In episode two of Unsure? Insure! we cover what exactly freelancers are doing that requires insurance.
Why do you need insurance? A lot of freelancers think they aren’t doing anything high risk, so they don’t need to be insured. They also have the assumption their contract is enough to protect them.
So, what is a freelancer doing exactly that requires insurance?
Insurance protects you from threats from unhappy clients as a result of your professional services—whether that’s because they consider the workmanship below par or there’s been a mistake in your work.
Even though you’re great at what you do, clients can be unhappy with a number of things that are out of your control;
- The project can be delayed
- The client has misunderstood what work they are getting
- The client is unhappy with the quality of work or level of service
Any freelancer—whether it’s design, photography or marketing services and more—faces these risks. It may not be that you’re working in a high risk sector like the medical industry or working with Fortune 500 clients, but projects can get derailed, clients can be unpredictable and mistakes can happen.
You're responsible for delivering work to a certain timescale (projects usually have deadlines).
You're responsible for delivering work to meet client expectations… and sometimes these are impossible to meet!
You're responsible for providing work to a certain standard, without bugs or mistakes. A mistake could be accidentally deleting important data or equipment malfunctioning. We’ve seen wedding photographers with faulty SD cards lose important photos.
These are the situations that insurance will help you with. If any of these situations did arise, having professional indemnity insurance removes the time and stress of searching for legal help because that’s provided to you within the policy.
Insurance gives you confidence when dealing with clients. If you do have a client confrontation that escalates, you personally wouldn’t suffer the financial consequences. You have insurance to help you.
Insurance can also prevent bad clients from taking advantage of you. You're no longer a one-person band. You now have a world class legal team fighting your corner. This means situations with difficult clients are diffused a lot quicker.
Lastly, let's touch upon the myth around contracts being enough to protect you. Contracts are important for laying down the foundation of what duties are to be expected of both parties, but insurance steps into action when those duties come into question. It’s not binary. It’s not one or the other. To put yourself in the best position possible as a freelancer, you should have both insurance and contracts.
To recap, what's a freelancer doing that requires insurance?;
- You’re working to deadlines and timescales that, if missed, could lead to unhappy clients
- You’re expected to meet client’s expectations. Sometimes expectations are difficult to meet whether that’s because the client is impossible to keep happy or there can be issues with communication and clients misunderstanding things
- You’re expected to provide work to a certain standard, but sometimes standards can slip due to bugs, human error or equipment malfunctioning
There are many more reasons why you should have professional indemnity insurance, but these are the common situations that we see at With Jack.