Gig Economy Insurance: Top 10 Best Options For 2024

Growth in the number of self-employed individuals has increased the need for gig economy insurance to reduce the risk of personal liability. 

Gig workers face unique challenges absent in traditional employment contracts, especially concerning health coverage and workers' compensation, usually covered by employer-provided insurance. 

Independent contractors and freelancers face various risks, including legal liabilities, accidents, property damage, and illness, associated with financial repercussions. 

Gig Economy Insurance: Top 10 Options for 2024 

Gig workers must obtain insurance coverage that addresses these risks to provide a financial safety net in case of a setback. 

Irrespective of freelancers' work, signing up for policies such as personal motor insurance, general liability insurance, professional liability insurance, and health insurance is vital. 

By investing in comprehensive insurance coverage, gig workers ensure they can enjoy financial stability while dealing with the stresses of independent work. 

To help narrow the focus and identify precisely what insurance coverage is necessary for an evolving gig economy, we've categorized each type of insurance. 

Here's our list of the best gig economy insurance solutions for 2024. 

10. Designated Vehicle Coverage 

The largest gig platform companies are in the ride-hailing and food delivery sector, with gig workers using their vehicles to convey passengers and deliver meals. 

This requires commercial auto insurance with specific coverage for vehicles used solely for gig work or in combination with normal private usage. 

Many gig economy insurance providers offer commercial auto insurance coverage—including Geico, USAA, Travelers, Esurance, Progressive, and Mercury—for business and personal use. 

Other companies, such as Allstate, offer gig work coverage, but there are some situations in which coverage is subject to specific rules. 

Most ridesharing or ride-hailing platforms are required to offer insurance coverage to drivers by state law, but this doesn't always cover all eventualities. 

Some insurance companies have a ride-hailing insurance endorsement, adding another layer of protection to a personal car insurance policy. 

Insurance companies may refer to a transportation network company (TNC) when insuring vehicles for gig work or ridesharing platforms. 

Speak to an independent insurance agent about passenger accident coverage, non-paying passenger protection, and extended accident coverage to limit your liability risk and out-of-pocket expenses. 

9. Personal Auto Insurance (Hybrid Policy) 

Using a vehicle for work and relying on personal auto insurance is a gig economy trend that puts workers at risk. 

To ensure they are appropriately protected from liability, they must take out dual-use protection insurance that covers personal and professional vehicle use. 

While gig economy platforms offer some insurance coverage, a rideshare endorsement provides customized insurance for ridesharing drivers under their personal insurance policy. 

Hybrid policies are designed to provide complete protection when a personal vehicle is used for business purposes. 

A gray area arises when a personal vehicle is covered for business use but a driver is waiting for a ride. 

If the driver has not yet been engaged by a client, they may not be covered under their commercial TNC policy or their hybrid policy. 

Also, remember that if the personal policy doesn't offer collision or comprehensive coverage, the rideshare endorsement won't have it either. 

8. General Liability Insurance 

General liability insurance coverage is available for all kinds of businesses and is not restricted to a particular sector or industry. It offers protection in the event of injury or damage due to a person or business's products, services, or operations on its premises. 

Two types of policies cover general liabilities: claims covered regardless of the date of the event and claims covered within a set period. 

The types of liability a person is covered for include accidental damages or legal costs incurred defending a lawsuit. 

This type of insurance generally excludes liabilities incurred through intentional damage or due to a motor vehicle, boat, or aircraft. 

Gig workers new to self-employment may not recognize the risk associated with potential lawsuits, and this type of insurance cover is essential. 

As an employee, you are typically covered by your company's insurance policy while at work, but freelancers don't have this luxury. 

Taking out general liability insurance is prudent for your financial well-being and family. 

7. Professional Liability Insurance 

Professional liability insurance is also known as "errors & omissions" coverage and protects you in case of a service- or product-related error. 

This cover protects gig workers from potential lawsuits that may result from an injury or loss suffered from purchasing their product or services. 

Depending on the specific policy and wording of the contract, this insurance may also cover settlements and legal fees associated with a claim. 

There are many circumstances in which a claim may arise, including loss of profits, actual financial loss incurred, or the costs of rectifying a mistake. 

In our current litigious work environment, it makes sense to assess the potential risks associated with one's work and then plan accordingly. 

You're at increased risk if you provide professional services such as accounting for startups, architectural drawings, or specialist information technology services. 

Spending approximately $500 to $1,000 each year providing cover against negligence is a fraction of the costs of appointing a lawyer, court fees, and any court-mandated damages. 

6. Product Liability Insurance 

Product liability insurance covers potential financial liability claims you may incur if your product causes death, injury, or illness. This is usually a result of a defect in the product or service, be it food, equipment, or software. 

It is not usually covered under a general liability insurance policy; independent contractors must find insurance coverage tailored to their specific needs. Depending on the industry in which you work, this cover has different names, including malpractice coverage or errors and omissions coverage. One of the most essential financial tips for working in the gig economy is ensuring adequate insurance coverage. 

This specialty coverage is taken out separately and does not fall under usual homeowners' endorsements or in-home business policies. 

