I met with a local State Farm agent recently about getting errors & omissions coverage for my freelance writing, blogging, and publishing services. I received notice this morning that they won't cover my business. The reason? They said their policies don't cover:
- Freelance Writers
- Bloggers
- Publishers
- Web content developers
- Website managers / owners
Um... okay? We're talking about a kind of insurance that's not exactly uncommon in our industry, so to find out they won't cover any of these areas was a bit surprising. It was especially surprising given that I had been told "writer" was an option for listing the business on the policy (as was "publisher"). Very strange indeed.
Basically errors and omissions insurance is a type of professional liability insurance that would cover you if you're sued for publishing inaccurate information which caused harm to a client or other party. Obviously fact-checking is important. But there is always the risk that something will be missed or information from a normally reputable source will be incorrect. And of course, there is always the chance that you'll have to defend against a frivolous lawsuit if you piss off the wrong person or company -- especially when you start bringing in significant earnings from your blog, books, etc.
So I'd like to reach out to our readers today and ask what insurance policies you use in your business, if any? Do you have E&O coverage? Another type of policy? Does your policy cover freelance work, books and e-books, blogging, or some combination? And if you were successful in landing one of these policies (which I know exist), what company did you go with?
While I'm fine going without this kind of coverage temporarily, it's something I want in the long-term, especially as the publishing side of my business grows (both digitally and in print). So for now I'll just keep an eye out for promising policies.
I do not have any answers on this one, but you get feedback please do a follow up post for us!
I looked into insurance for selling homemade bath & body products, either on Etsy or at craft fairs and it seemed like a simliar crapshoot. No large carriers cover it.
Will do! 🙂
One of my graphic design partners and I had to decline a big project for a Fortune 500 company a few years ago because we didn’t have coverage — and they wanted some ridiculous level, like $25 million or something, so it wouldn’t have been affordable anyway.
A freelance writer friend of mine went through Axis Pro when she wrote a book a year or so ago: https://www.mediaprof.com/default.asp They specialize in media, so I imagine they’re hipper to what is appropriate than a generalist company like State Farm. She seemed happy with the policy, not sure about the price.
On a side note: Beyond life and health, the one type of insurance that I highly recommend freelancers get is disability insurance. It’s cheap (I think my policy is $300/yr) since we’re in a low-risk enterprise, unless you’re a writer for Skydiving Illustrated or Shark Diving Monthly.
Oh wow. The one we were talking about I think was for $100k (possibly $1m though), and the agent anticipated $400 or so per year for the policy (before the underwriter said to forget it). I can’t even imagine how much a $25m policy would cost — probably too much to be worthwhile for most freelancers.
I’ll be sure to check Axis Pro out.
And good tip regarding the disability insurance. 🙂
Some additional resources here, including a line item for freelancers: https://www.publiability.com/
This is interesting. Part of why I chose to incorporate (LLC) was to protect my personal assets in the event of a lawsuit. I’ve never considered acquiring additional insurance coverage. I need to learn more about this type of coverage. Thanks for sharing the link, Jake.
Great discussion and information!
It just goes to show you that there’s MORE to being a freelance writer than creating and publishing a website, pitching stories, and marketing your writing. I think this an area that’s seriously lacking, and I’m considering creating a business around helping NEW freelance writers get started the RIGHT way. They need to understand what they’re getting into. It’s not just about focusing on writing for that high-end magazine or ghostwriting a novel for a celebrity. If you don’t understand business, your freelance writing dreams can be over ASAP.
I’ve thought about filing paperwork for the LLC too. I recently created a FAQs in the hopes to clarify what I do as a freelance writer. I’ll check into extra insurance.
Finally, I wish I had a great freelance writing mentor when I started freelancing in 2008. Someone, who would have showed me HOW TO set up my business and then teach me about setting up a website, finding my ideal clients, marketing, etc. Live and learn!
Very interesting (and frightening) thoughts here on insurance! I’m interested to know how everyone feels about Kimberly’s comments on forming the LLC vs. buying insurance. I, too, am in the stages of forming an LLC to protect my personal assets. Would it be prudent for me to have E&O insurance as well?
I can honestly say, this is something I have NOT thought about! Thank you, Jennifer, for bringing this to my attention!
In the case of most freelancers, I doubt an LLC would protect them as much as they think. LLC are largely about protecting personal assets if you default on business debts. But, for example, it won’t protect your personal assets if you personally guarantee the loan. And I’d be surprised if you aren’t asked to do this as a freelancer, unless you’ve been in business quite a while and have significant income or assets in the business.
I also did a quick search on LLCs and liabilities, and found interesting info from NOLO. They note that an LLC doesn’t protect you if:
– you’re personally responsible for the harm (which you would be if you defame someone, fail to conduct proper research, etc.)
– intentionally do something reckless
So in the cases where E&O should cover you, it doesn’t appear an LLC will. Here’s the article so you can read more:
https://www.nolo.com/legal-encyclopedia/what-is-a-limited-liability-company.html
Of course, I’m not a lawyer or insurance agent. Your best bet is to talk to one about your own case and find out if insurance makes sense for you.
Jenn, when you say: “LLC are largely about protecting personal assets if you default on business debts. But, for example, it won’t protect your personal assets if you personally guarantee the loan. ” are you referring to a mortgage loan? If so, I wonder how it would affect someone who owned their home and/or car outright? I definitely need to read up on this…
No. What I mean is that if you borrow money for your business, you probably will be asked to guarantee the loan personally. And if you do that, you’re personally tied to the business obligations, so if you default they can come after personal assets even if you have an LLC. A big protection of LLCs is that your personal assets are protected if you default on those business obligations. But because many freelancers likely haven’t established separate business credit, they wouldn’t likely be able to get approved w/o that personal guarantee which takes away the protection.
Thanks for the clarification and for bringing up this topic. Great discussion!
I’m back again… came to a point where I had several people recommend I get E&O insurance. My insurance agent said she could get it but it could start out at $2,500 in fees. Not too reasonable especially if you are just starting out. Instead I’m looking into a variety of author guilds, professional writer memberships, etc. Some of them offer E&O at a discounted rate to members meaning I might pay a few hundred dollars a year, instead of $2,500, for the same coverage.
My husband uses Hiscox for his business. He’s a developer, not a writer. But they have to cover similar things as far as E&O goes. Might be worth checking them out. If nothing else, please let us know if you find any good deals that would be a good fit for folks starting out and looking to protect themselves. 🙂
I contacted Hiscox for a quote and was told that they don’t cover writers but their affiliate, Bolt Insurance does. They sent me a form but it’s entirely oriented toward writing a book or a single publication, obviously not suitable for a freelance writer. I am opting for an LLC and E & O in our litigious minded society. 🙂
Good to know. Thanks for passing that along Christy!