Freelance insurance is something that I always knew existed but didn’t really want to think about.
“Freelancing is fun!” I thought, “it’s freeing!” – I don’t want to get bogged down in paperwork! But the harsh truth is that I was underprepared for the risks and responsibilities that come with running a business.
I know I personally didn’t consider getting insurance until I started writing my book Out of Office. It’s not legally required, so I just put it off, thinking that it wasn’t essential and probably too expensive.
I know that insurance gets a bad name because it’s literally capitalising on fear, but I can honestly say that now I’ve signed up I’m genuinely quite happy to pay £15(ish) for the peace of mind I have right now. Here’s a quick rundown of what you need to know about the types of insurance available for freelancers:
Professional Indemnity Insurance
This covers you against the business risk of causing financial loss to your client through your own negligence.
I spoke to Robert Hartley, who is one of the co-founders of Dinghy, an insurance company specialising in policies for freelancers, and he gave me an example of why you might need professional indemnity cover:
Imagine you were a graphic designer and you’ve created a logo for a client and a year later a larger company says that your design breaches their trademark. They’ve also got the funds to take legal action. You could be held accountable for this and need to pay for lawyers and damages.
‘You get your logo design put on your website, printed in a magazine, make loads of banners, and then suddenly someone says you’ve breached their trademark and you owe them £10,000. It’s the designer of the logo who would need to pay this compensation,’ says Robert. ‘Something like this is an honest mistake. You didn’t deliberately rip off this logo design and so professional indemnity cover will pay the compensation.’
Bear in mind, though, that this is only relevant when there has been some sort of financial loss. It can’t be a client saying that they just don’t like the logo!
Public Liability Insurance
This offers protection against injury to other people or their belongings. It doesn’t need to be a client; it can be anyone in the public who isn’t you as long as it happens when you are working.
Perfect for freelancers like me who work in public spaces like cafés, co-working spaces and libraries and live in fear of dropping a scalding hot chai latte over a stranger’s laptop.
Things like your laptop might be covered under your home insurance, but that’s not always the case, so check with your existing policy to find out where you stand.
It’s also worth noting that your home insurance might not cover items when you are using them outside of the house and some policies totally exclude business items anyway. I personally have worldwide cover on business equipment so that if my laptop ever breaks or is stolen, I can get a replacement ASAP.
This is something that I don’t have, but might be worth considering if you handle a lot of customer data.
‘Say you visit a website and you accidentally download a ransomware virus and get an email saying you need to pay £500 or all the information on your computer will be deleted,’ says Robert. ‘The insurance company would help with that. If you hold a lot of customer data like addresses or bank details then you would want that protection.’
For most freelancers, loss of income is a major concern. This type of insurance helps by providing you with an income in the event that you are unable to work due to long-term sickness or as a result of an accident. Policies will provide you with a percentage of your gross income for a set time or until retirement, depending on the terms.
How much does it cost?
There’s no set rate for insurance policies as it depends on the cover you need as well as what kind of work you do. I currently pay about £15 a month for professional indemnity, public liability and equipment insurance, so that gives you an idea of what to expect.
Bonus tip: Look out for freelance specific insurers like Dinghy. They offer added benefits like Freelancer Assist, which gives you access to 24/7 helplines for legal matters, tax investigations and counselling. Dingy also has a team of experts on-hand who will chase up late payments (over £200) on your behalf.
For more tips on going freelance listen to the Out ot Office podcast or pick up my book.