What Freelancers Need to Know About Insurance

Ready to think through all the ways you could become too sick, injured, or otherwise debilitated and unable to work, destroying your ability to earn a living?

Welcome to insurance, the worst thing to think about. But worse still is being financially unprepared when bum luck does befall you.

While it’s hard to consider paying for something you might—and hope not to—use, the odds of needing various insurance policies might be higher than you think. The Social Security Administration says that more than one in four 20-year-olds will be out of work for at least a year due to disability before retirement age. And even if you can keep working, a single health issue can threaten your financial security. A Kaiser Family Foundation study found that 26% of U.S. adults said someone in their household had medical bills they couldn’t or struggled to pay—and 66% of those bills were from a one-time or short-term medical expense.

Of course, that doesn’t mean you need to go out and buy every form of insurance ever created or face inevitable financial doom. Here are a few of the most common types of insurance for freelancers and the basic info you need to decide if each is right for you.

Health Insurance

Yes, you need health insurance. You know this. The Freelancers Union’s Freelancing in America: 2019 survey found that 83% of full-time freelancers have health insurance. So good job. You don’t need our help.

Disability Insurance

Disability insurance covers a portion of your income—often around 60%—for a certain period of time if you’re too sick or injured to work. Commonly used during childbirth recovery, cancer treatments, or when healing from broken limbs. Short-term disability insurance covers you for a few weeks or months, and long-term typically kicks in after a waiting period but last much longer. Some plans go through retirement age, if you’re still unable to work.

For Anne Miller, a former Contently managing editor based in New York City, it was a big help when recovering from childbirth. Miller took advantage of New York State Paid Family Leave right when it became available in 2017 because she was due in early 2018. Purchasing disability insurance was required to participate.

The new program was admittedly tough to navigate. But though the process was fraught and the lines between her disability insurance and paid family leave coverage were blurred, Miller was able to secure about 60% of her income for about seven weeks. She said the work to secure the coverage—and the premium—were worth it.

“Absolutely,” she said. “Having a kid is expensive. And there are hospital bills to pay. There’s a lot to manage, and, if you’re like me, you’re recovering from major abdominal surgery. But yet, you still have to pay your bills.”

While not all states have programs like New York’s, freelancers can purchase private short- and long-term disability insurance policies for individuals in many states. For example, Freelancers Union offers long-term disability insurance with monthly rates ranging from $6.58 to $485 depending on age and coverage.

So do you need it? In the Freelancing in America: 2019 survey, 59% of freelancers said they live paycheck-to-paycheck. Just 43% said they could go without two weeks of pay. Everyone’s risk profile is different, but for many freelancers, it could be a beneficial safety net.

Accident Insurance

If you think of insurance as rain gear, your health insurance might be your umbrella and disability insurance might be galoshes. They’re doing the most work in a storm. But if you’re really averse to getting your back and shoulders wet, you might want a raincoat, too.

Accident insurance pays for the expenses that can slip (or drip) in between health and disability insurance when you’re injured in an accident. So if you fall off a ladder and break both hands, disability insurance might cover your rent and groceries while you can’t work. But you’ll have medical bills—and depending on your co-pays and deductibles, they could be big. You might need help with transportation or childcare while getting treatment. That’s what accident insurance covers.

How much do accidents cost? It varies. But the National Safety Council found the 37.6 million non-work injuries that happened in 2018 cost Americans a total of $479.1 billion. That’s around $12,700 per injury.

So do you need it? If you have good savings or amazing, low-deductible, low-copay health insurance, you might not judge your need for accident insurance to be very high. If you don’t, the good news is that accident insurance tends to be affordable. This writer just received a quote from Freelancer Union-affiliated insurance company Trupo for $24 a month.

Liability Insurance

In 2017, the Columbia Journalism Review reported about how freelance journalist Yashar Ali was sued by Fox News host Eric Bolling for $50 million in damages. Ali had written a story in HuffPost about Bolling texting unsolicited photos. But HuffPost stood by Ali and the story, saying they would cover his legal fees.

Ali dodged a bullet, but if the words “$50 million lawsuit” make you question your decision to freelance, consider that not all publishers would take HuffPost’s stance. Actually, said business lawyer Elena Favaro Viana, many of them put language into their contracts that explicitly shifts the legal liability for published freelance work onto the writer.

Before you immediately run out to get liability insurance, know that not any old policy will do. According to the CJR story in 2017, newsgathering- and publishing-specific liability insurance is rare. Even the Freelancers Union’s liability insurance offering said their policy is geared toward graphic designers, photographers, and other non-editorial freelancers.

So do you need it? If you cover high-risk topics, investigating a customized liability policy for your work may be worthwhile. However, if you’re like most freelance writers, it’s likely easier to manage your liability on a contract-by-contract basis.

“The number one thing is to go through the contract, find where it says ‘waiver of liability’ or ‘liability release,’ and find if there is a clause on indemnity,” Favaro Viana said. A release of liability and an indemnity clause are two ways a publisher can shift liability to the freelancer. Look for any such language and ask for those to be removed.

“Do not be afraid,” she said. “If the publisher doesn’t want anything to do with your risk, don’t be afraid to bring your work somewhere else. Do what’s right for you.”

What’s right for you

Doing what’s right for you is a recurring theme in determining which insurance policies are right for you as a freelancer. Because each policy is different and your risks are unique to you, there truly is no one right answer. But because the right insurance can be so important to your financial survival should anything bad happen, doing the work to figure out your best insurance coverage is a smart move.

Natalie Burg is a freelance writer and editor covering technology, business, finance, development, healthcare, and wellness. She lives in Ann Arbor. She is under-insured.

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Photo Credit: Anna Minkina