Streetsmart insurance Blog
Like many other service providers, freelancers rely on a steady stream of clients to generate revenue. If you fail to complete your work on time and on budget, your clients can sue you and destroy your freelance business.
If you want to protect yourself from unexpected claims, you should purchase professional liability insurance (also known as error and omissions or E&O coverage). Professional liability insurance protects service providers from lawsuits that arise due to their performance. Freelancers, who provide technical, administrative, and marketing services in exchange for cash, are particularly vulnerable because their success depends on the satisfaction and good will of their clients. This policy can pay for any court costs and legal fees that you incur because of a professional lawsuit.
For example, imagine that Barbara Carlucci owned Carlucci Web Design. Over the course of three years, she built her business by providing freelance UX/UI design services for local clients who wanted to improve the look, feel, and efficiency of their websites. After five months of prospecting, she finally landed the largest contract of her career with Atlantic City Consulting. In exchange for her services, Barbara would receive $30,000 over the course of her three-month contract.
Atlantic City Consulting was a large firm with an even larger website, and they wanted to expand the number of web pages on their website to increase their online traffic. After three weeks of reviewing half of their current web pages, Barbara realized that she was in over her head. She hired two additional freelancers to help her review the client’s current website so that she could create the right design, but after three months of hard work, Atlantic City Consulting was not satisfied with her work. They sued Barbara to recoup their expenses, and Barbara was afraid that it could destroy her freelance business.
Fortunately, Barbara had purchased a professional liability insurance policy that provided $100,000 of liability coverage. She contacted her insurance agent, and her insurance company paid for her legal fees and helped her cover the cost of damages. The other clients that Barbara had served over the past three years rallied around her, and after the lawsuit ended she was able to get back to work without suffering critical losses.
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