Gig economy workers need these three insurance policies
Freelance workers often turn to InsurTechs for their insurance coverage needs. Here's why...
The freelance or “gig” economy is one of the biggest trends to affect the workforce in the last decade, as it provides workers with short-term employment to make additional income. It has also created job opportunities for many Americans who were left unemployed, furloughed, or working reduced hours due to COVID-19.
While freelancing provides individuals with flexible work, it also brings about its own set of unique challenges such as unpredictable shifts, out-of-pocket expenses and legal risks.
There are both benefits and downsides to entering the gig economy. If you’re a freelancer, it’s important to make sure you’re protected no matter what happens.
Benefits and downsides of the gig economy
Freelance work, which makes up 35% of the U.S. workforce, provides many benefits for workers, including flexible hours and the ability to create your own schedule. However, the flexibility of short-term employment also means that workers aren’t provided the same guaranteed benefits and protections that come with full-time employment like health insurance and paid time off. In fact, in the 2020 election, California voters sided with rideshare companies to classify drivers as contractors, replacing an earlier law that granted drivers full employment and benefits, including unemployment and sick leave.
Furthermore, if you are a rideshare driver, for example, your personal car insurance won’t provide adequate protection for you and your passengers. If you were to get into an accident, this would impact how quickly you are able to get back to work and put you at legal risk.
When your paycheck depends on your personal vehicle or you are your own boss, so to speak, having insurance is critical.
Three must-have insurance policies gig workers need
Depending on the work you’re doing, there are different insurance policies that a gig worker should consider signing up for. However, there are a few must-have insurance policies that all gig workers should consider. These include general liability, professional liability and workers’ compensation insurance.
General liability insurance covers the risks that affect almost every business, no matter what your industry. It’s the most common insurance for small businesses and self-employed professionals, and it’s typically the first policy purchased by new businesses. This is because it provides financial protection if you are held responsible for some of the most common accidents that can occur at a business, such as a customer injury or property damage.
In addition to general liability insurance, gig workers should also consider purchasing professional liability (also known as errors & omissions). This type of insurance will provide gig workers with protection in the event that they are charged with negligence by a client.
Lastly, workers’ compensation coverage provides a safety net if a workplace injury occurs and can help cover expenses for medical treatment, lost wages and other costs. A common misconception about workers’ comp is that it’s only needed when a business has employees. But many self-employed workers, sole proprietors and independent contractors purchase coverage for the financial protection it provides or to meet contract requirements with clients.
No matter the type of insurance policy you sign up for, it is important to read through your policy documents carefully to make sure you are adequately protected.
Why gig workers turn to InsurTech providers
Gig work can be inconsistent at times and projects often arise on short notice, so working with a digital insurance provider allows for quick and flexible coverage. Digital InsurTech companies provide gig workers with personalized and cost-effective policies quickly and efficiently. Some providers even offer monthly payment options, which can be useful for gig workers who may not receive a consistent paycheck. In addition to providing much-needed protection, having robust insurance coverage can offer gig workers a leg up when competing for jobs and projects.
Sofya Pogreb (support@nextinsurance.com) is chief operating officer at Next Insurance. The opinions expressed in this column are the author’s own.
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