Going Freelance Insurance Checklist

Leaving traditional employment for freelance work means losing employer-sponsored benefits. Use this checklist to ensure you have proper insurance coverage as an independent contractor.

Before You Leave Your Job

Understand What You’re Losing

  • Review current employer health insurance (coverage ends on termination)
  • Check if employer offers COBRA continuation (18 months, but expensive)
  • Note any life insurance, disability, or other benefits you’ll lose
  • Calculate the true cost of replacing these benefits

Health Insurance Options Research

  • Healthcare.gov marketplace (ACA plans with possible subsidies)
  • Spouse’s employer plan (if available)
  • COBRA continuation (expensive but familiar)
  • Freelancer associations and unions (group rates)
  • Health sharing ministries (alternative, not traditional insurance)

Timing Considerations

  • Job loss is a qualifying life event for ACA enrollment
  • You have 60 days to enroll after losing coverage
  • Consider timing your departure around open enrollment (Nov-Dec)
  • Avoid any gap in health coverage

Essential Freelance Insurance

Health Insurance (Top Priority)

  • Research ACA marketplace plans in your state
  • Estimate income for subsidy eligibility
  • Compare bronze, silver, gold, and platinum plans
  • Check if your doctors are in-network
  • Consider HSA-eligible high-deductible plan for tax benefits
  • Budget: $300-$800+/month for individual coverage

Professional Liability (E&O) Insurance

  • Essential for service-based freelancers
  • Covers claims of negligence, errors, or poor work
  • Some clients require it for contracts
  • Costs: $500-$2,000/year depending on profession
  • Consider: designers, writers, consultants, developers

General Liability Insurance

  • Covers third-party injury or property damage claims
  • Important if clients visit your workspace
  • Some clients require it for contracts
  • Costs: $300-$600/year for basic coverage
  • Can often bundle with E&O insurance

Disability Insurance (Often Overlooked)

  • Replaces income if illness or injury prevents you from working
  • No employer to provide sick leave or disability benefits
  • Consider: own-occupation policy for freelancers
  • Aim for 60% of gross income coverage
  • Buy before health issues arise (pre-existing conditions matter)

Within 30 Days of Going Freelance

Immediate Health Coverage

  • Enroll in ACA marketplace plan OR
  • Elect COBRA coverage OR
  • Join spouse’s employer plan
  • Confirm coverage start date (no gaps)
  • Set up auto-pay for premiums

Business Insurance Setup

  • Get quotes for professional liability insurance
  • Consider general liability if meeting clients in person
  • Check if homeowners policy covers home office (usually limited)
  • Consider business property coverage for equipment

Financial Safety Net

  • Build emergency fund (3-6 months of expenses minimum)
  • Open business bank account for clear expense tracking
  • Research quarterly estimated tax payments
  • Consider umbrella insurance for overall liability protection

Ongoing Considerations

Annual Health Insurance Review

  • Re-evaluate plans during open enrollment each year
  • Update income estimates for subsidy calculations
  • Check if your preferred doctors are still in-network
  • Consider switching plans if rates increase significantly

Life Insurance Needs

  • Term life insurance is affordable and important if you have dependents
  • No employer life insurance means you need your own policy
  • Get coverage while young and healthy for lowest rates
  • Consider 10-20 year term for most freelancers

Retirement Planning

  • Open Solo 401(k) or SEP IRA for tax-advantaged retirement savings
  • No employer match means you need to save more
  • Health insurance costs in retirement should be considered

Home Office Insurance Considerations

Homeowners/Renters Policy Limitations

  • Most policies limit business property coverage ($2,500 or less)
  • Business liability typically not covered
  • Client visits may void home insurance coverage

Options for Home Office Protection

  • Add home business endorsement to homeowners policy
  • Get separate business owner’s policy (BOP)
  • Consider in-home business insurance rider
  • Insure valuable equipment (computers, cameras, etc.)

Client Contract Requirements

Common Insurance Requirements

  • General liability: $1 million per occurrence
  • Professional liability: $1 million minimum
  • Sometimes: workers’ comp (even for solo freelancers)
  • May need to provide certificate of insurance (COI)

How to Get Certificates of Insurance

  • Request from your insurance company (usually free)
  • Can often generate online through insurer portal
  • May need to add client as “additional insured”
  • Allow 24-48 hours for processing

Freelance Insurance Budget Guide

Typical Annual Costs

CoverageEstimated Annual Cost
Health Insurance (ACA)$4,000 - $10,000
Professional Liability$500 - $2,000
General Liability$300 - $600
Disability Insurance$1,000 - $3,000
Life Insurance (term)$200 - $500

Budgeting Tips

  • Factor insurance costs into your freelance rate
  • Consider these costs as part of your “salary”
  • Set aside 20-30% of income for taxes and benefits
  • Review and shop coverage annually

Common Mistakes to Avoid

  • Don’t go without health insurance (medical bankruptcy is real)
  • Don’t assume homeowners insurance covers business activities
  • Don’t skip disability insurance (your income is your greatest asset)
  • Don’t underestimate the cost of replacing employer benefits
  • Don’t wait for a client to require insurance to get covered

This checklist is for educational purposes. Consult with a licensed insurance professional for advice specific to your situation.