Insurance for Self-Employed / 1099

When self-employed, you're responsible for finding, purchasing, and managing your own insurance without employer contributions. However, you gain complete control over plan selection, may qualify for tax deductions unavailable to employees, and can customize coverage exactly to your needs. Self-employed insurance also stays with you regardless of client or project changes.

Most self-employed professionals should seriously consider professional liability insurance (also called errors and omissions insurance). This coverage protects you if clients claim your work caused them financial harm, whether through errors, omissions, or negligence. Many clients require this coverage before contracting with 1099 professionals, especially in consulting, IT, design, and professional services.

While traditional group plans typically require multiple employees, self-employed individuals have several alternatives. These include professional association health plans, membership in business groups offering health coverage, or forming a group plan if you have even one W-2 employee. Health reimbursement arrangements (HRAs) provide another option for certain business structures.

Income variability is a common challenge for self-employed professionals. For Marketplace plans, subsidies are based on annual income projections, with reconciliation at tax time. Private plans aren't affected by income changes. For business insurance, most policies don't fluctuate with income, though some liability coverage might be tied to revenue. We can help develop strategies for managing insurance during variable income periods.

Business structure decisions and insurance strategies should work together. Forming an LLC or corporation can provide additional liability protection beyond insurance policies and may affect insurance pricing and availability. Some coverage options may be available only to certain business entities. We recommend coordinating with both insurance and legal professionals when making these important decisions.

Once you hire employees, your insurance needs expand significantly. You'll likely need workers' compensation insurance, employment practices liability coverage, and possibly benefit plans for employees. When using independent contractors, you should verify they have their own insurance coverage and consider contingent liability protection. We can help you transition your insurance strategy as your business grows.

Proper coverage typically includes health insurance, professional liability protection appropriate for your industry, general liability coverage, business property insurance, and income protection. Contract requirements from clients, industry standards, professional licensing mandates, and risk assessment all factor into determining adequacy. We provide comprehensive reviews to identify and address potential coverage gaps.

Many insurers offer business owner policies (BOPs) that combine multiple coverage types into one package, often at lower rates than purchasing separately. These typically include general liability, property insurance, and business interruption coverage. Personal and health insurance policies usually remain separate, but we can help identify bundling opportunities for potential savings.

We recommend a comprehensive review at least annually and whenever significant business changes occur. These changes might include new services offered, revenue increases, equipment purchases, location changes, or taking on larger clients. Insurance needs evolve as your business grows, making regular reviews essential for maintaining appropriate protection.