One challenge with freelancing and independent consultant work that you may not have considered is securing business insurance. Business insurance will protect you and your business against unfortunate mistakes and mishaps. There are a number of different types of insurance coverage that you should carry as an independent consultant or independent contractor, each of them designed to protect you from a different type of happenstance or error.

There are several options to getting business insurance on your own. Many independent contractors and independent consultants use a portable employer of record to secure General Liability insurance and E&O (Errors and Omission) Insurance (also called professional liability insurance). One option, a portable employer of record service, can offer this coverage to a freelancer. These companies provide a workable solution to the challenges many independent consultants face. These workers can remain independent, but also can secure business insurance as well as other W-2 benefits. This is but one option, but knowing your options is the best way to make the right decision for your business.

Errors and Omissions Insurance

If you are a freelancer who gives professional advice to clients upon which they rely to make business decisions or provides IT solutions services, you make an implicit promise to them that your work will be free of errors. If you do make an error or omission in the work that you do for them, it could cost them dearly, both in cash and in reputation. If that happens, you have a direct financial responsibility to your client to make it right. These days more and more client companies will only contract with consultants who can provide proof that they carry professional liability coverage, also called Errors and Omissions insurance, or E&O. This ensures that they are protected if an error on your part causes them financial harm. Maintaining this kind of professional liability insurance represents your professionalism to clients, and helps you in obtaining work in the future.

Professional liability E&O insurance provides financial protection to meet the cost of defending any claims brought against you. It will also cover any damages that may be held against you and become payable. E&O insurance is a necessity if you work in any capacity where your errors may cause the company financial harm. Some examples are an error in the tax schedules, IT security failure, or faulty legal advice.

You can buy professional E&O insurance as an independent consultant or an independent contractor operating as a limited company through a number of providers, including many that specialize in business insurance for white collar freelancers. The cost is reasonable, particularly when weighed against the consequences if you do not have it.

General Liability

General liability insurance will protect you against claims that you accidentally caused damage or loss to someone else's property. Accidents happen, and they often have financial consequences for your client. If you are an independent consultant, your client can hold you financially responsible for damages if you, for instance, knock over a cup of coffee and it spills into a keyboard, or if knock a laptop off the corner of a desk and destroy it. General liability insurance will cover the cost in the event your actions accidentally cause damage to your client's or another person's property. It will also cover you in the event your actions cause injury to another person.

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