Insurance Curator Gig workers and freelancers face unique income volatility: a single illness, injury, or interruption to the workplace can wipe out weeks or months of revenue. This guide, focused on the United States (with state notes for California, New York and Texas), compares the two most relevant insurance solutions to replace lost income: Short-Term Disability (STD) for personal wage replacement and Business Interruption (BI) coverage (usually as part of a Business Owner’s Policy) for lost business income tied to a covered property loss or interruption. Read on for pricing examples, recommended insurers, and a practical buying checklist.
Quick comparison: STD vs Business Interruption
| Feature | Short-Term Disability (Individual) | Business Interruption (BOP / BI) |
|---|---|---|
| Purpose | Replace personal lost wages when you’re unable to work due to illness or injury | Replace business revenue and continuing expenses after a covered physical loss (fire, flood per policy, civil authority closures, etc.) |
| Who it covers | The insured individual (you) | The business entity (sole proprietorship, LLC) and its documented income |
| Typical cost (USA) | 0.5%–3% of income annually (roughly $20–$200/month depending on benefit level and age) — see insurer examples below | $500–$3,000+ per year for small businesses; standalone BI riders vary (BOPs often start at <$50/month online for some industries) |
| Typical benefit | 40%–70% of pre-disability earnings, short waiting period (0–14 days), benefit length 3–26 weeks | Indemnity for net income lost + extra expenses during recovery period; limits based on revenue and policy period |
| Common insurers | Mutual of Omaha, Guardian, The Hartford, Principal | Hiscox, Next Insurance, State Farm, Nationwide |
| Best if you are | A solo freelancer whose personal earning power needs protection | A gig business with equipment, inventory, or a location reliant on physical operations |
Sources: Policygenius, Insureon, Hiscox, Next Insurance (linked below).
Why both matter for gig workers
- Short-Term Disability protects your personal ability to earn: if you (the individual) are sick or injured and can’t perform gigs (ride-share driving, photography shoots, consulting), STD replaces a portion of your lost pay.
- Business Interruption protects business cash flows and fixed costs when a physical loss (fire, covered property damage) prevents you from operating or client sites are closed by civil authority. This matters if you rely on equipment, rented studios, or physical storefronts.
Many gig workers will need one or the other — or both — depending on whether the risk is tied to your body (STD) or your business operations (BI).
Pricing reality and insurer examples (USA, 2024 estimates)
Note: premiums vary by age, occupation, benefit amount, elimination/waiting period, and state. The examples below are representative ranges and sources for readers to verify current quotes.
Short-Term Disability (individual)
- Policygenius and NerdWallet estimate private STD cost roughly 0.5%–3% of annual income (Policygenius: typical short-term disability cost range) — for a freelancer earning $60,000, expect roughly $300–$1,800/year ($25–$150/month) depending on benefit level and waiting period. (Source: Policygenius)
- Typical carriers: Mutual of Omaha, Guardian, The Hartford, Principal. These insurers provide STD riders or individual disability policies; costs for a 30–40 year old on a $3,000/month benefit commonly fall in the $30–$100/month band in online quotes depending on underwriting. (See insurer sites below.)
Business Interruption / BOP for small gig businesses
- Marketplaces and specialty insurers (Hiscox, Next Insurance) offer small-business packages:
- Hiscox advertises small-business coverage options with BOP components starting at roughly $20–$50/month for low-risk service businesses (annualized $240–$600) depending on coverage limits. (Source: Hiscox small business quotes)
- Next Insurance often lists sample small-business BOP starts around $30–$60/month for many service-based gigs (pricing varies by occupation). (Source: Next Insurance)
- Industry data shows many small businesses pay between $500 and $3,000 per year for commercial property + BI exposures depending on revenue and risk. (Source: Insureon)
Always request quotes referencing your gross receipts and payroll (if any); BI limits are typically tied to past revenue and a chosen indemnity period (e.g., 3–12 months).
