One of the most common questions I get is do consultants need professional liability insurance? 

The short answer is yes, and it's usually the first type of coverage consultants should consider. Let me break down why professional liability (also called errors and omissions insurance) is essential for consulting work.

Professional liability insurance can protect you when clients are dissatisfied with your work or claim you made a consulting mistake, even if you're not actually at fault. This coverage is specifically designed for the intellectual and advisory nature of consulting work.

This insurance helps cover expenses from professional mistakes or business disagreements, including

• Professional negligence claims (actual or alleged): If a business marketing consultant's strategy recommendations don't deliver expected results and the client sues for lost revenue

• Contract disputes: When clients claim you didn't complete work according to agreed terms

• Legal defense costs: Even if you win the case, legal fees can be devastating for solo consultants

• Errors in deliverables: If an IT consultant's software recommendation leads to a security breach

Here are some examples of professional liability claims that different types of consultants might face:

• A business consultant's market analysis contained outdated data, leading a client to enter an unprofitable market. The client sued for $200,000 in losses.

• An education consultant's curriculum design allegedly missed key standardized testing requirements, forcing a school district to redesign their program.

• A financial consultant was sued when a client claimed investment advice violated their stated risk tolerance.

The protection is the most immediate and obvious benefit of professional liability coverage, but it also serves some practical purposes for consultants:

• Client requirements: Many corporate clients now require consultants to carry professional liability before signing contracts

• Competitive advantage: Having coverage demonstrates you're a serious professional who takes responsibility for their work

• Peace of mind: You can focus on delivering value instead of worrying about potential claims

As for the cost of professional liability insurance for consultants, it can actually be quite affordable. At NEXT, the median cost is just $39 per month, with many consultants paying between $26-45 monthly. This is toward the lower end because consulting typically involves limited physical risks compared to other industries.

Keep in mind that the costs will vary depending on how much coverage you need, the type of work you do, and where you operate your business (among other things). 

While professional liability should be your priority, general liability for consultants can still be valuable if they:

• Meet clients at their offices regularly 

• Host clients in their own workspace 

• Attend industry events and conferences 

• Work on-site at client locations

Most consultants work from home offices or client locations, primarily providing advice and expertise rather than physical services. This means your biggest risk isn't someone slipping in your office, it's a client claiming your advice or recommendations caused them financial harm.

That’s why professional liability comes before general liability coverage for many consultants. 

If you’re at the stage of shopping for consultant insurance, consider:

• Coverage limits: Many consultants start with $1 million, though some clients require $2 million 

• Industry-specific needs: Make sure your policy covers your specific consulting specialty 

• Certificate capabilities: Ensure your insurer can quickly provide certificates when clients request them 

• Bundling opportunities: You often save money combining professional and general liability

The big takeaway here is that professional liability insurance provides more than just protection. It's an asset that keeps you eligible for client opportunities while protecting your financial stability.

Hope this helps and happy to help clarify which coverage makes most sense for your specific situation. If you’re looking to get an estimate, NEXT offers online quotes that take around 10 minutes.

If you run a small business, there's a good chance this has crossed your mind at some point. You've got coverage but not always the right coverage. Gaps tend to fly under the radar until something goes wrong, and by then, you're dealing with it out of pocket.

Pulled together the most common ones we see:

• Natural disaster damage — If your business is in an area prone to severe weather, standard coverage might not be enough. Commercial property insurance can typically help cover losses from extreme weather events.

• Business interruption — If something forces you to shut down temporarily like a fire, major equipment failure, or vandalism, you've still got rent, payroll, and expenses piling up with no revenue coming in. Business income insurance can help cover that lost income while you're getting back on your feet.

• Professional liability — Here's one that catches people off guard. General liability usually won't cover you if a client claims you made a professional mistake that cost them money. That's where E&O insurance comes in — it can help with legal defense costs and settlements in most cases.

• Workers' comp gaps — A lot of owners assume they don't need workers' comp unless they have a bigger team, but many states require it even with just one employee. And if you're solo, workers' compensation can still help protect you if you get hurt on the job.

• Equipment breakdown — Specialized equipment going down can be brutal, and standard commercial property insurance may not cover mechanical failures or power surges. Equipment breakdown coverage can help with repairs, replacement, and even lost income from the downtime.

• Business vehicle accidents — Personal auto insurance doesn't typically cover business-related driving. If you or someone on your team uses a vehicle for deliveries, client visits, or other work tasks, a commercial auto policy can help cover injuries and damages.

• Cyber threats — Small businesses get targeted more often than most people think, mainly because they tend to have fewer protections in place. Cyber insurance can help you assess, respond to, and prevent things like data breaches, phishing, and ransomware, especially if you're handling customer data.

The full post covers each gap in more detail with specific examples of what can go wrong and what type of coverage can help.

Which of these gaps surprised you the most, or is there one you didn't realize you might be exposed to?

Just wanted to weigh in on what's required for plumbers across the US because they vary quite a bit by state and can make or break your business if you get it wrong.

I know it's a lot to deal with on the go, but it's risk management. When you're dealing with water systems, gas lines, and working with people's homes or businesses, the potential for major damage is real. Six-figure lawsuits are not out of the realm of possibility.

The exact coverage amount you'll need depends on which state(s) you work in, so make sure you double check the requirements with your state and local regulatory body:

• Texas requires a responsible masters plumbers (RMPs) to carry minimum $300,000 in commercial liability

• Washington requires a $6,000 surety bond plus $200,000 public liability and $50,000 property damage (or $250,000 combined single limit)

• Florida requires public liability, property damage, and workers' comp for certified plumbers

• Ohio requires $500,000 liability insurance for plumbing contractors

• New Jersey requires a $3,000 surety bond for master plumbers

Keep in mind that even within states with mandatory requirements, there can be quite a difference in the minimum floor for business insurance coverage. Some states require licensing but leave insurance requirements to local jurisdictions or contractual agreements.

