide network, not a local HMO, when I started traveling for clients.
The Local Network and the Out-of-State Emergency
As a new freelancer, I chose a local HMO health plan to save money. The network was great in my home city. Then, I landed a big client that required me to travel to their headquarters in another state. While there, I got sick and had to go to an urgent care center. My HMO denied the claim because it was out-of-network. A PPO plan, with its national network of doctors, would have been a much smarter choice for a professional who needed the flexibility to travel.
99% of Airbnb hosts don’t inform their homeowner’s insurance carrier, which could void their policy.
The Secret Side Hustle That Voided My Policy
I started renting out my spare room on Airbnb. It was a great source of extra income. I never told my homeowner’s insurance company. I was afraid they would raise my rates or drop me. When a guest slipped and fell, leading to a lawsuit, I learned the hard way. My insurer denied the claim, citing the “business use” exclusion. Worse, they sent me a notice of cancellation for “material misrepresentation.” My secret side hustle had not only created an uninsured liability, but it had also caused me to lose my entire homeowner’s policy.
This one habit of paying your quarterly estimated taxes will prevent you from having to dip into your insurance savings.
The Tax Bill and the Raided Emergency Fund
As a freelancer, I loved getting big checks from my clients. I wasn’t used to having to save for my own taxes. I didn’t pay my quarterly estimated taxes. When I filed my return in April, I was hit with a massive, five-figure tax bill that I didn’t have the cash for. I had to raid the emergency savings account that I had set aside to cover my insurance deductibles and other risks. The simple, disciplined habit of paying my taxes quarterly is a critical part of a healthy financial life that protects my long-term safety net.
Use a qualified business income (QBI) deduction to lower your taxable income and make it easier to afford benefits.
The Tax Break That Paid for My Health Plan
As a self-employed person, I was struggling with the high cost of health insurance premiums and retirement contributions. My accountant showed me the “Qualified Business Income” (QBI) deduction. It allowed me to deduct up to 20% of my business income, which dramatically lowered my overall taxable income. This huge tax savings freed up the cash flow I needed to afford a better health plan and to max out my Solo 401(k) contributions. The QBI deduction is a game-changing tax break that helps make the freelancer’s benefit package affordable.
Stop assuming your homeowner’s policy covers a client’s data if your computer is stolen.
The Stolen Laptop and the Data Breach I Was Responsible For
My work laptop, which contained sensitive data from several of my clients, was stolen from my home office. My homeowner’s policy paid to replace the computer. But it did not cover the much larger costs of the data breach. I was on the hook for notifying my clients, paying for credit monitoring, and defending myself against a lawsuit from a client who claimed my negligence had caused them harm. For that, I would have needed a separate cyber liability policy. The hardware was covered; the data was not.
Stop thinking that because you work online, you don’t have liability. A data breach or slander claim can happen to anyone.
The Digital Business and the Real-World Lawsuit
I run an e-commerce store. I don’t have a physical location. I thought I didn’t have any liability risk. I was wrong. My website was hacked and my customers’ credit card information was stolen, leading to a class-action lawsuit. A few months later, I was sued for copyright infringement over an image I had used on my site. I learned that a digital business has very real, and very expensive, digital risks. Cyber liability and general liability with advertising injury coverage were the protections I needed for my modern, online business.
The #1 secret is to build the cost of your insurance into your rates. It’s a business expense.
The Line Item I Added to My Budget
When I first started freelancing, I set my rates based on what I wanted to earn. I completely forgot about the cost of my “benefits.” I had to pay for my own health insurance, disability insurance, and liability insurance. These were not personal expenses; they were the cost of doing business. I created a business budget and added “insurance” as a major line item. I then adjusted my hourly rate to ensure my pricing covered not just my time, but also the cost of my professional safety net. It’s a legitimate, and essential, business overhead.
I’m just going to say it: You are your own HR department. You have to manage your own benefits, retirement, and risk.
