How to protect yourself against all kinds of claims while being self-employed.
Working as a freelancer may bring you some benefits that you won’t have as an employee. In terms of flexibility and control of your workload, it might seem like doing things your own way could make life easier.
However, when stepping into this world of independent labor you must take note of the different methods you can cover yourself against legal, financial, or other claims involved in case of an accident, lawsuit, disaster, or any unexpected situations that could occur in your workplace.
Although some of these types of insurance are typically offered to small and medium business owners, there are also some other specific policies that will be more important and unique to Freelancers depending on a number of factors such as activities done, their industry, time in business and more.
General Liability Insurance
As your own representative, you may have to deal with cases of people (suppliers, clients, or others) claiming property damage or bodily injury as a result of your operations. This coverage helps take care of legal fees and damages.
It can also protect your business in the event of:
- Advertising mistakes
- Harm to reputation
- Trademark and copyright infringement
- Damages to rented properties caused by employees or sub-contractors.
General Liability will protect you if you face a lawsuit.
While General Liability is not compulsory by law, most project owners will insist on you having coverage to bid on their project. At the minimum, we recommend having General Liability insurance is one of the best insurance policies to protect your business.
Professional Liability Insurance
General Liability does not cover professional mistakes that you make.
These are covered by Professional Liability Insurance. Also known as Errors and Omissions Insurance, this is the coverage that you need and will pay for all your legal fees (up to the policy limit) if a client sues you for mistakes, negligence, inadequate work, inaccuracies, misrepresentation or similar allegations regardless of whether it’s your fault or not.
Workers Compensation
Although the state law typically requires employers to provide workers’ compensation for their employees, coverage is usually optional in cases for independent contractors, self-employed individuals, and business owners.
Let’s say you work in a high-risk job, such as one that requires physical labor, you may want to purchase your own workers’ compensation insurance policy. But even freelance writers, for instance, may be asked to carry this type of insurance as a condition of the contract.
Some states require workers to apply for an Internal Revenue Service test (IRS) that will help them know whether a worker is counted as an independent contractor or as an employee.
This will also tell them how much control a company has over the freelancer’s schedule for work.
If the result of the workers’ tests shows that they are considered employees, the company should include them in workers’ compensation insurance and should also include them on regular payroll.
Last Thoughts
In essence, the freelance economy is rising in the U.S. employment landscape and a lot of our clients ask, “Do I have to include my work as a freelancer on my insurance?”.
Finding a policy for freelancers and other self-employed individuals may not be simple, though, as large insurers might not see the point in selling such relatively small policies.
Start by talking to an insurance agent about what legal obligations you’re subject to as a freelancer in the state you’re in, since the US government may vary its laws depending on your location.
Those who work with freelancers on a daily basis should have a contract that states that the company will not be held responsible in case something happens to them.
They should also require the freelancers to show proof that they have their own Insurance Policy which they can rely on.
If you are a freelancer and still have questions about whether you stand in terms of getting a proper insurance policy for your activities done, let a knowledgeable agent help you navigate the ins and outs of the buying process.