Types of Liability Insurance — Understanding the Landscape as a Freelancer

By Liz Alton, Contributor, on March 6, 2017

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There are many types of liability insurance, and freelancers must be aware of what’s needed to protect their business. Whether you’re a freelance designer who inadvertently violates copyright with image use or a writer who interviews a source that later turns out to be under a nondisclosure agreement, a misstep — intentional or not — can lead to a lawsuit.

Freelancers often sign contracts containing indemnification clauses, which state that if legal action arises from the work, it becomes the freelancer’s problem. Signing smart indemnification clauses, which limit your risk and exposure, is a solid strategy. However, you’re still exposed, and freelancers can leverage liability insurance to protect their business. Here’s a closer look at the different types of liability insurance for freelancers and what you need to know.

General Business Liability

General business liability insurance targets the mainstream small business owner. It protects against issues that occur on the premises of your business, like a fall or an injury. Typically, these policies cover bodily damage to others, medical expenses, lawsuits and damage to other people’s property. If you’re working from home, your first thought might be that general business liability insurance isn’t for you.

However, there are a few scenarios where it makes sense to carry. The first is if you ever see clients in a home office. For example, if you’re a freelance graphic designer who meets with clients for consultations, it’s smart to consider general business liability. One slip on the ice can lead to a lawsuit; in many cases, homeowners’ insurance won’t cover this, since it’s considered a business-related issue. Another scenario is when a general and professional liability bundle is actually less expensive than purchasing professional liability insurance on its own.

Finally, certain clients may only agree to work with freelancers if they carry a certain level of general business liability protection. It’s a generic vendor requirement for many Fortune 500 companies, for example. However, in the case of client requests, you can sometimes increase your project fees to cover the premiums or pass the fees along to the client as an expense.

Professional Liability

Professional liability insurance is directly related to the types of protection most freelancers need. Professional liability insurance protects you in the event you leave out a critical fact, give bad advice in an article or find out a source lied to you and you’re later sued by a member of the public.

Professional liability insurance often covers you both when you make an error or when you’re confronted with baseless claims. When choosing professional liability insurance, find out:

  • What issues are covered?
  • What the deductible is per incident?
  • Is there a cap on the amount of coverage provided per incident?
  • What does the claims process look like?
  • Are there any factors that would mitigate insurance coverage?
  • What expenses are covered? Is anything excluded from the policy?

Media Perils

Media perils insurance covers writers, content producers and other individuals whose work provides facts and guidance to audiences. Whether you’re a medical writer providing tips for managing a health condition or a reporter writing about the latest controversial celebrity figure, media perils insurance is useful when you could potentially face a lawsuit. Lawsuits can range from defamation on the part of someone who didn’t like the way you described them in writing to negligence suits.

A media perils policy often covers certain types of work — like copywriting or investigative journalism — and is tailored to the types of risk specific members of the media face. In some cases, media perils insurance is called Errors and Omissions (E&O).

Determine What You Need

As a freelancer, it quickly becomes clear there are numerous types of insurance that can protect your business. The different types of liability insurance cover a full range of solutions for different business types. Freelancers need to assess their unique situation, working setup, client needs and budgets. Work with a broker who can help you understand the minimum amount of insurance needed to protect your business and the maximum available to give you complete peace of mind.

Consider setting up time each year as you evaluate your business plan to look at your insurance mix and make sure you’re adequately covered. Connect with brokers, since premiums may come down and new types of coverage may become available. It’s often possible to purchase more robust coverage bundles at a discount.

Keep abreast of the types of liability insurance out there, the current climate and the type of work you do with clients, and evaluate whether the available options fit your budget before making any decisions.

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