Your freelancing gig has been smooth sailing, and you’re wondering why you didn’t quit your day job a long time ago.
And then it happens …
Something goes wrong, and you’re stuck with the financial responsibility of fixing the problem.
Murphy’s Law Can Happen to Freelancers, Too
Most of the time, this is a little obstacle—a minor blip on the horizon of your career.
But what about when it’s a big deal like your client hired you to handle their expensive equipment, and it was damaged in your care? Or your computer security system had a breach, and all the sensitive data on it was hacked?
If the worst-case scenario happens, and you have self-employed or freelancer liability insurance, you can remain calm. The insurance adjusters can handle the claim, and you keep on doing what you do best.
If you don’t have insurance, though, you should know these essential facts about liability coverage for independent workers.
1. Professional Liability Handles Those “Oops” Moments
You’re self-employed because you’re good at what you do. Other people hire you when they need someone to do the job, and they trust you to get it done well.
Occasionally, we all make mistakes. As a paid freelancer, those mistakes can turn costly.
Whether it was advice that backfired, accidental copyright infringement, or something else, someone filed a claim against you. Professional liability insurance, also called errors and omissions (E&O), protects you from the fallout of those mistakes.
E&O In Action
When most of us think of professional liability lawsuits, it’s usually related to things like medical malpractice. However, there are many ways you could be open to this kind of lawsuit, depending on your career.
For instance, a freelance traveling mechanic would need professional liability coverage in case something they worked on damaged the vehicle. Maybe they rotated the tires but forgot to tighten the lug nuts on a wheel, and it flew off and caused an accident when the owner was driving.
What could have been an expensive lawsuit is minimized with liability insurance. Without coverage, that problem could devastate the mechanic’s business and personal livelihood.
2. General Liability Keeps You Safe From Others’ Oopsies
The second type of coverage that freelancers need is general liability. You may not make a mistake, but that doesn’t stop your clients and nature from making them. General liability steps in to protect you from lawsuits when that happens.
Do clients show up at your office or on your property? One slip and fall and you have to pay for their medical expenses and other damages.
Property damage is covered in this policy, as well. As long as it isn’t specifically excluded, damage to your equipment and office space due to acts of nature are safely taken care of with general liability.
Some people mix general and property liability in one policy called a Business Owner’s Policy (BOP). These are customizable for your freelance business’s needs, making the plan more cost-effective.
If your job depends on your computer or expensive camera functioning properly, and you drop them and cause damage, it’s a big deal. Not only do you have to pay for the repairs or replacement, but you’re out of work until that is finished. Equipment protection in your BOP policy cushions the expense and pays you part of what you may have lost due to missing work.
3. Cyber Liability Covers Tech Crimes
A newer type of liability insurance is cyber-based. Now that technology is everywhere, we have to be diligent against cybercrimes. As a self-employed worker, this role falls on your shoulders.
Let’s look at the role of a freelance accountant. The job entails handling the sensitive data of all your clients. You take that role seriously, and you have backups of your backups and the best security system you can afford.
Somehow, a hacker gains access to the info, and a client’s identity is stolen. You end up sued for the breach, which can add up to millions of dollars, depending on the harm. Your cyber liability policy lets you breathe easy, knowing that you don’t have to pay the damages yourself.
We all hope we never need to use our insurance policies. Yet, we feel better knowing they’re there if it’s necessary.
Liability is a cheap investment compared to the possible expense of not having it. As a freelancer, think about what you’d do if you were sued for damages without coverage. Then, figure out which policies would protect you and find one that fits your budget and business needs.