Published in the Kanata Kourier-Standard February 5, 1999

Being self-employed has plenty of advantages. But there are some areas where working on your own may not measure up to a conventional job - for example, work-related insurance benefits - unless you take action on your own. Many self-employed workers have inadequate insurance coverage. Because they have to pay for policies on their own, they opt to go without.

But that's not a good idea. If you're one of the growing ranks of the self-employed, without adequate insurance you, your family or your business could suffer financially. At the very least, you should have enough coverage to protect yourself against potential loss of income due to illness or disability, medical and dental expenses not covered by government health plans, and potential medical expenses while you travel. You may also need to boost your home insurance coverage or purchase liability insurance.

Disability insurance is one of the most neglected areas of coverage - largely because it is more expensive than other types of insurance. But the premiums are well worth the expense if you find yourself unable to work. Disability insurance will replace part of your lost income, possibly averting financial disaster for you and your family. You may be able to purchase group disability through a professional or trade organization. If that coverage doesn't suit your needs or isn't available, you have the option of purchasing an individual policy from a private insurer.

If you are a partner in, or part owner of, a business, and one of the partners becomes disabled, it can sink the firm, as concerned colleagues attempt to support the sick partner and his/her dependents. A smart move is for the firm to set up a legally binding partner buy out plan (which can also take account of the deaths of partners). To fund the buy out plan you will need partner buy-out disability insurance which deals with this problem, providing lump sum and/or income payments for five years. If you are a business owner, ask yourself what would happen to the firm in the event of any of your partner's serious disability.

You'll also need health insurance, which can also be purchased either privately or through an association. With individual plans, you can tailor your individual and family coverage to your needs. Health insurance is now a more attractive proposition because of the proposed 1998 federal budget changes to tax rules to allow most self-employed workers to deduct the cost of premiums from employment income for tax purposes.

If you travel on business or for personal reasons, be sure to purchase travel medical insurance. Some health insurance policies cover short trips, while in other cases you'll have to purchase coverage for each trip or take out an annual policy that covers all travel.

You may have special insurance needs, such as liability insurance. This can provide coverage against stolen, damaged or lost business equipment and records, and may also cover lost income that results. If your business is co-owned with others, you should consider entering into a buy-sell agreement to be funded upon death with life insurance.

If you work at home, check to see if your home policy covers equipment and premises used for business, including liabilities that could arise if clients visit your home. Many don't. You may have to add a rider to your home policy or buy separate coverage. Depending on your type of business - especially if you deal with client finances or provide other types of advice - you may require business liability insurance, also known as "errors and omissions" insurance. This offers protection against losses clients might suffer as a result of your oversight or error. And if you use your car for business, make sure you are covered by your auto insurance policy.

Your best bet is to speak to your financial advisor, accountant or insurance representative about the insurance you require. Some companies even offer special small business packages, which can take care of a number of your insurance needs.