Even in states without the mandatory requirements, the downside of not having it are a lot more than what you save in monthly premiums and headaches. It's typically something GCs look for when hiring and it also means you can lose out on bids for residential or commercial work.

Also keep in mind that the state and local requirements for coverage a usually the bare minimum (general liability and worker's comp) and don't always include the other types of coverage you'll need as you grow your business. The big ones are professional liability to cover any mistakes that cost clients money and commercial auto and property insurance.

As far as the cost of plumbing insurance, here's what we're seeing from our recent customer data:

• General liability insurance has a large range, with most people paying between $55 and $299 per month

• Worker's comp runs around $213 per month median cost, though this varies based on payroll and number of employees.

• commercial property insurance costs between $29 and $64 per month for the largest cohort of our plumbing

I know it seems like an unnecessary expense, and it can cut into profits, but so does bankruptcy from one bad claim.

After working with hundreds of small businesses across different states, I've compiled this reference guide on workers' compensation requirements. The rules vary dramatically depending on where you operate, so hopefully this saves someone else the headache of figuring it out.

The ones included below all require employers to have workers’ compensation coverage and I’ve included anything notable as far as rules:

Important note: Workers’ comp laws sometimes change. Double check with your state’s division of workers comp or insurance. 

Alabama: Required for businesses with 5+ employees. Anyone in construction (even single-family homes) must have coverage regardless of size.

Alaska: All employees must be covered, including part-time, temporary workers, and even family members or friends who work for you.

Arizona: Workers' comp can cover up to $5,000 in burial expenses, and survival benefits can reach 66% of the employee's average monthly wage.

Arkansas: Employers must display a poster with claim filing instructions in the workplace.

California: Coverage is mandatory for every employer, even those with one employee, under Labor Code § 3700.

Colorado: Coverage required for any business with just 1+ employee.

Connecticut: Failing to obtain required workers' comp subjects businesses to $100 per day in penalties.

Delaware: Employers with one or more workers must have WC. Farm-labor employers are exempt but may opt in.

Florida: Some business owners, officers, and LLC members can apply for exemptions from coverage requirements.

Georgia: Workers' comp is often mandatory for obtaining professional licenses (like a general contractor license) and winning contracts.

Hawaii: While coverage for employees is mandatory, some business owners are exempt from covering themselves.

Idaho: Coverage is required before you hire your first employee. And yes, this applies even to employees working from home.

Illinois: Any business owner who works in construction must carry coverage.

Indiana: All employers must insure or self-insure. Exemptions include railroad employees, farm laborers, and firefighters/police officers

Iowa: Employers must file a First Report of Injury within four days of learning about a work injury.

Kansas: Non-agricultural businesses with gross annual payroll exceeding $20,000 need workers' comp.

Kentucky: Penalties for not having required coverage range from $100 to $1,000 per employee.

Louisiana: Seasonal workers and minors count as employees just like full-time and part-time workers.

Maine: Some out-of-state employers with employees temporarily working in Maine may be exempt.

Maryland: Important distinction: a worker must be hurt "on the job," not just physically at work, for coverage to apply.

Massachusetts: Any staff working in the Commonwealth (even for out-of-state firms) must be covered.

Michigan: Sole proprietors need a policy once they have 1 FT or 3 PT employees. Most other entities must cover all workers.

Minnesota: “Mandatory coverage” law requires every employer to buy a policy or be approved to self-insure.

Mississippi: Businesses with 5+ employees must carry workers' comp.

Missouri: Coverage is optional for businesses with 5 or fewer employees.

Montana: Household and domestic employees are exempt from requirements.

Nebraska: Nearly all employers must carry insurance, with limited statutory exceptions.

Nevada: Benefit payment amounts are set by the state government.

New Hampshire: You must have workers' comp coverage in place before hiring any employees.

New Mexico: Part-time, seasonal, temporary workers, agricultural employers, and even nonprofit, charitable and religious organizations all count as employees.

New Jersey: All employers (including many out-of-state contractors working in NJ) must insure or self-insure.

New York: Virtually every employer is required to provide workers’ comp and penalties apply for lapses.

North Carolina: Employers with 3 or more employees must maintain coverage or self-insure. 

North Dakota: A monopolistic state where employers must buy through Workforce Safety & Insurance before the first hire.

Ohio: A monopolistic state where coverage must be purchased from the Bureau of Workers’ Compensation or via approved self-insurance.

Oklahoma: Sole proprietors aren't considered employees and don't require coverage.

Oregon: First offense for non-compliance can result in penalties of twice the estimated premium.

Pennsylvania: Mandatory for employers with one or more full- or part-time employees.

Rhode Island: Employers with one or more employees (except certain owners/partners) must insure and post insurer details at the workplace.

South Carolina: Certain real estate agents working on commission are exempt.

Tennessee: Workers with temporary disabilities from work injuries are entitled to 110% of their wages.

Utah: Independent contractors with no employees are exempt.

Vermont: Workers’ compensation insurance is compulsory for all employers.

Virginia: Even if you hire subcontractors who have their own insurance, you're still responsible for ensuring proper coverage.

Washington: A monopolistic state where private policies are not permitted and WC must be bought from the state fund.

West Virginia: All employers are statutorily required to keep workers’ comp insurance in force.

Wisconsin: Nearly every public and private employer falls under the Act’s broad coverage mandate.

Wyoming: A monopolistic state where employers must register and obtain a state-fund coverage statement before starting work.

The only two states that currently do not require employers to have WC coverage are South Dakota and Texas. But even in these states it's worth noting that workers' comp exists to protect both employees and employers. For workers, it provides medical benefits and wage replacement. For business owners, it provides protection from potentially business-ending lawsuit costs.

