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Freelance 101: A Primer On Professional, Personal & General Liability Insurance

While my newfound freedom has several benefits, it also can come with the need to protect yourself and your business in case anything were to go wrong.

As someone who recently made the transition into the world of audio as a freelancer as opposed to a company employee, I learned that while my newfound freedom has several benefits (and for me, the flexible schedule is worth it), it also can come with the need to protect yourself and your business in case anything were to go wrong.

This article isn’t legal advice but rather a way to share industry-specific information after I learned about liability insurance and couldn’t find many industry-specific resources. So let’s start at the beginning. What is liability insurance?

Lay Of The Land

Liability insurance is a type of insurance designed to protect you, your business, and your professional services from any lawsuits filed against you. The type of insurance determines what specifically is covered by it. The most common types are general, personal, and professional liability insurance. Depending on the specific policy, these types of insurance are designed to protect against costs associated with legal claims resulting from injury, property damage, and more.

Professional liability insurance (also known as errors and omissions insurance) may help protect you as a freelancer from claims made against you resulting from your professional services. This type of coverage is similar to malpractice insurance for doctors. Errors and omissions policies cover mistakes, omissions, or any negligence that can cause your client to lose money as long as the claims relate directly to your professional services.

This policy is often offered as an add-on when you purchase general or personal liability insurance. Of course, this will depend on your insurance provider, as specifics, coverage, and costs may vary from company to company.

Next, there’s personal liability insurance, meant to protect you as an individual from lawsuits or claims caused directly by your actions. Think of it as being relevant to claims made against you personally (as opposed to professional liability insurance, which protects you from claims against the services you provided).

Personal liability may cover client, vendor, or third-party claims for things such as bodily and personal injury. In a legal context, personal injury is an injury that impacts someone physically, mentally, or emotionally. Frequently, many insurance companies also allow you to cover your personal property in the event of theft or damage as an add-on to your policy.

Finally, general liability insurance – sometimes known as an umbrella policy – protects your business if an incident occurs and a claim is filed where injury to others or property damage occurs. General liability doesn’t cover you or your property directly; instead, it’s designed to protect your business or you as a sole proprietor from claims made against you for things like property damage or bodily injury.

General liability claims can come from accidents that occur on-site. For example, let’s say you didn’t gaff or ramp your cables at a show and someone trips and falls over them, breaking their arm. If the client sues your business for the medical costs associated with the injury, general liability insurance should cover the costs.

Property damage claims can be the result of damage caused to a client’s property while you are working on a job, i.e., you’re flying a system in a shed as a freelancer for a company that owns the PA and a cart of loudspeakers accidentally rolls off the stage. Thankfully no one is hurt, but now the loudspeakers (and their rigging) need to be replaced. General liability insurance (that covers property damage) will cover the costs of repairing or replacing the loudspeakers.

Questions To Consider

While liability insurance isn’t a formal requirement for freelancers, it’s often recommended. It’s also worth noting that some employers may require their subcontractors to carry liability insurance, but this varies on a case-by-case basis. Here’s a list of questions to consider when shopping for liability insurance.

• Who are you covering? Does your business consist of just you or do you have employees? If you have employees, do you need workers’ compensation insurance to protect them as well as you?

• Do you have tools or other specialized gear that needs coverage?

• Where do you need coverage? Do you work in multiple countries where you would need coverage, or do you only freelance in one location?

• How much coverage do you need? A standard policy usually covers one to two million dollars per claim, with a maximum of two claims a year.

• Does your insurance provider cover the entertainment/live events industry?

When I was first shopping for liability insurance, I was surprised that many recommended companies didn’t cover the live entertainment and events industry. Though it can seem easy to simply fill out an online form and send in some money, you may find in the end that you don’t have a policy that gives you the needed coverage.

I found that I could make better choices after digging deeper and contacting each specific company to find out all the details. Taking some extra time was worth the few emails and phone calls.

In summary, professional liability, also known as errors and omissions insurance, protects the services you provide for your clients. Personal liability is designed to protect you as an individual from claims that may result from your actions directly, not the services you provide. General liability is designed to cover your business from lawsuits resulting from damage to others, whether personal injury or property.

While not all of these policies may be necessary for everyone, there are ways to add coverage and protect yourself by working with your insurance agent or company to create a policy that is right for you.

1. “Your Guide to General Liability Insurance” by Jason Metz, Forbes
2. “Liability Insurance: What It Is, How It Works, Major Types” by Julia Kagan, Investopedia
3. “What is Professional Liability Insurance?” by The Hartford

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