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I Don’t Have Small Business Insurance, and It Might Be Costing Me

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I have, at various times in my life, been an insurance scofflaw. I went without health insurance until I was in my mid-30s and only got it then because my wife got a job with insurance that covered me. I once let my car insurance lapse for a year when I moved to a different state (I don’t recommend this; the gap made my insurance very expensive when I started again).

But I have come around on the insurance front. I am grateful to have excellent health insurance that covers my asthma medication. For our home, my wife and I carry not just homeowners insurance (which our mortgage lender requires) but earthquake coverage, since we live a few miles from the Hayward fault in California.

I even got life insurance to protect my wife in case anything happens to me.

And when I ran a business selling at craft fairs several years ago, I had liability insurance to protect my business and customers. Years of selling in all kinds of weather and seeing more than one booth go flying in the wind taught me to be wary of the danger.

However, I have resisted getting liability coverage for my current freelance business. Here’s why I’m sticking to that decision — for now — and why I might need to change my mind.

All the reasons not to have small business insurance

I carried freelance liability insurance for about a year when I had a large institutional client that required it of its contractors. The policy cost me $54 per month or $648 for the year, which felt like too much for something I didn’t really need, so I canceled it after I stopped working with that client.

Since then, my only high-profile client brought me on as a W-2 employee rather than a 1099 freelancer to stay on the right side of a California law regulating gig work (which has since been amended so it doesn’t apply to freelance writers). As a subcontracted employee, I didn’t have the same worries about liability. And their vetting process for anything I wrote was extremely thorough.

And as a freelance writer, I work remotely and rarely see my clients face-to-face. I don’t write or publish anything that a client doesn’t approve. I create posts and pages on my clients’ websites, so there’s always a chance that I could break something, but, short of being an unwitting vector for malware, most mistakes are easily fixed.

My current clients include people I’ve worked with for years, and I expect that if there were any issues with my work, they’d talk to me or even fire me before they sued me. So, for now, I’m choosing not to buy professional liability insurance.

I worked in law offices for years before becoming a writer, so I know how litigious people can be. But one fellow writer pointed out that if people know you carry insurance, they might be more likely to sue because they have a greater hope of recovering damages.

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Why professional liability insurance could be a good idea, even for a remote business like mine

When I asked other freelance writers whether they carried insurance, they mostly said yes. Their reasons were the same: Insurance gave them protection and peace of mind when they worked for high-profile clients. Even though their clients vetted and fact-checked their work, insurance made them feel comfortable negotiating high-dollar contracts with large organizations without fear of liability.

My lack of insurance could be keeping me from pursuing higher-profile projects and working with larger organizations, which may keep my business small. Another way to look at small business insurance is as a stepping stone to a bigger business.

Another factor affecting the decision to carry small business insurance is what I stand to lose. I’m a sole proprietor, so my personal assets aren’t shielded from business liability. If a lawsuit could endanger the home I share with my wife, business insurance might be worth it to protect that investment. And, even if I won a liability suit, the lawyer’s fees to defend myself could bankrupt me.

I’m still weighing the decision to buy business insurance. If I can find a less expensive policy, it might just be worth it, even if I never need it.

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