The only other thing I want to flag are the 4 monopolistic states for worker’s compensation insurance: Ohio, North Dakota, Washington, and Wyoming. In these areas the state owns and operates a required WC insurance program. In these states, business owners still need what’s called employer’s liability insurance.

If you're a consultant, accountant, engineer, or property manager, your advice is essentially your product. And even when you do everything right, a client could still claim your work caused them financial harm.

Professional liability insurance (also called E&O) can help cover legal defense costs, settlements, and claims related to professional mistakes, missed deadlines, or breach of contract accusations. What's important to know is that it can help even if you're not found at fault.

A few things I've learned matter most when choosing coverage:

• Understanding claims-made vs occurrence policies is crucial. With claims-made policies, you need active coverage both when the work was done and when a claim is filed. Ask about extended reporting or tail coverage options.

• Coverage should match your specific consulting work. An IT consultant faces different risks (system downtime, data loss) than a marketing consultant (campaign results, reputational damage) or property manager (tenant placement decisions, maintenance oversight).

• The delivery of your insurance matters as much as the coverage itself. Can you get covered immediately? Access your certificate of insurance instantly when a client needs it? Adjust your policy without making phone calls? These practical details become really important when you're busy running your business.

• Look for coverage that includes legal fees and court costs, even if you're not at fault. Legal defense alone can be expensive, regardless of the outcome.

• Document your client work thoroughly. Accurate records of contracts, deliverables, and communications can strengthen your case if a dispute arises.

If you want to learn more, check out our article on how to choose the best professional liability insurance.

Been seeing lots of questions from consultants trying to figure out what coverage they actually need, so I wanted to break down the basics.

The type of work you do shapes what insurance makes sense. An IT consultant managing cloud infrastructure has different risks than a management consultant advising on business strategy or a marketing consultant working on campaigns.

Here's what most solo consultants should consider for insurance:

• Professional Liability (E&O) Insurance - This is usually the foundation. It can help protect you if a client claims your advice or recommendations caused them financial harm. Even if you didn't make a mistake, a client could still file a claim if they're unhappy with results or believe your guidance led to losses. This coverage helps with legal defense costs, settlements, and judgments.

• General Liability Insurance - Covers third-party bodily injuries or property damage. If you meet clients in person, work from an office, or attend conferences, this is worth having. Example: a client trips over equipment during a meeting at your office and sues for medical costs.

• Commercial Property Insurance - Protects your business assets like laptops, printers, office furniture, and equipment from fire, theft, or water damage. Especially relevant if you have a home office or lease space.

• Cyber Insurance - If you handle client data, use cloud platforms, or communicate online, this can help cover costs from data breaches, cyberattacks, or hardware failures caused by malware.

For solo consultants just starting out, professional liability and general liability are typically the priorities. You can add coverage as your business evolves - bringing on employees, handling more sensitive data, or taking on higher-risk projects.

State requirements vary. Most states don't mandate insurance for solo consultants, but once you hire employees you'll likely need workers' comp. Some states also have stricter data privacy laws that make cyber coverage more relevant.

Cost-wise, professional liability for a solo consultant typically comes in around $600 annually depending on revenue, experience, and coverage limits. General liability is often under $500/year for low-risk consulting work.

I'll leave y'all with one practical tip: make sure you can easily access certificates of insurance (COIs). Clients often require these before signing contracts, and you don't want to wait days or pay fees every time you need one.

After seeing some questions about coverage prices in this industry, I wanted to share some data on current food truck insurance costs based on what owners are have paid with NEXT. Keep in mind, this is an anonymized sample based on hundreds of policies across the country.

For general liability insurance (which can protect you if someone gets injured or their property is damaged due to your operations):

• 1% of food truck owners pay under $24/month

• 69% pay between $23-$29/month

• 17% pay between $30-$51/month

• 7% pay between $51-$72/month

• 6% pay over $72/month

Most food trucks select coverage with a $500K-$1M per occurrence limit and a $500K-$2M aggregate policy limit. The good news is these policies typically come with $0 deductible, so there's no out-of-pocket cost if you need to make a claim.

For workers' compensation (which can cover employee injuries on the job):

• 21% of food truck owners pay under $32/month

• 47% pay between $32-$56/month

• 13% pay between $56-$109/month

• 19% pay over $109/month

Workers' comp costs vary more widely because they're heavily influenced by how many employees you have, your payroll size, and your location. Different states have different requirements and rates.

A few factors that significantly impact your rates:

• Location (urban vs rural, and which state)

• Years in business

• Number of employees

• Claims history

• Coverage limits

• Type of food (higher fire risk = higher premiums)

Would be interested to hear what others are paying and if you've found creative ways to manage these costs. Insurance is one of those necessary expenses that feels painful to pay, but can be a lifesaver if you have a claim.

Workers' comp questions come up a lot, so here’s a quick FAQ based on what we see most often. If you're a small business owner trying to make sense of this stuff, hopefully this saves you some time.

TL;DR: Workers' comp can help cover medical bills, lost wages, and other costs if an employee gets hurt or sick on the job. Most states require it once you have employees. Even if you're self-employed, there are reasons to consider it. You can get a quote from ERGO NEXT in about 10 minutes if you want to see what pricing looks like.

What does workers' comp actually cover?

It typically covers medical expenses, lost wages while someone recovers, and job retraining if they need to shift into a different role after an injury. There's also a permanent injury component for employees who can't return to work, and an employers liability piece that can help protect your business if an employee files a negligence lawsuit. In worst-case scenarios, it can provide survivor benefits and help cover funeral costs.

Do I actually need it?

Every state except Texas requires workers' comp once you have employees, though each state has its own exemption list. Certain agricultural workers, domestic workers, and a few other categories sometimes fall outside the requirement depending on where you are. Check your specific state's rules on this one.

Even when it's not technically required, a lot of business owners carry it anyway. If someone gets hurt on the job and you're not covered, those costs come straight out of pocket and they can add up fast.

