There are a lot of benefits to working as a freelancer, but there are also many risks. One of those risks is a lawsuit or contract dispute. What would you do if you found yourself at the center of one of these legal issues with no insurance protection? And what scenarios are the most common? Here are four reasons freelancers need professional liability insurance.
#1: Equipment Failure is Possible
Imagine that your expensive camera quits working during a couple’s wedding photos. What if your computer breaks down on the eve of an important deadline. If you are unable to deliver work as promised to your clients, you could have a major contract dispute on your hands. Most people understand, and will simply request a refund. However, others might be less forgiving. In this case, professional liability insurance could save you from a costly lawsuit.
#2: Your Work Accidentally Infringes on Copyright
This is another surprisingly common reason to have insurance. As a graphic designer, writer, or photographer, there’s a very good chance that your creative vision might be close to something another person previously designed. If this is true, you are leaving both your client and yourself open to potential legal problems. In this case, if your client gets sued and names you as a co-defendant, professional liability insurance might be able to help.
#3: There’s a Contract Dispute
As most freelancers already know, contract disputes happen all the time for a variety of reasons. Maybe you feel your client is edging outside of their scope of work request. Perhaps they are just unhappy with the service you are providing. If there’s a contract dispute that goes as far as a lawsuit, having a professional liability policy is important.
#4: You Make a Mistake
Freelance creatives are just as fallible to mistakes as anyone else. If a client suddenly becomes unhappy because a fact check on an article fails or a design flaw creates a problem, you could be on the hook for reimbursing the client. In some cases, professional liability insurance might be able to help. It won't apply in all situations, however.
Simply put, you need professional liability insurance because attorneys are expensive. Most freelancers would not be able to come up with several hundred or a thousand dollars to hire counsel in the event of a lawsuit. In contrast, policy premiums are usually quite affordable on a monthly basis. Thus, this is why is important to have a policy that covers you in the event one of the above situations happens.
Also Read: What is Professional Liability Insurance and Who Can it Help?