A lot of freelancers think they don’t need to be insured because they aren’t doing anything high risk. They believe they can spot red flags before onboarding new clients, and assume that even if things do go wrong their contract is enough to protect them.
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So, what is a freelancer doing exactly that requires insurance?
Insurance exists to defend you against claims from unhappy clients as a result of your professional services—whether that’s because they consider the workmanship below par, you’ve made a mistake or work was delivered late.
Even though you’re great at what you do, clients can be unhappy with a number of things that are outside 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
The project can be delayed
Delivering work late can cause delays across the whole project. If this impacts the client’s launch they might lose out on business. Delays can stem from outsourcing work to third-parties, poor project management or the scope being more complicated than originally anticipated.
The client has misunderstood what work they are getting
This is most common with technical roles like web or software developers, especially when working with non-technical clients. The client might believe they haven’t received the work they expected. Even if this is down to a misunderstanding, there’s nothing stopping the client from blaming you.
The client is unhappy with the quality of work or level of service
You might produce work you’re proud of but the client doesn’t like the way it looks or functions. This type of dissatisfaction is more common with creative roles like design or photography. I had my own experience of this when I was a freelance photographer. The worrying part is this can be very subjective.
You are being hired to help clients achieve their goals
Any freelancer—whether you provide design, copywriting or marketing services and more—faces these risks.
You might not be operating in a high risk sector like the medical industry or working with Fortune 500 clients, but you are being hired to help clients achieve their goals. Projects can get derailed, clients can be unpredictable and mistakes can happen.
If something you do (or fail to do!) prevents your client from achieving their goal, they might bring a claim against you.
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.
Having insurance removes the:
- time and stress of searching for legal help in the event of a dispute
- need for expensive, upfront consultation fees with a solicitor
- financial fallout from legal action. Not only does insurance cover your fees in the defence of a claim, but it covers damages that have to be paid to your client
Even if you never use the practical element of your insurance, it can prevent bad clients from taking advantage of you. Once they realise you have a world class team fighting your corner, situations with difficult clients diffuse a lot quicker.
“I don’t need insurance. I have a contract”
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.
And what happens if you accidentally breach the terms of your contract? A good policy will help you defend yourself.
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.