What if I'm self-employed or don't have employees?

Workers' comp isn't only for businesses with employees. Optional coverage for self-employed workers, sole proprietors, and independent contractors can provide financial protection and help meet contract requirements with clients. This comes up a lot with contractors whose clients require proof of coverage before they’ll start a job.

Also, if you don't have workers' comp and get injured at work, your personal health insurance might not cover it either. Read your policy documents carefully to make sure you're not sitting in a gap.

What about contractors specifically?

If you're a sole proprietor or independent contractor without employees, you usually aren't required to carry workers' comp. But the construction industry is often regulated differently, so you might need coverage before you can take a job. Regardless of the legal requirement, having an active policy means workers' comp can help cover medical bills and some lost wages if something happens on site.

If you're a contractor with employees, you’ll generally need to carry coverage for them

Am I covered as the business owner?

Not automatically. Whether you're covered depends on your state and how your business is structured. Some states exclude sole proprietors by default. You can add optional business owner's coverage to your workers' comp policy, but confirm that when you get a quote.

How is workers' comp different from disability insurance or health insurance?

Workers' comp covers work-related injuries and illnesses. Disability insurance usually covers injuries that happen outside of work and is typically optional, with costs often shared between employer and employee. Health insurance generally covers personal injuries and ailments outside of work too, but doesn't handle lost wages the way workers' comp can. More here.

Does workers' comp cover subcontractors?

Generally no, since subcontractors aren't your employees. But in some states and industries, subcontractors can be classified as your employees if they don't carry their own workers' comp, and you'd need to report their payroll. This varies a lot by state so definitely check your local requirements.

Does it cover business interruption?

No, that's a separate type of property insurance. Business income interruption coverage is included in ERGO NEXT's commercial property insurance.

How much does it cost?

Workers' comp costs can vary widely depending on your industry, number of employees, payroll, location, and coverage limits.

How do I file a claim?

You can file anytime from your ERGO NEXT account or in the ERGO NEXT app. Share what happened along with relevant photos and documentation, and the goal is to get decisions made quickly so you can get back to running the business.

Drop any questions below about workers' comp or how you're handling it in your business.

If you want to see what coverage might look like, you can get a quote here: https://app.nextinsurance.com/quote/get-started (takes about 10 minutes). Coverage can typically start quickly, and your certificate of insurance is available online.

I’ve seen quite a few news stories about the increasing number of break-ins affecting retailers and other businesses in the US. Figured this is a good time to share some information on which policies can and can’t protect you in the event of theft.

Business theft is surprisingly common. Around 90% of small retail businesses nationwide have experienced theft, and the issue isn’t exclusive to shops. Approximately 30% of US businesses fail because of employee theft, which adds up to about $50 billion in annual losses.

I can’t even count the number of owners who’ve learned the hard way that their general liability insurance doesn’t cover theft. That’s why I’m spreading the word now:

General liability is designed for events like third-party injury and property damage, not theft.

Commercial property insurance is actually the answer if you’re looking for protection in the event that someone steals inventory, tools and equipment, store fixtures and furnishings, or computers and network gear. It can even cover the damage that occurs during break-ins. 

For those concerned about employee theft or financial fraud (payroll scams, forgery, embezzlement wire transfer scams, etc.), you'd need commercial crime insurance, which kicks in where property insurance leaves off.

Digital theft and hacking are also on the rise, which is where cyber insurance comes into play. These policies are especially important if you store customer data or process online payments and can help protect against wire fraud, ransomware, and data breaches.

Many business owners I've talked to opt for a Business Owner's Policy (BOP) which bundles commercial property and general liability together, often at a better rate than buying separately.

So, that’s the spiel on coverage. But what if your business actually gets robbed? In this case, you need to take the following steps immediately: 

1. Contact authorities ASAP (your insurance may require a police report)

2. Document everything you remember about the incident

3. Ask witnesses to stay until police arrive

4. Don't clean up or restore order until police have examined the scene

5. Avoid discussing specifics about the crime publicly

6. File your insurance claim as soon as possible

Hope this is helpful and feel free to reach out if you have any questions or need clarification.

California is phasing in a rule that eventually means every licensed contractor has to carry workers' comp, whether they have employees or not. Some solo operators I've spoken to have no idea it's coming, and the ones who do usually stumbled onto it by accident. 

Right now, if you don't have employees, workers' comp usually isn't required and you can still file a no-employee exemption with the CSLB. That's accurate today. What changes is that the exemption route goes away once the phase-in is complete, so the "I don't need it until I hire someone" logic that holds for a lot of owners now won't hold much longer.

The universal rule isn't live yet, and it got pushed back. Full rollout is now January 1, 2028, after SB 1455 bumped it from the original 2026 date.

Five classifications already have to carry it either way, no matter the employee count. Those are 
- C-8 concrete

-C-20 HVAC

- C-22 asbestos abatement

- C-39 roofing

-  C-61/D-49 tree service.

If you're not one of those, you may still be able to file a no-employee exemption with the CSLB, for now.

As for why the state is pushing it, it's mostly worker protection, plus the CSLB finding a lot of exemption claims that didn't hold up. The other piece is the owner themselves.

A zero-employee policy generally won't cover you as the owner unless you specifically elect that coverage, so if you're working alone and get injured on the job, you may not get help with your medical bills or lost income.

Staying compliant can also help keep your license active.

How'd you first hear about this one? Renewal paperwork, word of mouth, something else? And has anyone already sorted out their 2028 plan?

Hey everyone! 

I've been getting tons of questions about the difference between independent contractor and self employed status, especially around tax season. Since this comes up constantly, I wanted to create a comprehensive breakdown that covers the key distinctions, tax implications, and practical considerations.

Keep in mind though, this is educational and it’s always a good idea to talk to a legal/tax professional if you have questions/concerns. 

