The complete guide to liability insurance for freelancers
You’re a freelancer. You’re used to figuring out a lot of things on your own. But something that might not come as naturally to you is handling your own liability insurance, which, of course, is totally understandable. That’s why we’re here to help.
Who doesn’t love the idea of freelancing?
Working from home, coffee shops, or even off the coast of Tahiti if you’re in the mood. You’re a free agent; you’re your own boss. The perks are great enough to make all your friends want to quit their jobs and go out on their own, too.
But with all that beautiful freedom comes more accountability. And responsibility. And being the sensible adult and responsible business owner that you are, you can understand that it’s important to stay protected.
Do freelancers need liability insurance?
Yes. Liability insurance is an important type of business insurance that protects freelancers from the various liabilities they may face. There are many types of liability insurance, and the purpose of all of them is to protect you from claims and lawsuits.
Top reasons to get liability insurance:
Why take a risk?
Even if you think your projects are too small to worry about, just remember that the smallest issue could lead to a very large lawsuit. We live in a litigious society, and people sue over misunderstandings all the time, which can be very expensive.
Side note: Your bigger clients are probably going to request that you have liability insurance, anyway.
What types of liability insurance do freelancers need?
There are many liability insurance products out there, but there are some products in particular that every freelancer should consider.
Professional Liability Insurance
Professional liability insurance (aka errors and omissions insurance) is the first policy most freelancers look into. It protects you from lawsuits that can happen over your professional work:
- A missed deadline
- A database crash
- A failed marketing campaign
If a client is unhappy with your work, having this type of policy is important.
Why do you need professional liability insurance?
A lot can happen when you are in the business of working with multiple clients. Even if something happens that is completely out of your control, an unhappy client will look to you for answers when a project goes wrong.
You’ll have to be able to defend yourself.
This is probably the most essential insurance policy for freelancers, especially for those who work in technology. If the projects you work on are smaller and come with less risk, you may not need it, but many clients will not hire you without this coverage.
General Liability Insurance
General liability insurance, or GL for short, covers many of the “general” things that can go wrong in the course of doing business.
Why do you need it?
To start, some companies won’t hire you without it. But you’d be smart to consider it anyway. Everyone trips up and slips up. If you say, write, or tweet the wrong thing, you could get sued.
Business Owner’s Policy
If you want a little more bang for your buck, you may be interested in a business owner’s policy (aka BOP). A business owner’s policy is a nifty liability package with a cool name that sounds like a really good example of onomatopoeia.
It’ll usually include general liability insurance and business property insurance at a discounted price.
Business property insurance really comes in handy if you need to insure things like computers, cameras, printers, and copiers. And for most freelancers, your equipment is pretty much an extension of your body– you can’t function without it.
The more specialized or expensive your equipment is, and the more you rely on it for work, the more important it becomes.
A lot of freelancers who work from home think their homeowners or renters insurance policy will cover their business equipment, but it doesn’t always. And if it does, there’s usually a $500 cap. It’s always a good idea to check your policies to make sure you understand your coverage.
What does a BOP cover?
BOPs protect your business from claims and lawsuits that involve property damage, bodily injury, and personal/advertising injury that happen as a result of your business operations. It will also protect equipment from fire, theft and other disasters.
Why get a business owner’s policy?
A BOP doesn’t only save you money, it also makes it a little easier to keep track of your insurance (which can be oh-so-overwhelming when you’re already juggling a bunch of other things). A BOP is even more convenient when you get additional coverages bundled into it.
We can help you design your own business owner’s policy.
Cyber Liability Insurance
Cyber liability insurance covers internet-related losses involving things like intellectual property infringement, viruses, hackers, and privacy issues.
As a freelancer, you may not have the same security tools that employees working at larger companies have. It’s your job to protect business files (and client information) when you’re working on your own.
You should consider cyber liability especially if you:
- Handle sensitive client information, such as Social Security numbers
- Accept payment information, like credit cards
- Handle digital data
- Work in a tech-related field
What about that money, honey?
By now you’re probably wondering how much liability insurance will cost. But the bigger question is, would you rather pay a little for protection each month, or all at once if something bad happens?
The price of liability insurance varies.
The cost depends on what kind of protection you want, your profession, your location, the size of your business, and how many employees you have. But it’s entirely worth it to have peace of mind.
Also, keep in mind that your insurance premiums are considered a business expense, so they’re tax deductible.
Wondering how to get liability insurance?
We can help with that. Get a quote to learn about your options.