Sticking with a steady, full-time career for four to five decades is no longer the only way for people to make a decent living. America has around 53 million freelancers, and 50 percent of the U.S. workforce will be freelancing in some capacity by 2020, according to statistics from leadership expert Brian Rashid for Forbes. Many go-getters find that freelancing affords them a certain level of flexibility and control over their careers that clocking in and out for an established organization may not. But taking this plunge also comes with less financial surety.
Business insurance for freelancers can help protect your independent operation from a costly liability lawsuit that threatens your professional and personal assets. Freelancing often means that your reputation—not to mention your ability to pay bills—hinges on lining up steady projects; one expensive, time-consuming liability lawsuit can quickly sink your entire operation. So can damage to your work-related property. CoverHound can help you compare and equip yourself with the right insurance for your field.
Signing Certain Contracts
Your freelancing livelihood depends on the kinds of contracts you can sign. Some clients will not work with freelancers who don’t have a certain amount of liability insurance. As Freelancers Union succinctly writes: “Most freelancers get liability insurance when they want work from a client that requires it. So if you’re in that camp: if you want the gig, you need the insurance.”
Insuring Your Equipment
When you work for an established business, they often provide the equipment you need to perform your job duties. As a freelancer? Not so much. Part of the challenge is purchasing and maintaining the right equipment to keep you in business. As Business.com points out, your homeowners policy likely excludes business-related items or offers too low of a payout to be a viable backup plan. Choosing a Business Owners Policy (BOP) that includes property insurance can cover damages to your specialized equipment due to fire, theft, vandalism, and more.
Covering Your Home Office
If your freelancing job requires clients to swing by your home office, or for delivery people to drop off business-related goods, you likely need general liability insurance to cover you if a third party sues you for personal injury, property damage, or bodily harm. Commercial General Liability (CGL) policies cover these bases as well as other non-professional negligent acts, including copyright infringement and slander.
Something as simple as a visitor tripping on the corner of an upturned rug in your office and taking a nasty tumble could lead to huge liability for you in the form of medical bills and legal fees. If you’re visiting a client’s worksite and you accidentally knock a piece of expensive equipment off their desktop, your general liability insurance would kick in.
If the Project Falls Through
Even with the best intentions, a lot can go wrong over the course of a client contract. If something stops you from completing your project as intended, you’ll need professional liability insurance (or “errors and omissions”) on your side in case your client sues. One Forbes contributor writes that E&O “covers any errors, oversights or acts of negligence you make in your line of work.” Their example: An independent photographer’s camera stops mid-way through the wedding they’re shooting. Since they’re not fulfilling their end of the contract, the couple could sue them. Professional liability insurance would cover their legal defense, settlements, and court-ordered judgments.
Freelancers who work with technology, whether with coding, consulting, IT, or any other capacity may experience project derailment in the form of missed deadlines, software glitches, or vulnerability to hacks. It’s a good idea to extend your business insurance coverage to include cyber protection to handle possible litigation in the event of a breach of client information.
If You’re Sued for Your Advice
Your freelancing role may involve a consulting or advising capacity. If a client sues you because they believe your advice caused them harm, you’ll need professional liability insurance to mitigate the associated costs. As All Business humorously adds, “While a moderately aggravated client might be satisfied with posting a bad review on Yelp, this client is ready to send you to Davy Jones’ Locker and she has her legal team on a generous retainer. If your business owner’s policy includes professional liability insurance, you’ll sleep fine and avoid nightmares.”
If you work on a freelance basis—whether as a consultant, programmer, writer, photographer, handyperson, landscaper, florist, or any other capacity not mentioned here—you should take measures to protect all that you’ve worked for. CoverHound will help you compare business insurance for freelancers, while CyberPolicy can help tech-industry workers protect themselves with cyber coverage.