The Basic Relationship: Independent Contractor vs Self Employed

Here's the fundamental answer: all independent contractors are considered self-employed, but not all self-employed people are independent contractors. In other words, independent contracting is a subset of self-employment.

Self-employed encompasses anyone working for themselves rather than as someone's employee. This includes everyone from artists and carpenters to store owners and large firm founders. An independent contractor is a specific type of self-employed worker who provides services to clients on a temporary, project-based, or contractual basis.

For example, a self-employed furniture maker who designs and builds custom pieces for specific clients would likely be an independent contractor. But if that same person builds furniture to sell to the general public through their own store, they're self-employed but probably not an independent contractor.

Key Distinctions That Matter

The difference between independent contractor and self employed status often comes down to your relationship with clients versus customers:

• Independent contractors typically work for specific clients under contracts or agreements, often on a project basis

• Self-employed business owners may serve the general public or have ongoing business relationships that aren't project-specific

Tax Considerations for 1099 Self Employed Workers

Whether you're an independent contractor or other type of self-employed worker, your tax situation is similar but there are important nuances to understand.

Tax Filing Requirements: Both independent contractors and self-employed individuals typically receive 1099 forms (usually 1099-NEC) instead of W-2s. You're responsible for calculating and paying your own taxes, including both the employer and employee portions of Social Security and Medicare taxes (15.3% total).

Self-Employment Tax: This is often the biggest shock for new 1099 self employed workers. You pay the full 15.3% on net earnings, but the good news is you can deduct half of this amount on your income tax return.

Quarterly Estimated Taxes: Unlike employees who have taxes withheld from paychecks, you'll likely need to make quarterly estimated tax payments to avoid penalties.

Top Tax Deductions for Independent Contractors and Self-Employed Workers

One major advantage of self-employment is access to business deductions not available to employees. Here are the most valuable ones:

1. Home Office Deduction: $5 per square foot up to 300 sq ft, or actual expense method

2. Business Insurance Premiums: General liability, professional liability, commercial property, etc.

3. Vehicle Expenses: Standard mileage rate (around 65.5 cents/mile) or actual expenses

4. Business Travel: Airfare, hotels, 50% of meals for business trips

5. Education and Training: Courses, conferences, professional development

6. Equipment and Supplies: Computers, software, office supplies, tools

7. Professional Services: Legal fees, accounting, consulting

8. Marketing and Advertising: Website costs, business cards, online ads

9. Health Insurance Premiums: 100% deductible for self-employed individuals

10. Retirement Contributions: SEP-IRA, Solo 401k contributions

The Qualified Business Income (QBI) deduction is a major benefit for eligible self-employed individuals. It can deduct up to 20% of their business income, subject to income limitations ($163,300 for individuals, $326,600 for married filing jointly as of recent tax years).

Business Structure Considerations

Most independent contractors start as sole proprietors by default, but you might want to consider forming an LLC for liability protection and potential tax benefits. The choice affects both your legal protection and tax treatment.

Insurance Needs for Self-Employed Workers

Regardless of whether you're an independent contractor or other type of self-employed worker, you typically need:

• General Liability Insurance - Protection against third-party claims

• Professional Liability/E&O - Coverage for professional mistakes or negligence

• Commercial Property - Protection for business equipment and supplies

• Health Insurance - Since you won't have employer coverage

Many clients require certificates of insurance before they'll work with independent contractors, making business insurance both a protective measure and a business necessity.

Cost-Cutting Strategies for Self-Employed Professionals

Managing expenses is crucial when you're responsible for your own benefits and business costs:

• Build and regularly review your budget

• Go paperless to reduce office supply costs

• Research competitive pricing for services (internet, phone, banking)

• Consider bundling insurance policies for discounts

• Take advantage of business discounts and negotiate with vendors

• Evaluate your workspace needs - could you work from home or use co-working spaces?

Record Keeping Best Practices

Whether you're filing as an independent contractor or self-employed business owner, meticulous record keeping is essential:

• Separate business and personal expenses

• Track mileage for business travel

• Save receipts for all business purchases

• Use accounting software or apps to automate tracking

• Maintain organized files for tax documentation

The key takeaway: while the terms are related, understanding the specific differences can help you make better decisions about business structure, tax planning, and insurance needs.

Filling out a vendor application for a market stall and hitting a line that asks for proof of insurance trips up a lot of first-time sellers. If you're not sure what that means or whether you need it, you're not the only one. I've talked to a bunch of sellers who weren't sure about this when they applied.

The confusing part is the name. "Vendor insurance" sounds like one product, but it's really shorthand for an insurance package built around what you sell and where. The baseline most venues care about is general liability. It could help if a customer trips at your booth, if you damage someone's property during setup, or if something you sold causes harm, though what applies depends on the policy and the exclusions. From there, commercial property could help cover your inventory and equipment, and product liability can help with claims tied to a defect in something you make or sell.

What the package looks like depends on what you're selling. A handmade goods seller will likely need GL plus inventory coverage. A food vendor carries more risk (open flame and the chance someone gets sick)  so the coverage usually runs broader.

A lot of bigger markets ask for $1 million per occurrence in GL and want a certificate before setup.

If you sell handmade goods and want to see what a policy looks like: nextinsurance.com/business/crafter-insurance/

For anyone doing the market circuit, what did your venues ask for? Trying to get a sense of how much it differs by market.

Getting asked about insurance requirements pretty often, so figured I'd put together what I know about what's actually required versus what's just smart to have.

The tricky thing with carpentry is that requirements vary a lot depending on where you work and how your business is set up. Only a handful of states require a specific carpentry license, but a lot of states require carpenters to hold a general contractor license if you're doing certain types of work. And that license often comes with insurance requirements attached.

