"I don't know much about business insurance. Do freelancers need insurance? Where do I start?" This is something we hear all the time. As an ex-freelancer I can empathise with the challenge of shopping for insurance. I remember being confused about what insurance I needed and, more importantly, how it could help me.
Don’t know what type of insurance you need as a freelancer? Here are the key covers for small businesses in the UK. They are:
- Professional indemnity insurance
- Public liability insurance
- Contents insurance
- Legal expenses insurance
- Employers' liability insurance
What is Professional Indemnity Insurance for freelancers?
Professional indemnity is the most popular cover amongst freelancers. It's our bread and butter at With Jack and we'll get into why that is below. We start with a professional indemnity policy which you can customise by bolting other products onto—like public liability insurance.
The professional indemnity wording is deliberately broad so it covers a wide range of risks freelancers in the digital and creative sectors face, but we like to simplify it by thinking of it as insurance for careless mistakes and problem clients.
Think mistakes in your code or copy, unhappy clients that feel work isn't delivered to the standard they expect, copyright infringement, project management issues, breach of contract… the list goes on.
It’s increasingly common that clients contractually require a freelancer has professional indemnity insurance. This is because working with insured professionals is considered safer.
Even if it isn't a contractual obligation, every freelancer has a responsibility to deliver work to a reasonable timescale, meet client expecations and provide work to a certain standard. If a client threatens legal action or tries to recover compensation from you as a result of your project or relationship breaking down, professional indemnity insurance removes the:
- time and stress of searching for legal help
- friction of finding the right lawyer in the correct jurisdiction
- need to pay expensive, upfront fees
Your professional indemnity insurance not only covers the cost of the legal fees in the defence of a claim, but any compensation or damages that have to be paid to your client (minus the policy excess).
Why is professional indemnity insurance our bread and butter? Aside from the wide range of situations it can help freelancers with, we believe every freelancer benefits from being insured because it gives you the confidence to stand your ground with clients and navigate difficult projects.
Not all claims arise due to the freelancer making a mistake. Sometimes it's down to working with a client that's impossible to please. Insurance helps you handle those situations confidently knowing that, if the client was to take things further, you have a team of legal experts to help you.
Cost: If you turnover <£250,000 you can expect to pay around £14 per month for professional indemnity.
- How insurance helped this filmmaker when client footage was lost
- How insurance helped this freelancer with a stalled client project
- Why freelancers need professional indemnity insurance—my experience of With Jack
Do freelancers need Public Liability Insurance?
Public liability covers compensation for injuries to third-parties sustained as a result of your professional services, or if you cause damage to third-party property while undertaking work.
This is another cover that freelancers are sometimes contractually obliged to carry, especially if working with public bodies.
As an ex-freelance photographer I wouldn't have worked without public liability. The chance of someone's granny tripping over my camera bag during a wedding and injuring themselves was too big a risk to take! I was visiting different venues every weekend and also liked having the peace of mind I was covered should I inflict damage to someone's property.
Public liability is best known for slip, trip and fall claims and would assist if somebody sustains an injury and tries to recover compensation from you. With most of our customers working remotely and handling equipment that isn't dangerous, the risk of them causing an accident or injury to a client or member of the public is small.
This is even truer now. Most people have shifted to working remotely and handling all client communication via video communication tools due to the Coronavirus pandemic.
If you work remotely and handle all client communication online, public liability may be overkill. If you have clients visit your office, work on-site at client premises or are based in a co-working space you may want to have public liability insurance.
A lot of freelancers opt to add public liability to their policy because it's cheap and offers extra peace of mind.
Cost: Expect to pay around £2.80 per month for public liability.
Should I have Contents Insurance?
Contents insurance is important because you depend on the equipment you use for your business and may not have the capital to replace it should something happen. Most contents policies will cover claims of accidental loss, theft and accidental damage, but that's not all…
Business contents policies typically come with additional features like data reconstitution costs and worldwide cover. This makes it beefier than a home contents policy, which is just one of the reasons why you should consider a business equipment policy instead of a home contents policy.
Out of all of the products we arrange, contents insurance is the most used when it comes to claims. Our average claim is just under £3000 and the policy is designed to solve the problem of not having the capital to replace your equipment if damaged, lost or stolen.
Cost: Expect to pay around £3 per month to insure a £2000 laptop.
- How insurance helped this developer after a bike accident
- Business contents vs home contents insurance
- My favourite policy features: Data reconstitution
How could Legal Expenses Insurance help me?
The legal expenses product compliments your professional indemnity insurance nicely. 85% of issues can be resolved by obtaining legal advice, but your professional indemnity insurance only assists if a legal threat has been made or a client tries to recover compensation.
What about sticky situations that haven't yet escalated to that stage? This is where legal expenses comes in.
You have access to a legal advice helpline to assist with situations such as contract disputes, payment issues or general legal questions. Think of it as having a law firm on retainer, but without the costly fees.
Not only is there a helpline where you can speak to legal experts, but there's a dashboard brimming with legal documents. Popular templates amongst our customers include:
- notice to terminate a contract
- copyright and trademark agreements
- debt collection letters for unpaid invoices
- Privacy policies
With 35% of freelancers waiting more than one year to get paid, there's a debt recovery service where a solicitor will chase overdue invoices on your behalf. Whilst there's no guarantee the solicitor can recover your debt, having a third-party formally chase it on your behalf—especially a legal entity—yields a higher chance of success.
Legal expenses is a handy product that you can use on a day-to-day basis. With access to the helpline and legal documents it can even prevent a situation from escalating to the point you'd have to use your professional indemnity insurance.
Cost: Expect to pay around £5.50 a month for legal expenses.
- An overview of the legal expenses product
- The legal advice helpline
- How legal expenses insurance can help freelancers
What about Employers' Liability Insurance?
This is the only cover we'll talk about that is a legal requirement if you have employees. Failing to buy employers' liability insurance when you have 1 or more employees can result in a costly fine.
Employers' liability is similar to public liability, but applies to employees instead of third-parties like members of the public. For example, an employee sustaining an injury or illness as a result of working for you.
Freelancers who work solo are exempt from this. Since we work with freelancers we exclude employers' liability from the quote tool. However, we do have a lot of customers add this to their existing policy as they begin to grow and hire staff, or if a contract requires them to carry this insurance.
It's also a legal requirement for limited companies with 2 or more working directors.
Cost: If you have <5 members of staff you can expect to pay around £5 per month for employers' liability.
What other kind of insurance should I consider as a freelancer?
Cyber insurance is a hot topic right now. The professional indemnity policy we arrange includes third-party cyber liability by default, so if a client's website is hacked or their computer is infected with a virus and they pin the blame on you, your insurance may be able to assist.
What now? Get a quote. Our quote system is free, fast and fun (try it to see).