Freelance Liability Insurance 101: What You Need to Know

Why Freelancers Need Liability Insurance

Being a freelancer means that you have the flexibility to create your own schedule, be your own boss, and can take on whatever projects you like. Most freelancers prefer the lifestyle because freelancing work provides them freedom—many even work in coffee shops.

But freelancers face risks that might not be faced if they worked for larger companies. As a full-time freelancers, if something goes wrong, the blame lands squarely on your shoulders. We live in a litigious society—are you willing to risk a costly lawsuit without insurance coverage?

Even though you don't work for an employer, you still have to answer to your clients. You still have risks involved and must protect your business with the proper liability coverage. Here are a few reasons why you need to consider freelance business insurance:

• To protect yourself from the extra cost of lawsuits
• Get coverage for business-related claims
• To protect yourself from property loss
• Your clients may require you to obtain liability insurance (some may add you as additional insureds on their policy)
• Some lease agreements may require proof of insurance coverage
• Marketplaces such as Fiverr and Upwork often require proof of liability insurance

Who Needs Freelance Liability Insurance? 

Do you offer professional advice? Can professional errors that you make hurt people or potentially cause significant property damage? Some of the freelancers that may need to consider insurance include:

• Web designers/Web developers
• Graphic designers
• Programmers
• Photographers
• SEO Managers/Analysts
• Accountants
• Real Estate Agents
• Business Consultants
• Artists
• Legal services
• Writers/Bloggers
• Consultants
• Coaches
• Graphic Designers

Anyone who works as a full-time freelancer should consider freelance insurance.

The Types of Business Insurance Freelancers Need

So what kind of business insurance should freelancers consider? 

Professional Liability Insurance

A freelancer insurance package wouldn't be comprehensive without Professional liability coverage—also referred to as errors and omissions (E&O) or professional indemnity insurance—protects your small business if you make mistakes. Those mistakes can include things like:

• Alleged or actual negligence
• Missed deadlines
• Undelivered services
• Breach of nondisclosure
• Claims of libel, slander, or copyright infringement 

If the professional services you offer can lead to these kinds of mistakes, you should strongly consider investing in liability insurance.

Example: You’ve signed a contract with a business that needs a complete overhaul of its website. You’ve agreed to complete the project in two months. Unfortunately, you fall behind schedule and their project isn’t completed on time. They sue you for breach of contract for the missed deadline. But if you have professional liability insurance, your insurance company will pay legal expenses and cover defense costs.

General Liability Insurance

General liability insurance protects small business owners from liability for third-party bodily injury, third-party property damage, and advertising injury (defamation, copyright infringement, etc.). 

Example: You’re hired to help a company design its brand, including its new logo. They love your completed design and move forward with the project. However, you both find out that the logo is too similar to a copyrighted design. You’re sued for copyright infringement and required to redesign the logo. A general liability policy can protect you by covering the associated legal fees. 

Cyber Liability Insurance

Many freelancers work remotely and likely work almost entirely from a laptop. If you use a computer with internet access for your job, you open yourself up to the risk of data breaches. If you store or use client information in the course of your job, cyber liability insurance can protect you both.

If a breach occurred, your insurance company can help you notify impacted clients, pay for credit monitoring and identity theft protection, and even help negotiate and pay ransoms.

Example: One of your clients notifies you that they can't access their website and are getting an error message. As their technical support, you try to determine what's wrong. It turns out that every client website you support has been hacked, leaving you open to lawsuits. As a freelancer, you can't afford to pay claims like these. The right cyber liability policy can protect you—and your clients.

Business Owner's Policy

A business owners' policy (BOP) is a package that usually includes general liability insurance, commercial property insurance, and business interruption insurance.

• Commercial property insurance covers your rented or owned building, inventory, business equipment, and other contents. 
• Business interruption insurance helps a small business owner cover operating expenses if you’re unable to run your business due to an unforeseen event. 

A BOP is usually offered to small businesses at a discounted rate compared to purchasing each insurance policy individually. If you're looking to cut insurance costs and you own business property, a BOP may be a good fit for you.

Home Insurance/Renters Insurance

This is sufficient to cover your home and home office, your personal property, and some level of business property. Business property is usually capped at a certain dollar amount, so check with an agent to see how much coverage you have. 

Auto Insurance for Freelancers

You need personal auto insurance to protect you and your vehicle if you’re in an accident. However, if you use your vehicle for business purposes, you may need to consider adding on commercial auto coverage. 

Health Insurance for freelancers

Because you don’t work for an employer, you are responsible for providing your own health insurance and life insurance. If you worked for an employer, they usually provide workers' compensation insurance. This insurance policy can cover your lost wages and medical bills if you're hurt on the job. In conjunction with health insurance, you should consider disability insurance to help cover those expenses.

NOTE: Many freelance business operations use the Freelancers Union as a resource and for a community of support.

How Much Does Liability Insurance for Freelancers Cost?

Liability insurance for freelancers doesn't have to cost a lot. Multiple factors can impact the cost of insurance policies, including:

• The policies and policy limits you choose
• Whether or not you have a home office or lease a commercial space
• Your annual revenue
• The type of jobs you do
• The insurance coverage you choose
• The state/city you operate in

These are just a few of the things that can change the cost of liability insurance for freelancers. We always recommend speaking with an insurance agent experienced in your industry to help get the right insurance for your business.

How to Get Freelance Business Insurance

Do you have more questions? If you'd like more information or are interested in getting a free quote for freelancer insurance, feel free to reach out! You can call us at 877-907-5267 or complete the form at the top of the page and someone will reach out. Let us help you get the protection you need for your business—while saving money!

Check out more of our free resources to help you plan how to protect your freelance business:

• Certificate of Insurance
• Insurance for Independent Contractors
• Graphic Design Insurance
• Web Designer Insurance