Remember that the basic policy wording might not cover cyber liability, including data breaches and any other technology-based liability claims. 

This is where an independent insurance agent is worth their weight in gold, helping you identify issues that may require a separate policy. 

The sorts of liabilities covered by this type of policy may include: 

• Mistakes or failures in the service or product 
• Missing services not delivered 
• Breach of contract 
• Missed deadlines 
• Gross negligence 
• Failure to meet stipulated requirements or standards 

This type of policy does not cover employee injuries, accidents involving business vehicles, property damage, or customer injuries. 

5. Workers' Compensation Insurance 

Workers' compensation insurance provides protection for work-related injuries or illnesses and is mandated by each state based on a set of specific criteria. 

Freelancers who become ill at work or are injured on duty are provided medical and wage benefits in exchange for protection against civil suits. 

Minimum benefits are defined by each state and include death benefits, which are paid to designated family members of the deceased. 

California passed a law in 2019 that extended traditional employment benefits to gig economy workers such as those employed by Lyft, DoorDash, and Uber. 

Other states that require companies to provide workers' compensation coverage for one or more employees include Alaska, Hawaii, New York, and Rhode Island. 

To check if independent contractors are covered, speak to the company and check the contract to see how they are classified. 

It is best to consult an insurance agent familiar with this type of policy to ensure you are financially secure. 

4. Temporary Incapacity 

Short-term or temporary disability insurance offers workers monthly payments in case of sickness or injury preventing them from working. Depending on the severity of the incapacity, workers can receive between 40% and 70% of their monthly income until they return to work. 

Traditional employment benefits are paid for three to six months or until the worker has recovered enough to return to work. 

Although this is similar to health insurance, disability payments get paid directly to the worker and don't have to be used to pay medical expenses. 

Rhode Island, New York, California, New Jersey, Hawaii, and Puerto Rico are the only states with mandatory disability insurance legislation. The gig economy offers workers in the rest of the country an opportunity to purchase voluntary coverage that affords them sufficient coverage. 

Some of the more common disability claims are for pregnancy, injuries of the back, spine, knees, hips, and shoulders, digestive issues, and depression and anxiety. 

It makes sense to have disability insurance in place to avoid dipping into savings or taking on loans when you cannot work. 

3. Personal Accident & Disability Insurance 

Both short-term and long-term disability are a major concern for more than 50% of workers, according to a recent study. 

Workers worried about gig economy insurance covering them in the event of an injury or severe illness can take out personal policies. 

Short-term insurance usually covers up to 60% or 70% of one's monthly income and does not exceed $7,500 per month. The usual waiting period is typically two weeks but can vary from one week to one month in case of a claim. Benefits are paid out over three to six months, but some policies may pay out for up to a year in certain circumstances. 

Long-term disability insurance offers workers a partial income for an extended period, with a waiting period of 90 days to a year. Benefit periods vary from five to ten years, or until a worker retires, and are set at 60% of the worker's salary with varying maximums. 

People often switch from short-term to long-term disability insurance when their short-term benefits run out, and they still cannot work. 

2. Health Insurance 

Healthcare coverage is the most expensive insurance cost a gig worker must cover and cannot be avoided, especially if one has a family. 

When deciding which health insurance coverage is best, gig workers must consider their family's medical expenses and budget constraints. 

The Affordable Health Care Act introduced health insurance marketplaces, allowing you to shop for the best rates and benefits. Specific requirements must be met to qualify for the marketplace, such as living in the U.S. and being a legal resident, not in jail. Access to the marketplace allows you to compare various plans, calculate premiums and deductibles, and determine Medicaid eligibility. 

Another option is joining an Association Health Plan (AHP), where businesses and individuals combine their buying power. This is one of the more affordable ways to reduce health insurance costs and provide one's family with comprehensive medical coverage. 

1. Accidental Death And Dismemberment (AD&D) 

Accidental death, paralysis, or dismemberment insurance coverage provides gig workers with a vital safety net in the event of an accident. 

It is crucial for self-employed individuals and their families, particularly gig workers, who are especially vulnerable if they are seriously injured or killed. 

Gig work can expose individuals to a variety of potential dangers usually absent in traditional workplaces. 

This is especially true when delivering on a bike, driving for third-party services, or providing temporary gig economy jobs outside regular working hours. 

In a worst-case scenario, gig workers' families may not have the necessary resources to survive without additional income that's no longer available. If a gig worker is paralyzed or loses the use of a limb, the insurance payout might be their only means to survive financially. 

Covered injuries include loss of a limb or finger, sight, speech, or hearing, and paralysis due to work-related machinery. 

Benefit amounts are based on the severity of the injury and vary between 25% to 100% for partial or total loss. 

Summary 

To ensure gig workers are fully covered, a thorough risk assessment must be completed and a comprehensive insurance plan implemented. 

This should include a well-rounded portfolio incorporating personal auto cover, general liability coverage, professional liability insurance, health insurance, and income protection. 

By identifying, understanding, and addressing various risks ahead of time and proactively addressing them, gig workers can focus on work without fearing financial setbacks. 

Moreover, regularly reviewing and updating insurance portfolios is vital to keep up with changes in the gig economy and personal circumstances.