What Types of Insurance Do You Need If You’re Self-Employed?

More and more people are ditching the 9 to 5 grind in favor of self-employment. And why not? You are your own boss and can set your own working hours. You are working on passionate projects and making money doing what you love. At any time, you can drop everything and take a well-deserved vacation.

Also, you choose who is in your team and the clients you want to work with. You have the chance to infuse your creativity and personality into your products without a boss stepping on your ideas. Within reason, you can also control how much you earn instead of waiting years for a promotion or pay rise.

Many people go into self-employment for the freedom, or lack of exciting 9 – 5 jobs. Others are just leveraging the power of modern technology, which has made working remotely a lot easier than, say, 20 years ago.

Self-employment is especially an ideal arrangement if you want to create a healthy work-life balance. It’s also the backbone of what is known as lifestyle businesses, where you’re paid to live out your hobbies.

Without a doubt, self-employment comes with many perks, but there are equally as many risks since you don’t have an employer protecting you. Here’s where self-employed insurance comes in.

The risks are particularly amplified when you’re starting, and your business is not profitable. And while you might want to cut corners until you build some momentum, never cut corners on insurance coverage.

You might want to accept it outrightly, but when you go into self-employment, everything depends on you! And no matter how much you try; you can’t control everything.

Accidents, natural calamity, lawsuits, loses, theft and injuries, etc. happen without warning, and could incapacitate your new business or completely obliterate it. With the good financial sense, emergency savings, and the right insurance coverage, you can avoid huge loses and protect your business (hence income).

In the upcoming section, we cover a number of insurance options to consider as you continue building your self-employed career.

Best Types of Insurance to Have If You’re Self-Employed

In the following section, we look at the most important types of insurance you need from both a personal and business perspective. Also, remember to do some comparison shopping when purchasing insurance to get the best deal, and save some money while running your business.

That out of the way, let us start with the most obvious type of insurance every entrepreneur must have.

Health Insurance

When in salaried employment, your employer usually helps with your health insurance premiums. It’s a great employee benefit many companies use to attract and retain the best talent.

In many (if not all) companies, the health insurance cover is extended to other members of your family, giving you much-deserved peace of mind.

It also means you’re protected from minor and huge hospital bills should you or a member of your family falls ill or get an injury.

Without the right health insurance, you have to shoulder the financial burden alone, which can easily deplete your savings, if you had savings to begin with.

When it comes to self-employment, you don’t have an employer shielding you from the financial burden of medical services. It is your responsibility to purchase health insurance especially if your family depends on you.

If you fall sick and you don’t have insurance, you’ll lose income since you cannot work, and this will affect you and your family financially, mentally and emotionally.

With health insurance, you shield yourself, your family and your business from medical expenses, undue stress and losses due to downtime.

Don’t worry, however, since there are tax deductions on health insurance premiums for self-employed people, which can lighten the load.

Best is to sit down with an independent agent who helps you find the best insurance cover for your family’s needs and budget.

Disability Insurance

Health insurance protects you and your family when you need to pay medical bills. But what happens when you’re terminally ill or suffer an injury that keeps you away from work for several months?

Here’s what will happen.

If you can’t go to work for several months, your unprecedented absence will significantly hurt your cash flow. And what happens when your cash flow dries? You risk closing down your business and losing everything.

Worse still, if you have a family that depends on your income, how will you provide for their needs without cash flow? Now, nobody ever wants to fall terminally ill or be involved in an accident that takes you out of commission for months on end.

But, with disability insurance cover, you can provide for your family while you recover. Keep in mind that disability insurance, usually replaces 50% to 60% of your income, which is better than nothing. Still, it’s advisable to create an emergency fund, and spend wisely until you’re able to work again.

Liability Insurance

Running a business is not for the faint of heart. You juggle so many hats at any given time, meaning it is easy to ignore some areas innocently. Additionally, issues at a personal level can affect your attention and how you work resulting in negligence and other nasty occurrences.

Other times, it’s not even your fault. A supplier might send you faulty goods. We have seen it happen many times, even with big companies who end up recalling faulty products.

Since your business is your responsibility as a self-employed worker, you must be wondering what type of insurance you’d need in such scenarios.

Well, there is liability insurance, which is meant to cushion you from negligence claims, and lawsuits for personal injury as well as property damage claims.

There are different types of liability insurance to protect your business. General liability insurance protects you from property damages and bodily injuries that caused by your products or services.

Professional liability insurance protects you from misconduct and negligence claims, which are common with professionals such as doctors and lawyers, among others.

While you’re doing your best to provide the best service and products, it’s important to get liability insurance because, as we said, you never know when something bad will happen.

Someone might slip while in your store and you’ll need to cover their medical expenses.

That brilliant electrical product you just launched could blow up in someone’s face, and while you don’t want that to happen, it’s best to be prepared with some liability insurance coverage.

Auto Insurance

If you use vehicles in your business, it’s important to check out the options you have  as far as self-employed auto insurance goes. But before you run out to purchase motor insurance, there are a couple of things to keep in mind.

If you are self-employed but use your car for personal errands such as visiting family and friends, road trips or doing grocery shopping, regular car insurance is adequate. However, if you use your car to travel to work or for work, you need to add cover for commuting.

On the other hand, if you use your car for business purposes, say you run a moving company or visit clients in their homes for professional services such as elderly care, you must have business car insurance.

If your employees drive to work in their own cars, you also need to ensure they are covered for business use.

Also, remember business car insurance is often more expensive than regular car insurance. Additionally, your insurance rates also depend on what you do for a living, whether you choose personal or business car insurance.

Good news is that car insurance is tax-deductible for self-employed people since you can claim it as an allowable business expense alongside parking fees, petrol, servicing and repairs.

Note that you can lower your premiums by reducing annual mileage, driving safely and increasing your voluntary excess.

Life Insurance

Last but not least, we have life insurance. Nobody ever wants to think of their death. But death is inevitable and can happen any time without warning. It’s the superficiality of life in the face of death that makes it worth living, right?

That aside, we are here to talk about self-employed insurance, not philosophy 😊

Now, if you have a family who depend on you financially, getting life insurance cover is a no brainer. Life insurance protects your family when you, their breadwinner, kicks the bucket unexpectedly. The financial stability life insurance offers will go a long way in helping them recover.

Life insurance comes in two forms; term life or whole life policy. The former i.e., term life protects you for a set period, such as until your children are adults and can make it on their own. A whole life policy is pricier in comparison, but it’s touted as a long-term investment, and covers you for life.


When you go into business for yourself (or if you’re already are in self-employment), prepare yourself for the sweet perks and freedoms that come with the job.

But to keep enjoying the perks and stay sane, you need to get insurance (and the right kids of insurance) in order to protect you, your family and your business from any unwanted events, natural or human-made.

Sit down with your trusted insurance agent and come up with the insurance coverage that is perfect for you, your business, your beloved family, and, of course, your budget.

Don’t also forget to shop around before committing to one insurance firm because some companies have exorbitant premiums for no plausible reason at all.