Q: I’m a Freelancer. Do I Need Business Insurance?

A:  It’s probably a good idea for freelancers to purchase business insurance. As an independent contractor, you are in business for yourself. Because the people who hire you are your clients, their insurance probably won’t cover you. In fact, many client contracts require you to have your own insurance before you can begin work. Be sure to check your contracts so you know the exact status of your liability exposures and your insurance requirements. In addition to helping you meet contractual obligations, adequate business insurance sets you apart from other freelancers. It makes you look more professional, which can lead to more business opportunities.

Why You Need Small Business Insurance: Details

If you have assets that need safeguarding, you already have all the incentive you need to carry business insurance. Consider this:

  • If a fire destroys your place of business, how quickly could you bounce back?
  • If a client claims your services caused them financial losses, could you afford the expensive lawsuit?

Plenty of small-business owners and freelancers scoff at the idea of being hauled into court, but it is a very real possibility, and social media only ups the ante. If you post one critical tweet or misconstrued blog post, you could face the kind of lawsuit that wipes out your entire bank account. (Read about such a case involving a freelance transcriber here: “How Commercial General Liability Insurance Can Protect You from an $82,630 Tweet.”)

Even if the lawsuit is meritless, you still have to defend yourself. That means you must consult lawyers – and their fees aren’t cheap. If the lawsuit is thrown out, you can still expect to pay a couple thousand dollars on legal defense fees.

If the possibility of a lawsuit doesn’t convince you to carry insurance, think about how you want your clients to perceive your business. Prospective clients give preference to freelancers with business insurance because it’s often a trademark of professionalism, financially responsibility, and trustworthiness.

Moreover, some clients have insurance that obliges them to work solely with freelancers who are insured. Not having the right coverage or enough coverage can keep you out of the running for a competitive contract or assignment.

What Kind of Business Insurance Do I Need?

Depending on the type of freelance work you do, you should consider purchasing…

  • General Liability Insurance. This policy kicks in when someone seeks compensation for a bodily injury they suffered on your premises or property damage caused by your work. It may also cover claims of slander, libel, or copyright infringement.
  • Property Insurance. If you own commercial property or expensive equipment, Property Insurance is a worthy investment. It pays to repair or replace assets damaged by certain events, such as fire or theft.
  • Professional Liability Insurance. Also called Errors and Omissions, this policy covers legal expenses when a client claims your negligence caused financial losses.

These policies represent the most fundamental coverages for small businesses. In fact, small-business owners purchase General Liability and Property Insurance so frequently that insurance companies bundle them together in a Business Owner’s Policy, or BOP.

To learn which policies your business may need, contact us for more information, or submit an online insurance application.

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