Freedom vs. Risk: Why Insurance Shouldn’t Be Optional

I’ve been in the trenches with freelancers for almost a decade, helping them with issues like non-payment, costly mistakes and difficult clients. One of the most frightening things I hear freelancers say is “I don’t need insurance because…

I’m a limited company

I work with a contract

My project fees aren’t big so there’s not a lot at risk

I’ve been freelancing for X years and have never had a problem”

If you want to avoid financial risk then these are dangerous sentiments. I’m here to debunk each of these and show you why freelance insurance shouldn’t be optional. The minute you start trading your time for money, you should get insured.

I know you carry the weight of running a business day-to-day, but let me remind you of the average freelancer’s responsibilities when working with clients.

You’re responsible for delivering work on time. You’re responsible for meeting client expectations. You’re responsible for communicating clearly and promptly. You’re responsible for producing work to a certain standard. Throughout all of this you have a duty of care to your client… and yourself!

If any of these things were to go wrong or fall below what’s expected, the buck stops with you. And that’s whether you’re truly at fault or not. (Spoiler alert: sometimes it’s not the freelancer’s fault but there’s nothing stopping a nasty client from blaming you.)

Maybe you underestimate just how much work is involved and the project falls behind schedule until the deadline is missed. Now the client has to hire other freelancers to get things back on track and they expect you to cover the cost.

You deliver the work that was agreed in the project scope but the client is arguing it isn’t what they expected and now there’s a dispute around payment. This type of problem is especially common with technical roles like development—especially if working with a non-technical client.

Perhaps a typo you’ve made slips through the net and ends up on product packaging. It’s spotted only once the packaging has gone to print and it’s an expensive job to correct. Your client thinks you should pay to fix the mistake.

These examples aren’t plucked from my imagination. They have happened to many freelancers.

I’m a Limited company

There’s a misunderstanding that being Limited means you don’t need additional protection like insurance. Whilst being Limited does offer your personal assets more protection in the event of something like liquidation, the legal entity of the business has no impact on a client trying to recover damages from you, bringing legal action against you or refusing to pay your invoice.

You still need to be able to stand up for yourself as a Limited company should this happen. That’s something insurance can help you do, whether you’re a sole trader or Limited company.

I work with a contract

Contracts are great for outlining the duties of what’s to be expected between both client and freelancer, but insurance is what steps into action when those duties come into question. Contracts are simply a way of saying “I provide X, you pay me Y”. But what happens if you don’t provide X or the client doesn’t pay you Y? Your contract won’t prevent a situation from escalating and it won’t pay your legal fees.

Furthermore, disputes can actually arise as a result of breach of contract. So contracts are great. Contracts give clarity to a job and relationship. Contracts remove nasty surprises. Contracts help everybody get on the same page so that expectations are aligned, but contracts don’t completely eliminate risk.

My project fees aren’t big so there’s not a lot at risk

Most of the claims freelancers are subjected to aren’t limited to their project fees. You might receive £2000 for a project but the cost of delivering the work late or making a mistake has bigger consequences for your client. Some of the additional fees clients claim for are:

● Costs incurred to hire additional support

● Loss of business due to missing deadlines or broken functionality

●. Fees to correct errors

● Reputational damage

It’s not just about your fees. A failure of your professional services can lead to bigger losses for the client, which is why we have a duty of care to them and insurance shouldn’t be optional.

In some client contracts you’ll notice a clause that requires you to have a minimum level of indemnity. This is because your client needs to know—should you do something that impacts their earnings or costs them money–they won’t be out of pocket. They can safely recover the damages from you should that be a route they pursue.

I’ve been freelancing for X years and have never had a problem

I had been driving for 13 years before I had an accident. Somebody used the wrong lane on the roundabout and drove into the side of my car. It was a small bump but still costly. It reminded me of when I hear freelancers say that they don’t have insurance because they’ve never had a problem before. None of us get into a car anticipating a bump, but we still take measures to mitigate the risk like wearing a seatbelt. Insurance is the seatbelt.

None of us start work on a project expecting things to go wrong, but sometimes they do. Sometimes we make a mistake and need to put out a fire. Other times we end up working with a difficult client. Just because it hasn’t happened yet doesn’t mean it can’t happen in the future.

There are many self employed insurance plans and the one you choose depends on factors like your budget and how risk averse you are. With a legal package comprising of professional indemnity and legal expenses, insurance for freelancers can:

1. Cover the cost of legal fees

2. Pay damages to your client

3. Mitigate the risk of non-payment

4. Compensate third-parties

5. Provide legal advice

6. Support you with recovering unpaid invoices

If you aren’t insured then solving client conflicts will look different. You might turn to freelance communities to ask for help. While the feedback may be well meaning it isn’t legal advice and could make matters worse.

If you decide to take the next step and seek legal advice, there are expensive upfront costs involved with speaking to a solicitor. Plus there is the friction of finding the right lawyer in the correct jurisdiction who is skilled in the area you need them to be like IP or copyright law or commercial contracts.

Insurance solves both of these issues. Not only does it cover legal fees in the defence of claim, but the insurer has a panel of expert solicitors across the globe at the ready.

Without insurance you’re leaving yourself vulnerable to big costs that most of us don’t have the funds to cover, which can lead to you having to close up shop completely. We don’t want that—especially when we can simply transfer the financial risk to the insurer giving you the freedom to find your next client and do good work.

If you’d like to get started, head over to With Jack and build your insurance package.If you’d like to learn a bit more before doing so, check out our “why do I need insurance” guide.