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Business insurance for freelancers

Large companies aren't the only ones vulnerable to lawsuits and other unplanned expenses. Tech freelancers face the same business risks.

Why should freelancers buy insurance?

Commercial insurance (also called business insurance) helps freelancers recover from cyberattacks, lawsuits, and property damage. That's true whether you're classified as a sole proprietor, LLC, or even an S corporation.

Much like your clients, you need protection from various threats and the ability to cover unexpected expenses. And because you can't please everyone every time, you’ll need protection against dissatisfied clients as well.

What risks do IT freelancers face?

In short, freelancers deal with many of the same risks as small tech companies. As a result, you’ll probably need some of the same coverage as your clients. 

Some of the risks you could face if you're a freelancer include:

Client lawsuits: For example, a cybersecurity consultant who advises clients on how to secure their systems could be sued if a client falls victim to a cyberattack or data breach. The client could claim that the consultant should have flagged a security issue in their system or recommended better security measures.

Data breaches: Businesses of all sizes are at risk of cyberattacks and data breaches, especially those that store sensitive financial or personal info.

Equipment damage: Let’s say you’re an IT consultant performing tests on a client’s system and you accidentally knock over a computer. The client could ask for compensation for the broken equipment or even sue if you don't comply.

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Insurance coverage freelancers in IT should consider

Those examples were a fraction of the situations that could happen as you start taking on IT clients. Since you could be held responsible for unsatisfactory projects or accidents, it’s essential to protect yourself and your business assets.

To get started, check out these freelance business insurance policies for IT professionals:

Errors and omissions insurance

Errors and omissions insurance (E&O) protects against lawsuits over professional mistakes and oversights. It's usually bundled with cyber liability insurance in a package called technology E&O.

This coverage applies most to IT professionals who advise their clients, have to fulfill the terms of client contracts, and work on essential projects needed for clients’ success. It’s a key policy for IT professionals like software developers, IT consultants, and project managers.

You might also see this policy called professional liability insurance.

Cyber liability insurance

Cyber liability insurance provides protection against data breaches and cyberattacks. It's vital for IT professionals who store sensitive personal information or recommend software for their clients. It typically comes in two forms:

  • First-party cyber liability insurance protects against data breaches and cyberattacks that affect your business directly. It covers crisis management, security incident investigations, and customer notification.
  • Third-party cyber liability insurance protects against data breaches and cyberattacks that affect your clients. It covers costs like your defense attorney's fees, court-ordered damages, settlement costs, or other court costs.

General liability insurance

General liability insurance covers the most common risks of running a tech business. It protects against lawsuits related to bodily injury, property damage, and advertising injury.

If you're freelancing, it can provide protection if a client blames you for an accident. It also guards against lawsuits related to copyright infringement or defamation.

How much will freelance insurance for IT contractors cost?

While freelancers don’t have employee costs reflected in their insurance premiums, other factors will affect your rates. These include the risks in your industry, the amount and type of data you manage, the policy limits you choose, and your past claims history.

Small tech companies pay a median of $28 per month for general liability insurance. Cyber liability insurance costs a median of $145 per month, and errors and omissions insurance costs a median of $61 per month.

Protect your budding business with freelance liability insurance

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