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Understanding freelancing insurance + do you need it?

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The Freelancer’s Union recently announced the ability for members to purchase liability insurance. But as freelance designers, do we really need it?

Truthfully, when I read the “hey, we’re now offering liability insurance” email, I wondered what, exactly, that entails.

According to their website, there are three main types

NOTE: I am not a lawyer, nor am I offering professional or legal advice. The following are just my observations and conclusions as a fellow freelance designer.

Please seek legal advice or contact The Freelancer’s Union directly for more information.

Finally, I am not an advocate for The Freelancer’s Union nor am I receiving any money to blog about their products and services.

Types of Insurance

Professional Liability

Of the three, professional liability insurance is probably the most applicable to our profession. This type of insurance, also known as errors and omissions insurance, covers things like:

  • Claims of negligence
  • Awarded damages and defense costs
  • Claims of libel and/or slander arising from your work
  • Punitive damages
  • Claims arising from subcontracting

So what does that really mean?

Well, let’s say you’re working on a project where you’re comparing your client’s product to “other national brands.” You choose an orange laundry soap bottle (no markings) and Tide slaps you with a libel case.

Or, perhaps you’re working on a sweepstakes marketing campaign and your client refuses to put some required fine print on the poster (in this situation, don’t forget to save your communications). When they get hit with a huge government fine, they blame you for the omission.

Is this type of insurance really necessary?

If you work with corporate clients with strict legal departments, lawyers or other professionals who are very law-savvy, or heavy legalese (such as disclosures or sweepstakes-style campaigns), professional liability insurance might be a good safeguard for you.

However, if you’re working with clients who don’t have the time or money to sue you unless you do something REALLY egregious, it’s probably not worth the expense.

General Liability

General liability insurance, in my opinion, is the least necessary of the three for the typical freelance designer. It covers a third party’s:

  • Injury and medical bills
  • Property damage
  • Loss of data due to equipment damage
  • Libel or slander arising from your spoken or written words
  • Loss due to actions of temporary staff

Is this type of insurance really necessary?

General liability insurance becomes more necessary the more equipment and the more in-person interaction you have with your clients.

For example, if you do on-site photo shoots with photography equipment that can present trip hazards, you might consider general liability insurance.

If you rent office space or host events where people could injure themselves, this type of insurance might be worth checking into.

However, if you’re like me, the vast majority of your work is done away from the general public and therefore you’re probably not at risk enough to justify the expense.

Business Owners Insurance

Business Owners Insurance combines general liability coverage with protection for your business equipment and data.

Is this type of insurance really necessary?

You probably need to research your property insurance to get a better picture because most homeowner’s insurance doesn’t cover home businesses the way you think they might. A few things that might not be covered:

  • Specialized equipment such as photography equipment, professional printers, and large redundancy storage
  • Medical coverage for a client visiting your home office

So if you have the “normal” office equipment, especially if it is for both personal and business use, your property insurance will typically cover your equipment.

Do you need liability insurance?

As you can see, whether or not you need liability insurance (and what types) greatly depends on your freelancing circumstances. I encourage you to talk with a business consultant or lawyer to determine if insurance protection is right for your business.

Personally, I believe my contracts protect me in much the same way that professional liability insurance would.

Were a client or client competitor to pursue legal action, I have a “paper trail” of information and client signoffs that protect me from assuming “decision-making” responsibility for finalized projects. Furthermore, most of my clients don’t have the time/energy/money to pursue legal action for anything but the most flagrant misconduct.

Secondly, I rarely work in and around the general public, so a third party injury is highly unlikely.

Finally, I need to do some research (I’m in the middle of an out-of-state move) to find out what my new homeowner’s insurance will cover. Once I understand that, I can determine if business owners insurance would be a smart choice.

What do you think?

Leave a comment and tell us what you think. Do you have liability insurance? Have you ever known anyone who needed the coverage? Do you believe liability insurance is a scam to steal your hard earned greenbacks? Let us know – I look forward to hearing from you!

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Written by April Greer

Staff at Millo.co

April is a freelance designer with a rare combination of creative expertise and technical savvy. She's a positive, friendly, curious being who believes the most important rule to follow is the Golden Rule. She enjoys volunteering, organic gardening and composting, reading, puzzles, video games, music, and sports.

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