Home » The Importance of Professional Liability Insurance for Self-Employed Individuals
December 5, 2023
Debonie Thompson

The Importance of Professional Liability Insurance for Self-Employed Individuals

Choosing to be self-employed can bring great satisfaction and success, however, it also entails a certain amount of hazard. The most prominent peril encountered by those who work alone is being held legally accountable for financial losses due to any claimed wrongdoing, oversight, or mistake made regarding the delivery of services.

 

In this article, we’ll discuss why it’s important for self-employed individuals to have this type of insurance and what type of coverage they should consider when purchasing a policy.

What is Professional Liability Insurance?

 

In order to safeguard freelancers from the financial repercussions of purported wrongful acts, errors, or oversights in their professional services, Professional Liability Insurance (aka Errors and Omissions [E&O] insurance) is essential. This type of coverage guarantees that your livelihood won’t be compromised due to any negligence on your part.

 

This type of insurance coverage is vital for those who provide professional services such as consulting, freelance work, and other services as it offers protection against damages caused by negligence in the performance of their services. Professional liability insurance can help protect them from this risk by covering the legal costs associated with defending any claims that may arise from their professional services.

Why do Self-Employed Professionals Need It?

 

Navigating the tumultuous waters of self-employment is no easy task, but professional liability insurance can help protect you from potentially costly financial losses. This critical form of coverage offers a safety net against various risks that all entrepreneurs should consider acquiring.

 

In addition to protecting against financial losses, professional liability insurance can also help self-employed professionals protect their reputation and credibility in their field. If a customer or client sues to allege that they were wronged in some way due to a mistake or negligence on the part of the self-employed professional, having this type of insurance can help to protect their business assets and reputation.

Common Claims Covered by Professional Liability Insurance

 

This type of insurance can cover a wide range of possible claims, such as negligence, copyright infringement, breach of contract, and libel or slander. Out of these potentialities though, negligence is probably the most widely encountered when it comes to this sort of coverage. This happens when a professional is accused of failing to provide the standard of care that someone in their profession is expected to provide. Copyright infringement claims occur when intellectual property belonging to another party is used without their permission. A breach of contract can be brought forward if a self-employed individual fails to fulfill the terms of an agreement. Lastly, libel and slander claims can happen if a professional is accused of spreading false information about another individual or company.

 

Self-employed folks shouldn’t be without professional liability insurance. After all, it can provide invaluable coverage against the exorbitant legal fees that come with damages or other unforeseen circumstances. Whether you are just starting out on your own or are an experienced freelancer, making sure you have the right level of coverage tailored specifically towards your needs should be at the top of your priority list.

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