Liability Insurance can be a tough sell when no one’s explicitly requiring you to purchase it. We buy car insurance because we have to. We buy business insurance when it’s required for a contract. But without a car or a contract hinging on insurance, the absence of immediate value makes it easy to do without. That is, until you’re being sued by an angry bride for failing to capture any photos of her father smiling.
As a freelancer, your career is characterised by diversity, unpredictability, and above all, individuality. Unfortunately, with the individualistic culture comes the idea that if you’re talented, passionate, and careful, nothing can go wrong. Because there is very little industry wisdom available to the freelance economy, we rarely hear the stories about freelancers who did everything right, and still ended up face to face with lawsuits and lost wages. It’s time to start that conversation.
Below are a few examples of talented, passionate and careful freelancers, whose insurance saved them from nightmares they never could’ve seen coming.
Grace Larson (26)
Web & App Designer – San Francisco, CA
Grace is hired to revamp the website for a middle aged psychologist’s private practice. The old site had unpleasant, early 2000s style pages that could’ve been word documents. Grace completely redesigned the site, salvaging little other than the copy and photos of the office space. The new site looks beautiful, with new features allowing clients to pay and schedule their appointments online. However, because of a bug in the host site, the privacy settings malfunctioned making the calendar viewable to anyone who visited the site. Psychologists have a strict code of confidentiality, and this was unacceptable. The client threatened to sue Grace for leaking sensitive client information, setting the damages at one year of revenue from the private practice. Grace tried to explain that the host site was responsible for the breach, but her client insisted that she was the one who should be sued.
Although a court would likely not have found Grace responsible, she couldn’t afford a lawyer to fight the charges. She had, however, been able afford nine months worth of insurance, which wouldn’t expire for another five months. Her contract hadn’t required her to be insured – the psychologist had barely written a contract at all. However, she decided the $450 was worth it just in case something should happen. In the end, that $450 protected Grace from losing up to $150,000 for something she could neither control nor avoid.
Will Stephenson (23)
Graphic Designer – Seattle, WA
Will is hired to draw a logo for a mid-sized shoe company in Seattle, which he produces in just days. They love the design and begin using it in their marketing immediately. Two weeks later, a small company in Minneapolis sues for copyright infringement, claiming that his design was based too closely on theirs. Will drew the design by hand and had never heard of this company, let alone seen their logo – it never occurred to him that he could be accused of plagiarising it. Nevertheless, the two logos do bear some resemblance. Because he’s not an employee of the Seattle company, the lawsuit falls upon Will to deal with alone. Without professional liability insurance, Will would never be able to afford the $500,000 in damages demanded by the Minneapolis company. He would have a hard time even paying legal fees to fight their claim.
However, because Will bought three months of insurance to cover the time he worked for the Seattle company, he is covered. The $250 he spent on liability insurance allowed him to avoid half a million dollars in unexpected legal fees.
Nate Hartman (30)
Videographer – Chicago, IL
Nate was at one of the many summer weddings he’d been hired to film. The wedding was beautiful, the bride looked glowing in every shot, and he even got some footage of the couple’s dog smiling at the camera in his bow tie. He uploaded the footage to his box account and deleted it from his camera to make room for a shoot he had booked for the next day. But when he went back to edit the footage, it was gone. His Box account had been hacked and the past month’s worth of footage was wiped clean. He called the couple that evening to tell them the news and, needless to say, they weren’t pleased. They refused to pay him for his work since he had nothing to show for it.
Shooting and editing the footage he’d lost was projected to make up two months worth of revenue, without which he’d struggle to pay his bills. On top of that, the bride was now suing him for failing to deliver. Legal fees would’ve made for a tight budget in a normal month, but without the next two months’ revenue, they would be impossible to swing.
Luckily, Nate had renewed his insurance policy for another six months. The insurance company would not only help him cover lost wages from the disrupted projects, but protected him from litigation as well. The $300 Nate spent for 6 months of videographer’s insurance saved him from bankruptcy.
No one buys renters’ insurance because they think there’ll be a fire. No one buys car insurance expecting to crash. As a freelancer, you’d never do anything that you thought would get you sued. But customers can be as unpredictable as floods and distracted drivers, and it’s important to protect yourself so small bumps in the road don’t turn catastrophic.
Written by Bunker for Twine - September, 2018.