Business liability insurance is a key policy that protects your freelance business from financial risks. It covers costs if a client sues you for mistakes, negligence, or damages.
What is Business liability insurance?
Business liability insurance is a policy that protects your company from financial loss. It covers legal costs and payouts if you're held responsible for things like client financial loss, bodily injury, or property damage. For freelancers, it often comes as professional liability (errors and omissions) or general liability insurance.
Why is this important?
As a freelancer, you are personally responsible for your work. A simple mistake, a missed deadline, or a client's dissatisfaction can lead to a costly lawsuit. This insurance acts as a financial shield, protecting your personal assets and business savings from being drained by legal fees and settlements.
How does it work?
You pay a regular premium to an insurer. If a client claims your work caused them harm or loss, you file a claim. The insurance company then investigates and, if the claim is covered, will pay for your legal defense and any settlement or judgment up to your policy's limit.
Pros and cons
The main benefits are financial protection, increased client trust, and peace of mind. The primary downsides are the ongoing cost of premiums and policy exclusions that may not cover every scenario. It's crucial to read your policy details carefully.
Conclusion
Business liability insurance is a fundamental risk management tool for serious freelancers. It safeguards your financial future against unforeseen claims. Evaluating your specific risks will help you choose the right coverage for your independent business.
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