Freelancers who are renters should especially consider renters insurance as it can provide some important protections for their business property. But there are many limitations to the business coverage that renters insurance offers, and freelancers may need to purchase additional coverage.
Why freelancers need renters insurance
There are three reasons that freelancers who are renters should consider buying a renters insurance policy:
1. It can protect your livelihood. Freelancers who are self-employed rely on their personal property to do their jobs, whether they’re a bike messenger, a freelance writer or a graphic designer, and losing the tools that make those jobs doable could mean having to pay out of pocket to replace them. Losing certain items, like a laptop or cell phone, might be devastating for a freelancer’s ability to earn an income, and renters insurance can be an important way to protect yourself — and your business.
2. It’s inexpensive. Because renters insurance is so inexpensive – often no more than $20 to $25 per month – it can be an essential part of any renter’s financial plan.
3. It may be tax-deductible. In some cases — like if you work from home and have a room in your house that you use only as an office — freelancers may be able to deduct renters insurance premiums as a business expense on your taxes.
Read about how to deduct renters insurance from your tax liability.
Freelancers and renters insurance: What renters insurance covers
Renters insurance comes with several provisions that help renters avoid financial risk. Renters insurance include the following types of coverage:
Personal property coverage
What it covers: This is the coverage that protects your stuff when from theft, vandalism, and certain kinds of weather hazards. It doesn’t cover damage to the building structure, since the building is owned by the landlord you rent from. Personal property coverage may extend to items you leave outside your home, such as your bike, or even to items you use when you stay somewhere away from home. However, coverage limits outside the home are usually limited to 10% of your total coverage.
What freelancers need to know: Some categories of property are subject to category limits, also called the limits of liability. Highly valuable items, such as your laptop or expensive camera equipment, may require you to purchase additional coverage.
Renters insurance policies provide some coverage for property that you use for business, but it is substantially lower than your total coverage and it is subject to business property category limits.
These limits vary by policy, but common examples of some common business expense limits:
$200 for business property outside the home (aside from electronic media equipment)
$1,000 for business goods for sale, sample or delivery, while at home
$5,000 for electronic media equipment used for business or personal use
When shopping for renters insurance coverage, it’s smart to make a home inventory, which is basically a list of items in your home. For freelancers, it’s important to estimate item and category costs, especially business property.
The home inventory will not only give you an idea of how much coverage you need, it can help you decide if you need to add any additional coverage types (see below).
Liability and medical expenses coverage
What it covers: If someone gets hurt in your home, they may sue you for damages or request that you pay for their medical care. Renters insurance will pay for legal fees and settlements, as well as medical payments to others. Limits of liability also apply, so be sure to purchase enough coverage.
Your renters insurance policy defines what types of expenses it will cover. This usually means “reasonable” or “necessary” expenses, such as surgery or an X-ray. Some renters insurance policies even cover injuries such as dog bites, if you’ve added your dog to your policy.
Liability coverage also extends to bodily injury or property damage you or someone covered by your policy inflicts on someone else.
What freelancers need to know: Bodily injury or property damage that you cause while engaging in business activities is not covered by your renters insurance liability, either at home or away from home. So if a client gets injured at your home, your renters insurance won’t pay.
What it covers: If your rental home or apartment gets so badly damaged that you can’t live in it, your renters insurance policy probably may pay out if you need to stay a short time at a hotel or another alternative accommodation. This coverage is also called additional living expenses.
What freelancers need to know: Additional living expenses and loss of use coverage do not provide any payment or reimbursement for business losses. For example, if you lose money because your apartment burns down and you can’t work for a week, you renters insurance won’t reimburse you. They also wouldn’t pay for a coworking space, for example.
Freelancers and renters insurance: Additional coverage
There are two ways to get more business property coverage if you’re a freelancer: by adding a rider to your renters insurance policy or by supplementing your renters insurance policy with an additional business policy. Depending on your insurance company, you may also be able to add business liability coverage to your renters policy.
Freelancers and renters insurance riders
Some renters insurance companies offer optional additional coverage for freelancers in the form of two riders:
Business property riders — Increase the category limitations on business property insurance at home and out of home.
Business pursuits liability riders — Extend your liability protection and medical payments to cover some business pursuits.
Not all renters insurance companies offer these riders, and they may not cover your particular business, but if you’re a freelancer, you should ask your insurer about what business riders they offer.
Freelancers and additional insurance policies
There are two additional types of insurance that freelancers should consider in addition to renters insurance to protect their property and liability:
General liability insurance — Tailored to people who interact with a lot of different people – clients, vendors, and so on – throughout the workday.
Business owners insurance— Covers business property and business liability.
Read more about business insurance for freelancers.
Policygenius can help freelancers with other kinds of insurance coverage, too, including: