#024: Professional Liability Insurance: Do Freelance Writers Really Need It?

Welcome to the High Income Business Writing Podcast, helping you propel your writing business to a whole new level. And now, here's your host, Ed Gandia.

Well, hello everyone and thanks for joining me for episode 24 of the High Income Business Writing Podcast. I am your host, Ed Gandia, and this is the podcast for business writers and copywriters who want to take their writing businesses to the six figure level or the part time equivalent. As a reminder, you can find detailed show notes of this episode by going to b2b launcher.com episode 24 the number 24. So one of the things that I get asked about quite frequently is about professional liability insurance. I get writers asking me all the time, you know, where can I get some? What type should I have? Is it necessary? Do you even need it? And my answer is usually very generic because I am certainly not an expert in this area and I'm not comfortable giving out very specific advice when it comes to liability insurance. I always tell people, look, you know, you need to find someone, an insurance professional who can guide you through this maze. But recently I thought, you know what, this is happening so frequently that I really need to interview an expert and have him or her give my audience very specific practical advice in this area. And that's exactly what I wanted to do in this episode. So I brought in an expert. Not just an expert in this particular area of insurance, but someone who deals with freelancers, freelance writers, micro businesses, self employed professionals. Every single day. They understand our world. This company does. His name is Jared, Jared Kaplan, and he is the CFO and a senior vice president at Insuron. And Insuron works with small businesses, micro businesses and freelancers every day. So they understand what we deal with, they understand the risk and challenges we face, and they have products that are designed for us. So I wanted Jared to just give us a brief, practical, yet detailed explanation of what's out there, what you need to consider, and what the risks are. Now, I recognize that this may not sound like the most exciting topic in the world, but it's certainly a very important topic. So make sure to give this a listen, take some good notes. No, I don't think. I know you're going to walk away with some very practical ideas and some very specific steps that you can start taking right away. Enjoy the interview. All right, so I'm sitting here with Jared Kaplan and he is an industry expert in the area of liability insurance for self employed professionals and small business owners. And Jared, welcome to the show.

Thank you so much.

We have a lot of questions for you and this is an area that I don't think we really talk enough about, especially in the freelance world. I think there's a lot of misinformation out there. But let's start by talking in general terms, broad strokes. What are the basic types of insurance policies available for freelance writers and self employed professionals like us who really just deliver a professional service? We don't have products. Most of us work out of our house. What are the things that you need to consider?

Absolutely. There's really two or three basic types of risks that you want to make sure that you're covered for. As a small business of any size, but even a freelance writer, there are some specific business risks that are very, very relevant for your business that everyone should be aware of and you should purchase the proper insurance to be covered. There's really two types of products that we recommend, the first being a general liability policy and the second being an EO policy or errors in omissions. So we should probably talk about those separately. But the general liability policy, which is your most basic form of liability protection for a business, it will protect against the baseline risks that threaten. And especially for a freelance writing business, a couple of things that these will protect you for is like personal and advertising injury. So if something you wrote was interpreted as being libelous or slanderous and you get sued, this type of policy will protect you in those instances. And then also if you add on a BOP for that, it will protect you for property coverage. And everyone's got a computer or other equipment that they use for their business, Right. So even if you're working in your home, it's seldom that your homeowner's policy is going to protect you for your business property. Right. So we typically recommend for a couple extra bucks, 25 to $50 extra, you turn your general liability policy into a business owner's policy. It will also protect you in the case that for whatever reason you can't work. I don't know, maybe you're affected by Hurricane Sandy and you're forced out of the house and you can't use your computer. These types of policies can protect you, actually protect your income for down period of time when you can't work. So that's the general liability or BOP policy. Okay. The other one would be your errors and omissions policy. It's also known as professional liability. And you should think about this as medical malpractice for your business. Right? So this is when someone hires you and they think that you've been negligent in Performing the work. This will protect your business. So let's talk about maybe some examples where this could happen. Right. So your email campaign didn't garner as many opens or click throughs as you had promised someone. That could be an example of a risk that this protects you from. Or maybe your web copy increased the company's bounce rate when they sent it out. Right. So if someone wants to hold you liable for that, maybe a typo or incorrect fact in your copy caused a client to lose face with its customers or investors. Right. So there's just a couple of common examples that a freelance writer could, could find themselves in where this policy would protect you.

And by the way, those would be good examples because our audience, that's exactly the kind of work they'd be doing. But I'm starting to wonder two questions here. First of all, I know in my case, the contract that I have with my client, my agreement specifically states that, hey, look, I'm doing the best work to the best of my ability. You're responsible for fact checking, for running it through your own legal department, that sort of thing. So I'm trying to absolve myself for that kind of risk. Are you saying that we could still get sued even if you have that in your agreement?

Yeah. So first of all, you could always get sued. Right. So it doesn't take much, especially in our society, someone always can sue you. Right. Regardless of what the contract says. So this is the belts and suspenders to protect you from that. And you know, the other thing is we've seen, you know, countless examples of various different contracts which are just gray around these topics. Right. And the more, actually, the more often scenario we see, especially when you're looking at the freelance community, is you're dealing with much bigger businesses who have much larger legal departments. Right. That have written in a whole number of protections for that company, which really doesn't look after the little guy. So when it comes to them versus you, they've got the big legal department and the legal contract that is going to be sometimes difficult to battle against. Right. So this is just someone looking out for your corner by going out and purchasing the insurance rather than, you know, hoping that the contract that you're going to sign with a much bigger institution is going to protect you.

Okay. Okay. And I mean, I'm assuming the answer to this is yes, but I'd just like to hear, you know, how often do you see this? Are writers, freelancers actually getting sued out there for these sorts of things?

So I wouldn't say we don't see it that often, but there have certainly been a number of high profile examples. And the problem is that when it happens and you don't have insurance, it's incredibly detrimental for your business. And these policies are relatively inexpensive for the protection that they give you. And so it's always a great idea to purchase them. But, you know, just a couple of examples that we've seen. Last year there was a freelance writer, I think the institution was called the Stanford Patch. And they were accused of making false and defamatory statements. And the plaintiff wanted 15 grand in monetary damages, but $100,000 in punitive damages. Wow. So, you know, that's way more than most freelance writers can afford. And that doesn't even take into account legal fees you'd have to pay. And then just this summer, there was a cheerleader for the Cincinnati Bengals. Now she actually won her case against a blogger who called her a child molester because of a relationship she was in. She won $338,000 in damages. So just two kind of real world examples that we've seen where you're talking real, real monetary damages that will put you out of business quickly if you don't have an insurance policy to protect you.

So let's talk about the limitations of these policies. What do they not cover and under what circumstances? With that discussion, I'd like to hear a little bit about deductibles, because I know that could play into this as well.

Absolutely. So the typical policy is going to run you less than $1,000, typically $500 to 1,000 do.

And is that a year? A month?

That's a year. Okay, that's a year. And it obviously depends if you're going to buy both the BOP and the general liability of the property and the EO, it's going to be close to 1000. Could be as high as 1500 bucks. If you're just going to purchase one or two of the lines, it could be as low as $500. Right. So it really depends on what you're looking for. And typically the policies cover you for about a million dollars per claim. And some will. You can buy for as much as $2 million in the aggregate. But the typical policy we see for these types of businesses are $1 million of total liability coverage with what kind of a deductible. Now, usually many of our carriers have zero deductibles here.

Oh, wow.

But it will run the gamut. Right. So if you're willing to take on a $500,000, $2,000 deductible that will lower your cost a little bit. And so it really just depends on the carrier. And also the amount of coverage that you want all plays a part into the pricing. Right. But we do have carriers that will offer no deductible policies.

Okay, okay. And then what things do they not cover? I mean, we've talked about a number of examples.

Right. So we talked about some things that we'll cover. But really, exclusions run the gamut. Right. So it's very, very important always to read the 5 print of your policies or work with a licensed professional agent. Right. That can you interpret the policy to really understand hypotheticals and where you are and not protected. But the most common exclusion that we see is not covered is anything intentional. Right. Anything where the writer was intentionally misstating something or acting illegally. A policy is not going to protect you. That's your most blanket general exclusion. And then, like I said, depending on the specifics of a policy, you could see a number of different exclusions anywhere from the types of clients that you're working with, types of industries that we would be forbidden in. So it's very, very important to read it closely.

You mentioned something earlier about legal fees. You get sued, and let's say you go to court and the policy will cover you. But you said in most cases you still have to cover your own legal fees.

Yeah, it depends on the policy. Right. So if you're willing to spend a little bit more money, some carriers have policies that will exclude defense costs from the limit, so you'll end up getting a extra coverage, and they'll earmark a kitty for those expenses. And other policies, they'll actually include the legal costs in the total amount of liability that you're given. So most of these policies will protect you to some degree for the legal fees if you've bought the insurance. It just depends on whether it's going to be within that limits of liability or whether it's going to be slightly over.

Okay. Yeah. Because, I mean, I would be concerned that, gosh, you know, legal fees could run you, you know, let's say it's $10,000. That's right. Gosh. Yeah. The award potentially could be 100,000, but still, $10,000 is a lot of money. So I would think that it'd be smart to look at that as part of the coverage.

Absolutely.

Okay, so here's my next question, because this is an area that I might be ignorant, because this has just been anecdotal, but I have always heard that one of the challenges with these types of policies that most insurance companies and brokers don't really understand the potential risks of a freelance writing business. Because of that, it's either very difficult to get a policy that covers what you really need or something affordable. And I think you've kind of addressed that part of affordability because they're trying to kind of COVID for things that they don't understand. What has been your experience?

Right. What we find actually is it's more often the agent that doesn't understand than the insurance carrier. Because what's interesting is that these, you know, when you think about the premiums that are involved here and the size of business, it's typically hard for an insurance agent to spend time on such small businesses and really underwrite them on behalf of their carrier partners so that they buy coverage in line with their risk profile. And it's simple as they lack the people and the process and technology to actually make a money make money themselves on such small accounts that they typically don't do a great job assessing the risk and then doing the work that's required to get them to the right place. Right. So there are carriers out there that love these types of risks and would write them all day long and actually have some very, very good policies that will cover you. But it's the insurance agent that gets lazy and just won't put the time and effort in because they're like the thousand dollar policy. I can't make any money on it. Right.

Yeah.

Which is why our business model is so unique in catering to the one person firm. We've got the people, the process and the technology that we actually can make our profit margin on serving these accounts. And that's why we are able to get them the coverage that is in line with their risk profile. Right. And spend the time with them to assess their and use some cool online stuff to do that. But at the end of the day it's all about matching that company's risks with the right carrier partner. And we're lucky to have the delivery model to do that. So much more on the agent side than the carrier side. And what you find with a lot of these guys is they end up not buying coverage because the quote they get back is just so high. Because the insurance agency has not gone out and get the minimum premium policy. They've just gone out and tried to add on bulk on some coverage there that may not be necessary to get the premium level up to an amount they can make money.

Yeah. And maybe that's why I heard what I Did here, which is, it was either one or the other. Either can't get it, or what you can get was just because, you know, 500 to $1,000 a year, I mean, that seems very reasonable to me. But, you know, so that leads me to the next question is, would you say, does it make sense to buy a policy early in your business, or is this the kind of thing that it makes more sense to. To get into once you're at a certain income level?

Yeah, we think it makes a ton of sense to get it day one. And then as the business grows and gets more comprehensive, there are additional risks that are typically different exposures, different risks that are introduced. And it's important to always assess your insurance no longer than every year. Right. To make sure that you're currently protecting yourselves from all the new risks that may have developed as you've grown the business. And, you know, from a cost perspective and how the policy is underwritten, especially for a freelance writer, it typically is the size of the business and who you're doing the writing for. Right. So the larger the company you are, the more revenue you're generating. That typically will be linear to the amount of money that you're going to pay. A lot of these policies are underwritten based upon revenue. And then also depending on the industry, if you're in and the medium, whether you're blogging or you're writing for print paper or you're writing for a magazine and what you're writing about, if the carriers perceive certain customers or industries as being more risky, they may charge you a bit more for those. When it comes to the pricing policy.

Okay, let's say day one, I have zero revenue. It makes sense to get it there. However, I really don't have much of a track record. You're saying that it could still be. The risk could still be assessed and a carrier should be able to give you something?

Absolutely, yeah, absolutely. In those cases, they look at their pool of applicants. Historically, right from your geographic region, Doing business with those types of businesses, and typically at that size will fall under what we call a minimum premium policy, which is exactly in the range that we talked about earlier. So 500 to 1,500 bucks to get all the lines of coverage that make sense here and to secure your business as you grow it, you're protected then.

Especially the first couple of years. I would think that it would make sense to maybe look at this every six to 12 months.

Absolutely. Yeah. Once you sign another big contract or the business grows, there's no reason why you have to wait a full year, I should say all. For the most part, these carriers allow you to endorse the policy mid year for some additional premium, get some additional coverage if it makes sense. But for a lot of people it's a million dollars of coverage out of the gates, which is actually incredibly, incredibly standard and enough to cover a business as it grows out of the gates.

I'm wondering, would a carrier impose certain restrictions, limits or requirements in terms of what you use for a customer agreement and certain types of communications, or do they not really look at that?

A lot of the carriers do want to understand what type of written contracts you're entering into and what protections those have for you. Right. So what kind of identifications or hold harmless agreements that you've been able to send up for? Obviously the more favorable the contract is for the freelancer, the less risky that freelancer looks to a potential insurer and some of them can give discounts based upon that information. So always good idea to have a written contract and the more protections that you can negotiate into it so the better off you'll be when you go to buy the insurance.

That makes sense. What are some potential pitfalls? What should freelancers look for and be wary of when shopping for a policy?

I think that a couple things. First of all, you always want to try to go with an A rated carrier if possible. They're the carriers with the highest stability ratings from third party companies so that you know that you are dealing with a well capitalized insurance carrier. It's always important to shop around. You should try to get multiple quotes and then they'll often be priced differently. And then it's typically pretty easy to tell why one policy is slightly more expensive than another. And what's great is he's typically for $25, $50 extra, you get a lot more protection. Right? So it's important not just to look at one to one quote, to try to look at a bunch of different quotes. And then finally we talked about it a little bit earlier. But the fine print is important here, right? And so a lot of times people want to go jump at the cheapest policy, but when you actually read the coverage, you're not getting much coverage because they've excluded everything under the sun from a potential claim scenario. So it's really making sure you're with that well stabilized carrier and then doing the risk reward matrix between price and coverage to figure out what makes the most sense for your business. And that's why license agent is so important here because a lot of Freelancers, they don't know much about insurance. They just know it's probably a good idea to protect their business. So you want to work with someone that you can trust to walk you through that matrix to figure out the buying decision process and what's going to make the most sense.

So that brings up another question, which, if you're looking at different quotes, does it make sense to work with a broker who can then bring in different quotes that make sense, or is it better to just go and find pricing directly to different companies?

No, I think that whenever you're buying a product that you're not the expert in, it always makes sense to work with an expert. And in this industry, working with the licensed broker who can walk you through the ins and outs of different coverages and different policies is paramount, because then you can really be an informed buyer and say, hey, I could spend 350 bucks to get a general liability policy with this guy, but my coverage is going to be XYZ versus spending 450 bucks with this carrier. And look at all the extra coverage I got. And then say, hey, for the extra hundred bucks a year, does it make sense for me to step up for the greater coverage?

Yeah, I don't know if it's the case in this business, but I don't think you pay any more by going through an expert broker. Correct.

You don't? No, you don't.

So that's an added benefit. You're really getting the same product without paying anything extra.

That's right.

Super. So how do you avoid problems altogether? I mean, there's certain things that you could do even if you have coverage, just to really lower your risk. Are there some basic things that freelance writers should be doing to prevent claims in the first place?

Sure.

Other than the obvious. Right, right.

Well, contracts are important. You'd be surprised how many guys that we find that just don't have the business practice of contracts and contracts for when you sign up the account. And then also as it relates to invoicing and billing, making sure you set clear expectations there so that everyone understands what the process looks like. We've seen a lot of instances where freelancers will get into a billing dispute, and then their client will turn around and then use that as a way into an insurance claim to basically say you didn't do your job appropriately. Right. And then all of a sudden, you got a bigger borrow on your hand. So contracts, written contracts, very, very important. And then also keeping the lines of communication open, making sure you check in if you have to change Deadline if you're un about project specifications and when any of the project deliverables change, it's very, very important to keep small miscommunications from becoming bigger problems.

So keep a paper trail. Always get it in writing. Really the basic stuff too.

That's right.

So this has been fantastic. Jared and I know you guys do quite in this area you work with a lot of self employed solo professionals. Tell us a little bit about your firm and the products and services you provide.

Absolutely. So Insureon is the micro business insurance solution for all these types of businesses that we're talking about. The freelance economy, the population that really is ignored by traditional brick and mortar insurance agencies for what we talked about in the beginning that just lack the people, process and technology to make money on these small accounts. So in our process you come online, we've got a customized application depending on what you're doing so that we can give you a risk questionnaire and really understand your business. And then we've got some really cool technology behind the scenes that integrates with a number of a rated insurance companies to produce a real time quote that you'll see on your screen there. And then when it comes time to buy, we've got licensed professionals in the lower 48 states that will work with you to make sure you understand the coverage options and then work with you also after you buy in the coverage so that as new term, new requirements are risen midterm or at renewal, we work with you to continue to figure out whether you're really protected for the right risks for your business. It's an online national virtual insurance agency focused on the micro businesses of America.

That's who we are. What's a good URL? We'll include this in the show notes but where should people go?

Sure. Www.insureon.com that's I n S u R e o N. So insureeon.com is where you go to select your business class and get the process started.

That's super. Sounds easy.

Yeah, it's. We try to make it easy. It's a topic that, you know, everyone knows they need it but no one really knows that much about it. So that we take the pain out of buying insurance so that you can get it quickly and make sure your business is covered.

I love it. I love it. Jared, thanks so much for coming on today. I really appreciate it.

Hey, my pleasure, Ed. And we look forward to the future conversations. Hopefully.

Well folks, I told you you were in for a good one. I don't know how you feel about it. But I In my case, that's probably the most straightforward discussion I've heard on this topic ever. I found it to be extremely useful, very straightforward, very specific advice. Really enjoyed talking to Jared and again, I know this is not the most exciting topic in the world, but this is a very, very important issue and I hope you take it to heart and I hope you investigate these options and make sure to check out Insuron's website. Insurance insuron.com I'll include that link in the show notes. I want to be very clear about the fact that I'm not affiliated in any way with Insuron. I just found their information to be extremely helpful. They're one of the few companies who was taking the time to talk to me and answer these questions very specifically and been very helpful all along the way. So I think they're worth checking out. Make sure to do your homework and you know, see what else you can find. There are definitely a lot of players out there, but as we mentioned in this interview, not everyone is set up to deal with freelance writers or even micro businesses and entrepreneurs such as ourselves. Again, you can grab the detailed show notes for this episode by going to b2b launcher.com episode 24 and I had a couple of quick announcements before I sign off. First, I wanted to make sure that you're aware of my free pricing guide. I'm giving away the actual master fee schedule that I use every day, every week in my freelance writing business. I have fee ranges for 32 different B2B or commercial writing projects. I have some pricing guidelines, some strategies, some tips, and this will be applicable for any of you. I mean really regardless of your experience level. So if you're starting out, I think this will be a really useful guide and I talk about how you can adjust your pricing based on where you are in your business. And if you've been at this for a long time, I still think you're going to get a lot of use out of this. You can grab that pricing guide, no strings attached. Just go to b2b launcher.com and you'll see the sign up right there. Basically what will happen is just enter your email address, you'll get the download link immediately, and I will send you about every week or so a kind of a new insight or tip or strategy that I don't share with anybody else. You can always unsubscribe to this, so don't feel you're tied to anything by giving me your email address. Also, wanted to make sure that if you've enjoyed the show that you consider giving me a quick star rating or honest review in itunes. And the best way to do that, the easiest way to do that is to go to b2b launcher.com iTunes that will take you straight to the show page in itunes where you can leave that review and you can also subscribe to the show in itunes on that page. And finally, if you're enjoying this material, if you've enjoyed today's show and you want to share it with friends, I welcome you to do that. In fact, I hope you do. The best way to do that is to go to b2b launcher.com forward/love or to just use any of the social media sharing buttons that you see on the show Notes page. So that brings us to the end of the episode. Again, folks, I am your host, Ed Gandia. Thanks so much for listening and I hope you have an awesome day.

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