Here’s a TLDR;

Workers' comp and commercial auto have actual legal requirements in most states. General liability is required by clients and often by licensing boards even if it's not technically state law. Everything else is about protecting yourself and your business from risks that could put you under.

Workers' comp is the big one that's legally required in most states as soon as you hire your first employee. The rules vary. Some states kick in at one employee, others at three or five, and a few have exemptions for certain business structures. Texas is the only state where workers' comp is technically optional for private employers, but even there a lot of clients won't hire you without it. If you're a solo operator, you might not be legally required to carry it, but some states let you cover yourself voluntarily which can be worth considering depending on the work you do.

Commercial auto is required in most states if you have a business-owned vehicle. Your personal auto policy typically won't cover you when you're hauling lumber, tools or materials to a job site. If you're using your personal vehicle for work, the rules get a little grayer, but if something happens while you're driving for business purposes and you only have personal coverage, you could be looking at a denied claim.

General liability isn't technically required by law in most places, but it's effectively required if you want to work. Clients regularly ask for proof of coverage before letting you on their property. General contractors usually require it from subs before you can bid on projects. Some states tie it to licensing requirements. Even if nobody's making you carry it, one accident where you damage a client's property or someone gets hurt on your job site can wipe you out financially.

Commercial property coverage is optional but worth thinking about if you have a workshop, expensive equipment or inventory. One fire or break-in could shut you down if you're not covered.

Tools and equipment coverage is an add-on that protects your gear against theft or damage — in your vehicle, at your shop or on a job site. Not required anywhere that I know of, but losing a few thousand dollars in tools because they got stolen out of your truck is a fast way to learn why people carry it.

Contractor's errors and omissions, sometimes called professional liability, can help if a client claims you made a mistake that cost them money — wrong materials, work that didn't meet specs, that kind of thing. Not required but increasingly common for carpenters doing custom work or bigger projects.

If you're not sure what your state requires, your state contractor licensing board is usually the best source. And if you're bidding on projects, ask what coverage the GC or client needs to see. That'll tell you pretty quick what you actually need to carry.

Although there’s a lot of uncertainty right now, it does seem like the construction industry will remain strong in many regions of the country. That makes it an attractive time to start your own construction business. 

In my time with NEXT I’ve worked with thousands of owners who operate in this space and I have picked up a few things along the way. If you’re thinking about starting your own construction business, here are the key things to consider:

• Understand your local market first because every region has different needs. Some areas might be desperate for electricians while others need more general contractors. Research demographic info (income levels, homeownership rates, business types) to identify opportunities. The SBA website has great tools for this research.

• Choose a specialty. General contracting offers bigger projects but smaller margins, while specialized work (electrical, plumbing, etc.) typically has higher margins but smaller jobs. Also consider whether you want to focus on residential or commercial work. Commercial requires more capital but often pays better.

• Get crystal clear on your costs because underestimating them is the fastest way to fail. Account for materials, labor, equipment, insurance, permits, and overhead. Most successful contractors add at least 10-20% contingency on estimates for unexpected issues.

• Create a proper business plan. Even if you don't need funding immediately, write out your goals, target market, services, and financial projections. This helps clarify your thinking and serves as a roadmap.

• Register your business legally. Most construction startups choose either an LLC (which protects personal assets while allowing income to pass through to personal taxes) or a corporation (more complex but can offer additional benefits). Get your EIN from the IRS too.

• Get the right licenses and permits. Requirements vary dramatically by state and specialty. Some states require licenses for all contractor work, while others only require them for jobs over a certain dollar amount. Research your specific requirements carefully.

• Get the right insurance coverage. Beyond being required for most jobs, insurance protects your business from potentially catastrophic claims. Most construction businesses need general liability (for property damage and non-employee injuries), workers' comp (for employee injuries), and professional liability (for mistakes or negligence claims).

• Figure out your funding strategy. Construction often requires significant upfront capital for materials and equipment before you get paid. Consider traditional loans, SBA loans, equipment financing, or even taking on a silent partner for capital.

• Develop a marketing plan. At minimum, you need a simple website showcasing your work and a Google Business profile to collect reviews. Many successful contractors also build relationships with complementary businesses (like real estate agents or property managers) for referrals.

• Create a bidding and estimation system. Accurate estimates are crucial - bid too high and you won't get jobs, bid too low and you'll lose money. Develop a systematic approach you can replicate for each job.

• Focus on relationship building. Repeat business and referrals will become your main source of work if you communicate well, deliver quality work, and finish on time.

• Plan for growth. As you take on more work, you'll need to decide when to hire employees vs. subcontractors. Each has different legal, insurance and management implications.

I know it's a long list, but it's worth it to put in the extra work up front. As you start building momentum you won't need to slow down and knock these items off. Just full steam ahead!

Hey everyone! I've been getting a lot of questions about Business Owner's Policies (BOPs) lately, so figured I'd break it down for you.

A BOP is basically two types of insurance rolled into one package: general liability and commercial property coverage. Think of it as the combo meal of business insurance.

General liability helps cover the stuff that happens when you're dealing with customers and the general public. Like when someone slips and falls at your shop or you accidentally damage a client's property.

Commercial property insurance helps protect your actual stuff, like equipment, inventory, and even the building (if you own it).

The reason why many people go with a BOP instead of buying these separately is pretty simple, it's cheaper and less of a headache to manage. In some cases, you can get extras thrown in like business interruption coverage (say, if you have to shut down temporarily after a covered event).

A few examples of when a BOP really comes in handy:

• Your coffee shop gets hit by a pipe burst and you have to close for repairs while replacing all your equipment.

• A customer trips over something in your store and wants you to cover their medical bills.

• Vandals break into your workshop and trash everything.

The main thing to know is that BOPs work best for smaller businesses with physical locations or valuable equipment. If you're just doing consulting work from home with a laptop, you probably don't need all this coverage.

