What freelancers should know about liability and their assets

get adequate business insurance
From Mashable, Nellie Akalp offers and overview to the liability that might be incurred by freelancers and advice on how freelances and independent contractors might protect themselves.  Some of the best advice is to obtain appropriate insurance. Insurance protects you and your assets and it protects your clients in the event that you make an error that results in a loss.  Nellie offers similar advice.  She writes:

So, how should solo workers protect themselves?

If you’re concerned that being sued for a part-time gig will wipe out your personal bank account, here are a few suggestions:

    1. Form an LLC/corporation: Yes, as mentioned above, this step won’t protect you from personal liability, but it will protect against contractual liability. If you ever hire an employee or contractor, a formal business structure can protect you personally from your employees’ actions. It can also offer flexibility in terms of how you pay your taxes and classify your income (you can talk with a tax advisor/CPA about the possibilities).
  1. Get adequate business insurance: Ideally, you should consult with an insurance agent who’s familiar with your business type and particulars. Many small businesses take out general commercial liability insurance to protect against accidents, injuries and negligence claims. For example, it can help cover expenses if someone gets hurt on your property (i.e. a client comes over to review something) or against a claim of slander, false advertising or copyright infringement. Depending on your level of coverage, you can expect to pay between $500-$1,000 annually.

There’s also an E&O (Errors and Omissions) policy that covers any errors, oversight or negligence in your work. Professional service providers — like lawyers, doctors or accountants — will need to get some kind of professional liability insurance to protect against claims of malpractice and negligence.

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