I was doing my daily activity of lurking on a forum for freelancers when I stumbled upon a thread about insurance.
I knew what to expect before I even read it. Somebody asking about whether they should get insurance, and a number of replies with silly reasons why they shouldn't.
Here's one of the replies:
This is terrible advice. Please don't listen to people who say, "No, you don't need insurance. I freelanced for years with no insurance".
It's similar to a driver asking, "Should I wear my seatbelt?" and another replying, "Nah. I've driven for years and never had an accident".
There are more reasons, too, but these are real stories from freelancers.
Why Freelancers Buy Insurance
We asked our customers why insuring their business was important. Here are some of their responses:
- I wanted to make sure I was in the best possible position should there ever be a dispute
- So I have back-up if an emergency arises
- Protection against legal action
- It reassures my clients
- Peace of mind
- I wanted to start my business properly with no worries of potential problems
Stop Giving Terrible Advice
Unfortunately, the advice given above about not needing insurance isn't uncommon. When freelancers ask about insurance, people typically respond with three things.
- "I've never had insurance. I don't think you need it."
- "I work with a contract and this keeps me protected."
- "I only have it because it was contractually required. I went with the cheapest provider I could find."
"I've never had insurance. I don't think you need it"
It's great you haven't found yourself in a problematic situation with a client, but this doesn't mean you won't in the future. This is bad advice. Stop spreading bad advice.
“I haven’t experienced that in the past so it won't happen in the future” is flawed logic. As I said in the example above, it's like confidently driving a car with no seatbelt because you've never had an accident.
If you're running a business with paying clients, getting insured should be as commonplace as doing your accounts, working with contracts etc.
"I work with a contract and this keeps me protected"
Contracts do not stop a client from making a claim against you. They're useful for laying the foundation of what duties are expected, but insurance steps into action when those duties come into question.
With each of the real stories I linked to above, all of them had a contract in place. This didn't stop clients from threatening legal action or relationships breaking down.
"I only have it because it was contractually required"
A lot of clients request freelancers have professional indemnity insurance, but it's important you understand what you're covered (and paying) for.
Professional indemnity covers a multitude of scenarios, but I like to break it down to protecting you from careless mistakes and problem clients.
Before buying insurance, take 5 minutes to browse some resources and learn more about it. For example, our professional indemnity teardown gives you an overview of what's covered.
At With Jack we're trying to move away from the 'check a box' mindset and prove insurance is valuable. We do that through sharing real stories and being there when our customers need us.
If thinking about whether you need insurance, it's quite simple. 44% of freelancers will be stung by a client. Insurance exists to protect you financially and legally when that happens. If that sounds helpful, get insured.