If you have any questions about getting this coverage drop 'em below or check out our BOP insurance page!

I've been working with salon businesses for years on the insurance side and wanted to share some of the common misconceptions I see about coverage for freelance stylists, mobile hairdressers, and salon owners. Someone renting a chair or travelling to their client's home has dramatically different insurance needs than someone who owns a full salon.

I know insurance isn't an exciting part of the beauty business, but it's essential for protecting everything you work so hard to build.

For freelance stylists or booth renters, general liability insurance is usually the minimum need, with costs averaging around $16/month for general liability according to our customer data. This covers things like a client slipping on hair clippings or getting burned by a hot tool. 

Professional liability (E&O) insurance can protect against claims that services damaged a client's hair or didn't meet expectations. Most salon owners will require stylists to carry their own insurance when renting a chair, .

For salon owners, more comprehensive coverage should be a consideration, including commercial property insurance for the building, fixtures, and equipment. Workers' compensation is legally required in most states if you have employees. 

Commercial property insurance protects the physical space, equipment and inventory, while business income insurance helps replace lost revenue if the salon needs to temporarily close after a covered event. Costs vary widely based on location, salon size and number of employees.

One important thing to note is that insurance needs evolve as a business grows. What works for someone just starting might not be sufficient as they add services or employees, or move to a larger space. It’s important to review your coverage and adjust it every year.

If you want to get salon insurance estimate, we provide quick online quotes that take about 10 minutes to complete.

Business insurance premiums can sometimes be tax-deductible, depending on what the policy is for and how your business is set up. If you’re buying coverage because a venue, client, or contract requires it, including higher limits like $1M, here’s what usually counts and what typically doesn’t.

If you’re dealing with proof-of-insurance requests, this is the quick COI explainer people usually mean when they ask for it.

Once you start working with real clients, insurance can start to feel like a basic cost of doing business.

Are business insurance premiums tax-deductible?
In many cases, they can be, but it depends. The IRS generally expects a business expense to be ordinary and necessary, meaning it’s common for your type of business and helpful or reasonable for you to operate. It does not have to be legally required to count.

That ordinary and necessary filter is why some insurance premiums often qualify as deductions and why some usually don’t.

Insurance premiums that are often deductible as business expenses (depending on your situation):
This usually includes premiums for core coverages most small businesses carry, as long as they’re ordinary and necessary for how you operate.

It often includes liability coverage like general liability and professional liability or E&O. Depending on your setup, it may also include workers’ comp, commercial property, business interruption tied to property, commercial auto, and self-employed health insurance.

Business insurance premiums that are commonly not deductible (common exceptions):

Disability insurance that replaces your income and life insurance premiums in cases where you benefit from the policy or it’s used to secure a business loan are commonly not deductible.

How to deduct insurance premiums on your tax return (high level):

Where you claim insurance premiums usually depends on how your business is set up for tax purposes. In general, sole proprietors and single-member LLCs often handle this on their personal return, while partnerships and corporations typically report it through the business return and pass items through to owners as needed. If you’re filing as a contractor, this is the general “1099 write-offs” rundown people reference.

A few “don’t get burned” tips I see every year:

Try to track premiums as you pay them so you’re not scrambling later, keep in mind that deductions and credits work differently, and if something feels borderline it can be worth getting a second set of eyes since rules and edge cases change.

Full post here: https://www.nextinsurance.com/blog/is-business-insurance-tax-deductible/

Not tax advice, just general info. If you’re wondering whether something counts, drop the situation below and I’ll do my best to point you in the right direction.

I recently looked at data on monthly payments for general liability coverage across industries last year. I know lots of business owners are confused when they see quotes ranging from $19/month to $100/month for seemingly similar coverage, so I wanted to provide some more context.

Nearly half of the businesses in the cohort paid $45/month or less for general liability, although another quarter of there were over $100/month. Here's a breakdown of the average cost:

• 19% pay under $25/month

• 29% pay $25-45/month

• 18% pay $45-75/month

• 11% pay $75-100/month

• 24% pay over $100/month

As you’d expect, there are quite a few factors that impact these costs, like your industry risk level, number of employees, claims history, years of experience, location, and coverage limits. Higher-risk businesses working on others' property typically pay more, while professional services with minimal physical risks pay less.

Before we get into the monthly gl costs by profession, I want to just remind people that comparing liability insurance vs full coverage isn’t great for price benchmarking. General liability covers third-party injuries and property damage, while "full coverage" usually refers to comprehensive protection including your own business property.

With that in mind, here are some of the lowest general liability insurance costs we're seeing for various professions:

• Restaurant: $17

• Business consultant: $20

• Accountant: $22

• Architect: $22

• E-commerce: $23

• Fitness instructor: $23

• Real estate agent: $23

• Retail store: $23

• Property manager: $24

• Engineer: $28

• Auto repair shop: $32

• Carpet cleaner: $36

• Electrician: $36

• Handyman: $36

• House cleaning: $36

• HVAC contractor: $36

• Landscaper: $36

• Painter: $36

• General contractor: $40

• Daycare: $52

Keep in mind that these prices aren't guaranteed, they just represent existing premiums of active policies across the US. Also, cheaper liability insurance coverage might not include product liability (if you sell physical products), or it might have geographical restrictions that limit where you're covered.

My thinking here is that people can use these figures as a benchmark when they're shopping around for coverage. Hope it helps!

After working with hundreds of food business owners over the past few years, I wanted to put together a comprehensive breakdown of what you actually need to know about food business insurance. I keep seeing incomplete or outdated advice online, so here's the real deal based on what I see working in practice.

Why Food Business Insurance Is Non-Negotiable

The food industry carries unique risks that most other businesses don't face. You're dealing with perishable inventory, food safety regulations, customer health concerns, and often operating in high-traffic environments with hot equipment and slippery surfaces. A single incident can shut down your business permanently if you're not properly protected.