The Hardest, and Most Important, Job I Ever Had
When I quit my corporate job, I was thrilled to be my own boss. I quickly realized I had also become my own Head of Human Resources. It was now my job to research and choose a health plan. It was my job to set up and fund my own retirement account. It was my job to analyze my risks and buy the right insurance. It’s a daunting and complex role that no one trains you for. The success of your freelance career doesn’t just depend on how good you are at your craft; it depends on how good you are at being your own HR department.
The reason your claim was denied is that your side hustle grew into a full-time business, and you never updated your insurance.
The “Hobby” That Was Actually a Business
I had a “business pursuits” endorsement on my homeowner’s policy that provided a small amount of coverage for my little side hustle. Over a few years, that side hustle grew into my full-time, six-figure job. But I never updated my insurance. When I had a major liability claim, it was denied. The insurer argued that the small endorsement was for an “incidental” business, not a full-time professional operation. My coverage had not grown with my success, leaving my much larger, more valuable business dangerously underinsured.
If you’re still not using a contract that includes a limitation of liability clause, you’re missing a key non-insurance protection.
The Sentence in My Contract That Saved Me a Fortune
I was sued by a client for a mistake that had caused them a significant financial loss. They were suing me for hundreds of thousands of dollars. My lawyer pointed to the “limitation of liability” clause in the contract I had them sign. It stated that my maximum liability for any error was limited to the total amount of fees I had been paid for the project. That one sentence reduced my potential exposure from a catastrophic number to a manageable one. It’s a critical, non-insurance tool that works hand-in-hand with your E&O policy.
The biggest lie is that you’ll “get around to it” later. You need insurance from day one.
The Lawsuit That Arrived Before “Later” Did
When I launched my freelance business, I was so focused on getting clients that I put off buying insurance. “I’ll get E&O insurance once I’m making some real money,” I told myself. In my third month of business, I made a mistake on a project for my very first client. That mistake led to my very first lawsuit. My plan to get insurance “later” was a catastrophic failure. The risks to your business exist from the moment you send your first email. Your protection needs to exist from that moment, too.
I wish I knew that my city required a specific business license that was a condition for my insurance being valid.
The Missing License and the Voided Policy
I ran a small business from my home. I had a great Business Owner’s Policy. When I had a fire claim, the insurer’s investigator asked for a copy of my city’s home occupation business license. I didn’t have one; I didn’t even know I needed it. The insurer denied my claim, stating that my failure to comply with local ordinances was a violation of the policy conditions. My business was operating illegally, and therefore, my insurance was void. That missing piece of paper from city hall cost me my entire claim.
99% of self-employed people don’t have adequate life insurance to cover their business debts.
The Business My Husband Left Behind
My husband was a successful self-employed consultant. He had a small life insurance policy to cover the mortgage. When he died suddenly, I discovered the true extent of his business’s finances. He had a huge business loan, a line of credit, and outstanding tax liabilities. His personal life insurance was not nearly enough to cover the business debts. As his heir, I was left to untangle the financial mess of a business I knew nothing about. A separate, larger policy was needed to give me the funds to pay off the business and shut it down cleanly.
This one small action of reading your client contracts carefully for their insurance requirements will prevent last-minute scrambles.
The Contract I Almost Didn’t Read
I was about to sign a huge, exciting contract with a new corporate client. As a final step, I read their “vendor requirements” section. I was shocked. They required me to carry a $2 million commercial umbrella policy and to name them as an “additional insured.” I didn’t have that coverage, and it would take weeks to get. By reading the contract carefully before signing, I was able to get the required insurance in place. If I had just signed it, I would have been in breach of contract from day one.
Use a business overhead expense disability policy to keep your business running if you get sick.
The Policy That Paid My Rent While I Recovered
As a solo practitioner, I had a great personal disability policy that replaced my income when I got sick. But it didn’t pay my business’s bills. My office rent, my employee’s salary, and my utility bills still had to be paid. My business was bleeding money every month. A separate “Business Overhead Expense” policy would have paid for all those fixed costs, keeping my business alive while I recovered. It’s the policy that ensures you have a business to come back to after you get well.
