When starting out as a freelancer, the temptation is always to keep things small. By staying lean, you can cut your overheads and keep more of the profit. This might mean working from your kitchen table to save on office rent or renting rather than buying computer equipment.
In the early days of starting a business, this makes perfect sense as you will need to reserve your cash flow. After all, you never know how long you’ll have to wait between invoices or if you’re even going to get any customers.
While keeping things lean is a good idea, one area that you should never skimp on is insurance. If you offer professional advice, your words could come back to haunt you if your client suffers a loss as the result of your work or advice.
While you might have a rosy view of the world and you might like to believe that no one would take legal action against you, think again! When you start dealing with bigger clients, they will all have extensive legal departments that are well equipped to take on indemnity cases.
Insurance claims against freelancers are on the rise, and with legislation like the GDPR set to come into play later this year, there are also IT security risks that could cause you a headache in future. Staying protected by freelancer insurance just makes sense.
So, what type of insurance do you need?
Professional indemnity insurance
This is the most obvious one for freelancers offering professional advice. PI insurance will protect you against claims made against you if a client suffers a loss as a result of advice you gave them. For example, if you’re a marketing professional and you make a mistake on budgets that causes a client to overspend and they make a claim, you’ll be protected from the financial cost of compensating and defending the claim.
PI insurance can also protect you against nuisance claims against your work. For example, if you are a personal trainer and a client claims that you misled them and they aren’t getting results, PI insurance will ensure that you aren’t personally financially liable for their claim. While they might only ask for a refund, they could also go after damages, particularly if they claim your advice caused them injury.
Employer’s Liability Insurance
If you employ another person and they are injured while doing work for you, they have the legal grounds to sue. Employer’s liability insurance protects you in cases where an employer takes legal action. If you’re a photographer and your assistant breaks their leg while on a shoot with you, you’ll be covered.
As a business owner, it’s tempting to dismiss claims from employees as nuisance claims, but if someone is seriously injured while working for you, they should be properly compensated.
Office Contents Insurance
We often have home contents insurance but forget this essential bit of coverage when building our own businesses. Office contents insurance isn’t just about covering the laptops and phones that you need to get your job done. It also covers things like the furniture, desks and filing cabinets.
It’s not just about protecting your business in the event of a break-in, it’s more about protecting your office in the event of a fire or flood. If you had to replace everything in your office, this could put a huge dent in your profits, so it makes sense to protect your business.
Public liability insurance
If your job brings you into contact with the public, then this type of insurance will protect you if a member of the public is injured or suffers a loss as the result of you. For example, if you are a freelance event planner and a member of the public suffers a burn during one of your events, public liability insurance will cover you. Often, you won’t be able to go ahead with events of this type without the right level of coverage.
If you aren’t sure what kind of freelancer or contractor insurance you need, it’s worth getting in touch with a professional to help guide you. Just like you don’t want to be paying for coverage you don’t need, you also don’t want to be missing out on essential coverage.
A gap in your insurance coverage can be costly if someone decides to take legal action. Even if they have a case they couldn’t normally win, if your insurance is lapsed or insufficient, they may see this as a sign of weakness.