Everything freelancers need to know about liability insurance

Aug 6, 2019

Do you have a question about liability insurance? Check out these frequently asked questions below, or reach out to us at membership@freelancersunion.org.

What Is liability insurance?

Liability insurance is a policy that protects an individual or business from being held accountable for malpractice, injury, and/or negligence. For freelancers, liability insurance offers financial protection if your perceived professional or physical error results in your being sued for an injury, mistake, or contractual miscommunication. Depending on the policy limits, liability insurance can be used to cover your incurred legal expenses, and/or any settlements or judgments made against you.

There are two kinds of liability insurance: professional and general. Professional policies protect against claims regarding your work product or performance, like if your camera breaks in the middle of a contracted photo shoot, or if you crash a company’s server while performing routine network updates. General policies protect your business from claims of bodily harm or medical expenses — if a wedding guest trips over your camera wires or you hit a pedestrian while driving your business vehicle. Depending on your line of work, a professional policy may be sufficient, but freelancers with regular third-party interactions may benefit from a general policy as well. At Freelancer’s Union, we offer both general and professional policies, with coverage limits up to $2 million for both.

Why do I need liability insurance?

Many freelancers get liability insurance when they want to work for a client that requires it. But it’s also important for any freelancer who offers skilled services, advice, or products that depend on technical training. Liability insurance is the only type of policy that protects you from service-related errors, unhappy customers, or any type of legal action brought against you based on your professional performance.

What kind of protection will I get from professional liability insurance?

A professional liability policy will pay for your legal expenses when you're sued for professional liability. Lawsuits — even simple ones — can easily cost between $10,000 and $100,000, depending on how long they last, how complicated the facts are, where you live, and how willing your counter-party is to settle.

Coverage will include:

  • Legal fees, which range from $150-$400 per hour for every minute your lawyer devotes to your case.
  • Expert witness fees, which can cost thousands of dollars.
  • Administrative costs, including attorneys' printing and travel expenses.
  • Court costs, including filing and hearing fees.
  • The cost of the final settlement or judgement.

How much will professional liability insurance cost me?

It really depends on your specific business, as well as the options you choose, including your deductible, policy limits, and included types of coverage. But here’s the good news: Freelancers Union’s plans through Hiscox start at just $22.50/month, which is less than the cost of a cheap dinner for two!

When should I buy liability insurance?

As soon as you finish reading this paragraph! All kidding aside, Liability insurance will only cover a claim if both the triggering incident and the lawsuit occur when your policy is active. That’s why it’s crucial to purchase and maintain liability coverage for the duration of your business operation. After all, even if a triggering incident occurs this week, your client may not file suit for years to come. If you stick with your low monthly payments, you’ll be covered for all the legal expenses, regardless of how many years pass between the two events.

How much coverage do I need?

The amount of liability for which you are covered is known as your policy limit. As mentioned before, Freelancer’s Union offers plans with coverage up to $2 million. This means that, in the event of a lawsuit, your insurance company will defend you and pay up to the policy amount, including legal costs and any settlements or judgements.

Depending on your industry, your liability insurance plan will have coverage for different types of claims. If you’re purchasing insurance to fulfill a contract requirement, you’ll likely require at least $1 million in general liability insurance coverage; if a contract requires more than that, you can also negotiate your coverage amount. Even if your coverage amounts aren’t dictated by a contract, it’s a good idea to invest in a policy with $1 million of coverage. This makes you a more attractive contractor when bidding for jobs that will ultimately require insurance. It also will cover you in the event of costly mistakes.

Ready to shop policies? Get your free liability insurance quote here.

Jordana White

Jordana White is a contributing writer for Freelancer's Union, and a full-time freelance writer in the health and wellness field.