Stop assuming your personal health insurance covers work-related injuries.
The Fall in My Home Office That Wasn’t a Health Insurance Claim
I work from home for myself. I tripped over a computer cable in my office and broke my wrist. I went to the ER and submitted the claim to my personal health insurance. It was denied. They stated that because the injury occurred in my workspace while I was working, it was a “work-related injury.” My health plan had a clear exclusion for that. As a self-employed person, I was my own employee, and I would have needed a separate workers’ compensation policy to cover it. It was a bizarre and expensive gap I never knew existed.
Stop thinking that the platform’s liability protection for your Airbnb is enough. It has major gaps.
The “Host Guarantee” That Wasn’t a Guarantee at All
I was an Airbnb host, and I trusted their “Host Guarantee” and “Host Protection Insurance.” When a guest threw a party that resulted in major property damage and a neighbor filing a liability claim, I learned the truth. The platform’s protection is not real insurance. It has a long list of exclusions, and the claims process is a nightmare. It is secondary to your own insurance, and it is designed to protect the platform more than it protects the host. It’s a marketing tool, not a substitute for a real commercial insurance policy.
The #1 tip is to find an agent who actually asks what you do for a living instead of just selling you a generic policy.
The Agent Who Was a Journalist, Not a Salesperson
My old agent would just ask me if I wanted to renew my policy. My new agent sat me down for an hour and interviewed me. “Tell me about your business. Who are your clients? What’s your biggest risk? What keeps you up at night?” He was a journalist, trying to understand my story. Only then did he recommend a customized package of insurance that actually fit my specific, freelance life. He wasn’t selling me a product; he was crafting a solution. That is the mark of a true professional.
I’m just going to say it: The self-employment tax is a beast, and you need to plan for it to afford your own safety net.
The 15.3% I Forgot About
When I got my first big check as a freelancer, I was ecstatic. I had forgotten about the “self-employment tax.” As both the “employee” and the “employer,” I was now responsible for the full 15.3% for Social Security and Medicare. It was a huge, shocking tax hit that I hadn’t budgeted for. I realized that to afford my own benefits—health insurance, disability, retirement—I had to first get a handle on this massive new tax. It’s the first and most important financial hurdle every self-employed person must learn to clear.
The reason your E&O claim was denied is that you were accused of fraud, which is never covered.
The Mistake vs. The Malice
My E&O policy was designed to protect me if I made an honest mistake or was negligent. When a client sued me, they didn’t just claim I was negligent; they accused me of intentionally defrauding them. My E&O insurer sent me a “reservation of rights” letter, explaining they would defend me, but if the court found I had committed fraud, they would not pay the judgment. E&O insurance is for errors, not for intentional, criminal, or fraudulent acts. The policy protects you from a mistake, not from a malicious choice.
If you’re still operating without a separate business credit card, you are making your financial life unnecessarily complicated.
The Card That Cleaned Up My Bookkeeping
For a year, I used my personal credit card for all my freelance expenses. At tax time, it was a nightmare. I had to go through a year’s worth of statements, trying to remember if a lunch was with a client or a friend. I finally got a dedicated business credit card. It was a simple action that had a profound effect. My bookkeeping became effortless. My tax deductions were clean and provable. It created a professional, clean line between my personal and business finances that made my entire life simpler and more organized.
The biggest lie is that you don’t need disability insurance because you do “safe” work at a computer. Repetitive stress injuries and illnesses are common.
The “Safe” Job and the Hands That Gave Out
As a writer, I thought my job was perfectly safe. I wasn’t a roofer; I was just typing. I thought disability insurance was for people in dangerous professions. Then, I developed a severe repetitive stress injury in my hands and wrists. I couldn’t type. My “safe” career was over. I learned that the most common disabilities are not from accidents; they are from illnesses like cancer, heart disease, or a simple breakdown of the body. No matter how safe your job seems, you are not safe from your own biology.
