Freelancers Need Business Insurance Too: 8 Reasons to Protect Yourself

Just as you would obtain insurance for anything of substantial value, it’s important to consider business insurance for your small business–even if you're a freelancer. While you may have been able to run your business without insurance, as your business grows, you’ll reach a critical juncture where you will face either the need to obtain business insurance or wish you had already done so.

With the freedom and authority of running your own business comes the responsibility and liability of your enterprise, and that’s where business insurance lightens the load. Here are eight scenarios that illustrate the need to be insured if you’re self-employed.

1. You have a contract, but your client interprets it differently than you do.

While contracts are important when you sign on a new client, they do not prevent every misunderstanding. It only takes one recalcitrant client to have you feeling like contracts aren't worth the paper on which they’re written. Clear communication and friendly relations can grease the wheels of many problems, but when a vendor-client relationship sours and the client cannot be pacified, knowing you have professional liability insurance may protect you from harm.

2. Your computer breaks and prevents you from meeting deadlines.

As a freelancer, your client may rely on your contribution to complete a larger project. If your code, graphic design, article, or other contribution is delayed due to your computer crashing or other equipment failure, your relationship with your client could be jeopardized. If your client is penalized for not completing a project, guess who will be responsible? You. An errors and omissions insurance policy or a cyber liability insurance policy can help protect your company.

3. Your equipment gets damaged or stolen and you need to replace it without dipping into your capital.

While many solopreneurs can run their businesses with an old DSLR camera and an aging laptop, as your business matures, the tools you use become more sophisticated and costly. A new rig optimized for video editing starts at several thousand dollars, and once you start adding equipment like a decent printer or camera, the most basic technology needs can quickly exceed the coverage of most basic renter’s or homeowner's insurance policies. Business property insurance means that if your gear is harmed or hijacked, you can replace your equipment without having to hit your savings or incur debt.

4. A client blames your work for the loss of another client or the source of slanderous claims.

All it takes is one hint of disparagement to set off a nasty chain reaction of recrimination and blame. Even if you don’t end up in court, you could be forced to spend thousands out of pocket to procure professional representation. This is where professional liability insurance can save your skin. Once you have coverage in place, your business insurance policy can help with the cost of defending your company as well as with any judgment or settlement that might result.

5. A client says that only a person with access (you) could have maliciously altered the website copy.

Of course, the burden of proof lies with the accuser, but you still will be stuck with the cost of defending yourself against these claims. A determined complainant can cause substantial problems and hassles, and if you’re without insurance, you’ll be forced to deal with them alone. This is another situation where an errors and omissions policy will help you respond professionally and with the ability to fully indemnify your freelance business.

6. At a meeting with client, equipment gets damaged and the client holds you responsible.

Your client has a snazzy new piece of technology and they can’t wait to show it to you so you can start developing a new campaign for it. Then the unthinkable happens: thousands of dollars of electronics get damaged as a result of your inadvertent action. Now your client insists that you are responsible for replacement costs. If you don’t have a general liability policy in place, you are faced with the very real possibility of a major financial hit or losing a client or both. Either way hurts, but with insurance, it hurts a little less.

7. A third party goes after your client, asserting that work you completed bears too strong a resemblance to something previously published.

With the vast amount of data generated each and every day in today’s world, it’s increasingly difficult to generate something perfectly unique. Of course you do your best to ensure that the tagline, logo, or concept you created does not infringe upon anyone’s mark, and you’ve done fine until a company with a rabid legal department comes knocking at your client’s door. There are few contracts that can hold off a dogged claimant, but your handy errors and omissions policy can help you clear the air without bringing down your small company.

8. Your professional advice led the client to engage in harmful actions.

If you give advice for a living or work as a consultant, you could find yourself a difficult quandary when one of your customers decides that your counsel created a problem for her. 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.

In short, earmark funds for business insurance if you’re at all interested in the long-term viability of your freelance venture.

The post Freelancers Need Business Insurance Too: 8 Reasons to Protect Yourself appeared first on AllBusiness.com

The post Freelancers Need Business Insurance Too: 8 Reasons to Protect Yourself appeared first on AllBusiness.com.