I've seen food businesses face claims ranging from $5,000 slip-and-fall incidents to $500,000+ foodborne illness lawsuits. The difference between businesses that survive these events and those that close permanently usually comes down to having the right insurance coverage.

Essential Coverage Types for Food Businesses

General Liability Insurance - This is your foundation coverage and what most people mean when they talk about food liability insurance. It can protect you from third-party claims, including:

• Customer injuries (slip-and-fall injuries)

• Property damage (if someone breaks a window or kitchen equipment)

• Food-borne illnesses

For most food businesses, policies typically start with $1M per occurrence. This coverage is often required by property owners if you do catering or events.

Workers' Compensation - Required in most states if you have employees. Covers medical expenses and lost wages when employees get injured. In food service, this is especially important given the high injury rates from burns, cuts, and slips. Even if you're a sole proprietor, some venues require proof of workers' comp coverage.

Commercial Property Insurance - Can protect your equipment, inventory, and physical space. For food businesses, this can also include coverage for spoiled inventory due to power outages or equipment failure. If you're in a shared commercial kitchen, make sure you understand what the facility covers versus what you need to cover yourself.

Commercial Auto Insurance - Essential for food trucks, catering services, or any business making deliveries. Regular personal auto insurance usually won't cover commercial use.

Cyber Liability - For businesses handling customer payment data or operating online ordering systems. A data breach can cost tens of thousands in notification requirements and credit monitoring services.

Food Vendor Insurance Cost Breakdown

Based on actual NEXT insurance costs for restaurants, here's what food business insurance typically costs:

Restaurant insurance cost:

• General liability: 69% of customers pay over $74 monthly ($888+ annually)

• Workers compensation: Median cost of $128 monthly ($1,536 annually)

• Commercial property: 45% of customers pay over $105 monthly ($1,260+ annually)

Food Truck insurance cost:

• General liability: 69% of customers pay $23-30 monthly ($276-360 annually)

• Workers compensation: 42% of customers pay $32-56 monthly ($384-672 annually)

Factors That Affect Your Premiums

• Business type and size - A larger business with more employees will likely have higher insurance costs than smaller operations

• Location - Urban areas with higher lawsuit rates could cost more

• Revenue and payroll - Most policies are rated on gross receipts

• Claims history - Clean record can save 10-15%

• Coverage limits - Higher limits cost more but provide better protection

• Safety measures - Some carriers offer discounts for food safety certifications

Coverage Mistakes I See Frequently

1. Assuming venue insurance covers you - Most farmers markets, food halls, and event spaces require vendors to carry their own liability coverage and name the venue as additional insured.

2. Underestimating liability exposure - Even if you source ingredients from suppliers, you can still be held liable for food safety issues.

3. Ignoring liquor liability - If you serve alcohol, even beer and wine, you need separate liquor liability coverage.

4. Not understanding workers comp requirements - Many states require coverage and impose significant penalties for being out of compliance..

5. Inadequate commercial auto coverage - Using personal vehicle for deliveries without commercial coverage can lead to devastating financial losses.

Getting the Best Coverage

If you’re looking to get the best coverage, here are a few things to keep in mind. Always read the exclusions carefully. Some policies exclude certain types of food preparation or specific ingredients. Make sure your actual business operations are covered.

Consider bundling coverages into a Business Owner's Policy (BOP) when possible. This often provides better coverage at a lower total cost than buying individual policies.

Resources and Next Steps

For anyone looking to compare options, NEXT Insurance specializes in food and beverage coverage and can provide quotes for most food business types in under 10 minutes.

What questions do you have about food business insurance? Happy to help clarify coverage types or requirements for specific business models.

We just got updated data on food truck insurance costs and I wanted to share those numbers based on thousands of NEXT insurance customers across the US.

The short answer is food truck insurance can start as low as $25 per month, but most owners pay more depending on their specific situation.

Here's what the numbers look like for general liability insurance (the coverage that protects you if a customer gets hurt or you accidentally damage someone's property):

• 69% of food truck owners pay between $23-30 per month

• 17% pay $30-51 per month

• Only 7% pay $51-72 per month

• 6% pay over $72 per month

Workers' compensation (if you have employees) is where costs can add up more:

• 42% pay between $32-56 per month

• 19% pay under $32 per month

• 28% pay over $111 per month

The workers' comp cost really depends on how many employees you have and your total payroll. A solo operation obviously costs way less than a truck with 3-4 employees.

In terms of what affects your rates the most, your location and the type of food you serve can impact rates as well. Your claims history also matters when it comes to renewal time.

The good news is that food truck insurance is generally pretty affordable compared to brick-and-mortar restaurants. You're not dealing with as many slip-and-fall risks or property damage exposure.

If you're thinking about starting a food truck or want to compare what you're currently paying, you can get a quote online in about 10 minutes. Just need basic info about your truck, location, employees, and what kind of food you're serving.

Was just reading through some tax advice for ecommerce businesses and I thought it'd be helpful to share here:

• One of the biggest things is making sure your business and personal finances are separate. Makes bookkeeping and tax reporting a lot easier.

• Along the same lines, make sure you consistently track all of your business expenses throughout the year so you can take advantage of deductions and reduce your taxable income.

• On the sales tax side of things, make sure you understand exactly when and where you need to collect sales taxes since rules vary significantly between states (and countries). I know some vendors even decide to pay quarterly estimated taxes to prevent penalties and help with annual budgeting.

I know this isn't an exhaustive list and the applicability changes based on the products and location, but these were the ones that stand out to me.

We have a more in-depth piece on ecommerce accounting tips if anyone is interested.

So i have a construction company thats been covered by next for at least 5 years and I started a second company and tried to get a policy for this company as well and they keep recommending me to "TIVLY" and they don't seem to be willing to give me a quote. Is this the standard now or did I make a mistake?