External sources:
- Policygenius — Short-term disability overview and cost ranges: https://www.policygenius.com/disability-insurance/short-term-disability/
- Insureon — Business interruption insurance explanation and cost drivers: https://www.insureon.com/small-business-insurance/business-interruption
- Hiscox — Small business insurance quotes and BOP details: https://www.hiscox.com/small-business-insurance
State-specific notes (important for gig workers)
- California: State Disability Insurance (SDI) covers employees via payroll deductions. Independent contractors (1099) typically are not covered unless they opt into voluntary plans. If you live/operate in California (e.g., Los Angeles, San Francisco), consider private STD if you’re not covered by SDI. Source: California EDD SDI — https://edd.ca.gov/disability/
- New York: Employers must provide DBL for employees in many contexts. Freelancers in NYC or upstate NY should verify whether they qualify; otherwise buy private coverage. New York Dept. of Labor/State resources: https://dol.ny.gov/disability-benefits
- Texas: No state-mandated disability insurance for employees; private coverage is the primary option for independent workers in Austin, Dallas, Houston.
State agency pages:
- CA EDD (SDI): https://edd.ca.gov/disability/
- NY DOL (Disability Benefits): https://dol.ny.gov/disability-benefits
Which insurers to consider (and how to compare)
Short-Term Disability (individual)
- Mutual of Omaha — long-standing disability underwriter; competitive for health-care and professional occupations.
- The Hartford — often used by contractors and professionals; standalone STD for certain markets.
- Guardian / Principal — strong disability underwriting for self-employed professionals.
Business Interruption / BOP
- Next Insurance — built for small businesses and gig workers (rideshare fleets, mobile services); online quoting and policy bundling (GL + BOP).
- Hiscox — online-first insurer with tailored small-business packages and flexible BI limits.
- Nationwide / State Farm / The Hartford — large carriers that can bundle commercial property, GL and BI, often needed for higher limits or landlord-required policies.
Get multiple quotes — BI limits require current revenue numbers and often proof of past income to set an appropriate limit and indemnity period.
Practical buying checklist for gig workers
- Assess your real income exposure
- Calculate average monthly net earnings (12 months lookback).
- For STD: decide target replacement percentage (40%–70%) and elimination/waiting period (shorter waiting = higher premium).
- For BI: document gross receipts, fixed monthly expenses, payroll (if any) — insurers set limits from these figures.
- Ask about riders:
- Own-occupation vs any-occupation language for disability (critical for specialized skills).
- Civil authority coverage for BI (covers forced closures).
- Compare online marketplaces for small businesses (Hiscox, Next Insurance, Insureon) for fast quotes.
- Check state programs (CA/NY) to see if you’re eligible for state disability before buying private STD.
Sample scenarios
- Rideshare driver in Los Angeles (sole proprietor): Consider private short-term disability to replace your personal driving income (CA SDI covers employees, not independent drivers). Add a BOP or hired auto endorsements via commercial auto policies for vehicle-related BI exposure.
- Freelance photographer in New York City: Buy STD for personal injury non-coverage and a BOP that includes BI and equipment coverage (or buy dedicated gear insurance). If you rent studio space, BI with civil authority can cover lost bookings.
- Consultant in Austin, Texas: No state disability safety net — private STD is often the cheapest peace-of-mind; BI is important only if you have a physical office, staff payroll, or client projects that would suffer from a covered property loss.
Related reading from this series:
- Best Insurance For Freelancers & Gig Workers: Affordable Health Options and Marketplace Tips
- Best Insurance For Freelancers for Professional Liability (E&O): Who Covers Contract Work?
- Best Insurance For Freelancers to Bundle Personal and Business Coverage Cost-Effectively
Final tips
- If budget is tight, prioritize short-term disability if your primary risk is losing your personal ability to earn. Prioritize business interruption if you have inventory, leased locations, or equipment where an unexpected physical loss would shut down revenue.
- Always shop multiple carriers and confirm underwriting details for gig-economy exposures (rideshare, delivery) — many standard policies exclude certain activities unless specifically endorsed.
- Keep financial records and contracts handy — insurers will use past revenue as the baseline for BI limits.
For immediate next steps: get a short-term disability quote from a reputable broker (Policygenius or direct carriers) and an online BOP quote from Next Insurance or Hiscox tailored to your occupation and state.