I've just finished reading a post in the freelance subreddit.
It was written by a developer who was hired to build an eCommerce store for a small business. The project involved a lot of scope creep. New features were requested constantly, as were changes to existing features. A common problem freelancers face.
This slowed down the completion of the site. The client grew increasingly frustrated with the lack of progress and threatened to sue the developer for loss of business. The client also expected compensation for hiring another developer to re-do the site.
With the developer charging £5000 per month for their service and the project having already spanned 3 months, the developer stood to lose a lot of money.
As I read this story and the panic in the developer's words, I couldn't help but think, "This could have been resolved with business insurance". Professional indemnity is designed to solve problems just like this.
Intent to sue, financial loss, compensation and legal fees… this is when your insurer would step in to help you. The aim of professional indemnity is to put you back in the same financial position after a loss as you'd enjoyed prior to the loss.
Unfortunately, many freelancers operate their business without insurance. Including the developer in this story.
This is largely down to insurers overlooking freelancers in the past, catering to more traditional industries like tradesmen. Information on how insurance can help freelancers is sparse—which is one of the problems Jack is trying to solve.
The developer stood to pay thousands of pounds in compensation and legal fees. What they could have done is transferred the financial burden to their insurer for < £200 per year.
Whether I'm browsing /freelance, /webdev or /smallbusiness, I see the same horror stories crop up repeatedly. Clients refusing to pay, a trip to small claims court… 99% of the time the problem could have been resolved had the freelancer taken out insurance.
Freelancers: Have a solid contract in place, get insurance and avoid becoming a Reddit horror story.
P.S. Read 4 horror stories about creative businesses that wished they had insurance.