I wish I knew that I needed to keep my E&O policy active for years after I finished a project because a claim could be filed later.
The Ticking Time Bomb of My Past Work
I was a freelance architect. I completed a big project and, a year later, decided to switch careers and canceled my E&O policy. Two years after that, a structural issue was discovered in the building I had designed, and I was sued. My old insurer would not cover it because the claim was filed after my “claims-made” policy had been canceled. My past work was a ticking time bomb, and I had canceled the insurance that would have defused it. I would have needed to buy “tail coverage” to protect myself.
99% of freelancers don’t know what “prior acts” coverage is and why it’s critical when switching E&O policies.
The Bridge to My Past
I had been with the same E&O insurance company for five years. I found a new company with a better rate and switched. My new agent made sure my new policy included “prior acts” coverage back to my original start date. This meant the new policy would cover me not only for my future work but also for any claims that might arise from my work in the past five years. Without that “prior acts” coverage, switching companies would have created a massive, uninsured gap for my entire professional history. It’s the bridge that connects your new policy to your past.
This one small action of creating a simple business continuity plan will show you exactly where your insurance gaps are.
The “What If” Game That Exposed My Risks
I sat down one afternoon to write a simple “business continuity plan.” I asked myself a series of “what if” questions. What if my computer is stolen? What if I get sick and can’t work? What if a client sues me? For each question, I wrote down my answer. The process was terrifyingly revealing. It showed me that I had no off-site backup for my data, no disability insurance to cover my income, and no E&O insurance to cover a lawsuit. That simple plan was a roadmap that showed me exactly which insurance policies I desperately needed to buy.
Use your professional association to get advice on the typical insurance needs for your field.
The Wisdom of the Crowd
I was a new freelance photographer and had no idea what kind of insurance I needed. I joined a professional photographers’ association. In their online forums, I was able to ask experienced professionals what kind of insurance they carried. They told me about inland marine policies for my gear, liability insurance for my shoots, and the common pitfalls to avoid. The collective wisdom of the association was an incredible resource that gave me a real-world, practical education on the specific insurance needs of my unique profession.
Stop assuming that your web hosting company’s security is a substitute for your own cyber liability policy.
The Hack That Happened on Their Server, but Was My Legal Problem
My e-commerce website was hosted on a large, secure platform. I thought their security was all I needed. When their servers were hacked, all of my customer’s data was stolen. My web host’s insurance covered their own business. It did not cover my legal liability to my customers. I was the one who was sued. I needed my own, separate cyber liability policy to cover my specific business risk. You cannot outsource your own legal and financial responsibility for your customers’ data.
Stop thinking your personal umbrella will cover a claim that your homeowner’s policy denied due to a business exclusion.
The Domino Effect of a Business Exclusion
I had a client injure themselves at my home office. My homeowner’s policy denied the liability claim, citing the “business pursuits” exclusion. I thought, “No problem, my $2 million personal umbrella policy will cover it.” It did not. The umbrella policy is designed to sit on top of a covered underlying claim. Because my homeowner’s policy had excluded the claim, there was no underlying coverage for the umbrella to sit on top of. The business exclusion on my primary policy had created a domino effect, toppling my umbrella coverage as well.
The #1 secret is that a good insurance package can be a a competitive advantage, allowing you to work with larger clients.
The Certificate That Was My Key to the Big Leagues
I was a small freelancer, and I was trying to land a huge contract with a major corporation. The quality of my work was great, but what won me the job was my professionalism. During the bidding process, I was able to immediately provide a certificate of insurance showing I had a robust package of general liability, E&O, and cyber insurance. It showed them I was a serious, stable, and professional business they could trust. My insurance wasn’t just a defensive shield; it was an offensive weapon that helped me win.
I’m just going to say it: Being your own boss means you’re also your own risk manager.
