Insurance Needs for the Self Employed
During the Great Recession, many professionals have renovated or rejuvenated their careers by starting their own businesses. Many have increased their incomes by becoming consultants or by contracting for major projects. In their hurry to get their businesses up and running, however, many ambitious entrepreneurs have neglected their insurance needs. Because your business absolutely depends on you, you must take initiative to insure your health, your property, and your venture. Secure four kinds of specializied coverage:
• Comprehensive business insurance In many cities and counties, you cannot get a business license without proof of insurance. If you bring people onto your property, you incur liabilities. If you perform a personal service or give advice, you assume liability for malpractice. If you carry any kind of inventory, you incur special theft, fire, and water damage risks. Work with an experienced insurance agent to assess your risks and limit your personal financial exposure. If you must pick and choose among coverage options, assign highest priority to liability.
• Health insurance If you did not have relatively high tolerance for risk, you would not have launched your own business, but you cannot afford to stretvh your risks beyond the limits of common sense. Follow the logic: If you don’t work, you don’t eat. If you get seriously ill, you do not work. You see how the consequences multiply. Although most health insurance for self-employed workers is expensive, it generally covers all kinds of preventive care with zero co-pays, and it pays for itself with just one serious medical procedure or trip to the emergency room. If you recently left an empoyer who provided health insurance for you and your family, you may be eligible for a COBRA plan; check with the company’s benefits manager. If you cannot extend yoiur existing care, invest some time and energy in careful shopping for a policy that balances comprehensive coverage with reasonable cost.
• Disability insurance Insurance industry analysts report that 10 percent of the American workforce suffers serious disability each year. Equipment failures, accidents and over-exertion, disable self-employed workers at least at the same rate as the larger workforce, and contractors in the most sophisticated building and remodeling trades naturally have even higher rates of serious accident and long-term disability. Although your health insurance probably covers the costs oif medical care and rehabilitation, it does not protect your income, and you probably do not have standard ste-sponsored disability insurance. Therefore, you must find affordable insursance that covers both long-term rehabilitation costs and lost earnings.
• Property Insurance Even if you work from home, you “rent” office space which you have equipped with the tools of your trade. Make sure you have adequate protection for that space and its contents, and make sure you have set the deductibles low enough that you can replace the tools of your trade immediately. Self-employed workers understand better than most people just how much one day’s lost earnings actually can cost. Good insurance guarantees you quickly can get back up and running after a fire, a serious theft, or a natural disaster. Moreover, even if you do not cover your entire home and property against floods and earthquakes—disasters not covered by most property insurance—you may consider securing coverage for your business.
Managing the costs
Almost everything costs more when you buy for just one instead of achieving economies of scale by buying for many. The principle especially applies to health insurance. In order to cut these costs, however, many self-employed and contract workers have formed “unions” or professional organizations that help members qualify for group insurance rates. Look for a professional organization that serves the special needs of people in your profession, and look for other major grouos that can help reduce all of your operating and insurance costs. If, for example, you are over 50 years-of-age, examine the benefits of joining the American Association of Retired People (AARP), because AARP members qualify for discounts of auto, health, and life insurance, and they often qualify for discounts on phone service and other essentials.
Aaron Kruger writes for askforinsurance.com where you can learn business owners policy coverages