The Hat I Didn’t Know I Had to Wear
When I became a freelancer, I thought I was just a writer. I was wrong. I had to become an expert in marketing, a bookkeeper, and a tech support specialist. The most important, and most overlooked, hat I had to wear was that of a “risk manager.” It was now my job to identify the things that could destroy my business—a lawsuit, an illness, a data breach—and to build a strategy to protect myself. Being your own boss is not just about doing the work; it’s about protecting the business that allows you to do the work.
The reason your claim was denied is that you were operating outside the scope of the business activities you described on your application.
The “Writer” Who Was Sued as a “Consultant”
On my E&O insurance application, I described my business as “freelance writing.” A few years later, I started doing more strategic consulting work. When a client sued me over my consulting advice, my insurer denied the claim. The policy was only for the professional services I had listed on my application. Because my business had evolved, but my policy hadn’t, I was performing uninsured services. You have to keep your insurer updated as your business changes and grows.
If you’re still not separating your finances, you’re making it impossible to know if your business is even profitable enough to afford insurance.
The Commingled Mess That Hid the Truth
I ran my freelance business out of my personal checking account for years. I had no idea if I was actually profitable. The money all just flowed together in a confusing mess. When I finally opened a separate business bank account and started tracking my real income and expenses, I had a shocking realization: I wasn’t charging enough to cover my costs, let alone to afford the insurance I needed. Separating my finances was the first step to acting like a real business owner and pricing my services in a sustainable way.
The biggest lie is that the free tools are good enough. Professional freelancers use professional tools, including professional insurance.
The Amateur Hour vs. The Professional Business
When I started freelancing, I used free email, free contracts, and had no insurance. I was running an amateur-hour operation. As my business grew, I realized I needed professional tools. I invested in a paid email suite, had a lawyer draft a real contract, and bought a professional package of insurance. These weren’t expenses; they were investments in my own professionalism and stability. The free tools are fine for a hobby, but a real business requires real, professional tools to protect it.
I wish I knew that my health insurance didn’t cover me when I tried to work from another country for a few months.
The “Digital Nomad” and the Domestic Health Plan
I was so excited to become a “digital nomad” and work from Portugal for the summer. I had my domestic US health insurance and thought I was covered for emergencies. I was wrong. My HMO provided zero coverage overseas. Even a PPO would have treated any care as “out-of-network” and required me to pay upfront. For a long-term stay, I would have needed a specific “global” health insurance or travel medical plan. My domestic plan was not designed for a global lifestyle.
99% of gig workers have no retirement savings, which is the ultimate insurance policy.
The Hustle Today and the Poverty Tomorrow
The gig economy is all about the hustle: the next ride, the next delivery, the next project. It’s a focus on the immediate income. The result is that the vast majority of gig workers have no retirement savings. They are not thinking about their future selves. A robust retirement account, built over decades, is the ultimate insurance policy. It’s the fund that will protect you from the certainty of old age, a risk that is far more likely than a house fire or a car crash. The focus on today’s hustle is creating a massive poverty crisis for tomorrow.
This one small action of having a 15-minute call with an independent agent each year will be the highest ROI activity for your business.
The Annual Check-Up for My Business’s Financial Health
Every year, on the anniversary of starting my business, I have a 15-minute scheduled call with my independent insurance agent. We review my revenue, my new clients, and any new services I’m offering. We discuss my risks and make sure my coverage is still adequate. That one, simple, proactive phone call is the highest-return-on-investment activity I do all year. It ensures that my financial safety net is keeping pace with my business’s growth and that I am not unknowingly operating with a dangerous and expensive gap in my coverage.
Use insurance to create a safety net so you can take the creative and professional risks necessary to grow your business.
The Freedom to Fail
I used to be scared to take on big, ambitious projects. What if I made a mistake? What if the client sued me? My fear was holding my business back. Then I invested in a great Errors & Omissions policy. The insurance became my safety net. It gave me the confidence to take on bigger challenges, knowing that if I made an honest mistake, I wouldn’t lose my business. The insurance wasn’t just a defensive shield; it was an offensive tool that gave me the freedom to take the calculated risks that were necessary to innovate and grow.