Three crucial insurance policies for freelancers

Freelancing is gaining in popularity. But what risks does working this way entail, and how can you protect yourself from these risks? In this blog we set out three crucial insurance policies for freelancers.

Three crucial insurance policies for freelancers

Who is a freelancer?

Freelancers are often defined as follows: an entrepreneur who does not employ staff, who mainly provides services in a B2B context working with temporary contracts, tasks or projects.

A study by Unizo showed that in 2017 the number of freelancers increased by 9%. What makes this way of working so attractive?

Autonomy, flexibility and creativity are the three buzzwords that help explain why freelancing is so popular. Today, freelancers are working in every sector of our economy. Examples include copywriters, IT workers, photographers, life coaches and consultants, to name but a few. It’s also really easy to start freelancing. Most of the time all you need is a laptop, a smartphone and an internet connection and you’re ready to take on your first tasks.

Which risks do freelancers face?

Being a freelancer gives you freedom, the benefit of not being under direct control from your employer and, above all, the choice of what tasks to do based on your own capacities and skills.

But that very freedom of choosing how to work is also where you can run into trouble. Below, we describe three risks you should take into consideration:

  • As companies take a more critical stance and the number of freelancers offering their services increases, your client’s expectations are being pushed higher. This puts more pressure on you when carrying out tasks, meaning you’re more likely to face mistakes which could lead to claims for damages.
  • As a freelancer, you depend on your clients for your income. They have to pay your invoice on time, but figures from Graydon show that only 68% of invoices are paid within the agreed period. This means that over a quarter of invoices are not paid on time.
  • If you’re freelancing and become ill or are incapacitated for a longer period, this has an immediate impact on your income. In a worst-case scenario, this could mean you’re unable to maintain your standard of living and have to stop your activities.

How can I protect myself as a freelancer?

We’ve just described the three biggest risks you face. Of course, we’d like to offer you some solutions which can protect you from these risks. Let us set out the various options for you.

Professional indemnity insurance

Professional indemnity insurance insures contractual liability between the client and executor. If damages are incurred, there must be a causal link between the freelancer’s intellectual error and the consequences this leads to.

Taking out such an insurance policy puts your mind at ease, because you know that any mistakes – and the financial consequence of them – are covered.

This sort of insurance also signals to your client that you work in a professional way. It’s even often the case that professional indemnity insurance is included as standard as a mandatory condition when signing a contract.

Legal protection for sole proprietors insurance

By taking out a legal protection insurance policy for your company, you’re giving yourself the best legal protection.

You can use this insurance to cover the costs of legal proceedings against a client if your invoice still hasn’t been paid after you’ve sent several reminders. Legal protection is a valuable aid if your client thinks the agreement has been executed poorly and is demanding compensation.

Legal aid for sole proprietors is available if you have a dispute with a service provider such as your accountant or lawyer. This policy can also give you a helping hand in cases relating to fiscal law, civil protection and third party insolvency.

Guaranteed income insurance

This insurance protects your income if you’re unable to work due to an illness or accident. This means you’ll be given a guaranteed sum each month of up to 80% of your income, with a minimum 30-day waiting period.

For example: you pay yourself EUR 45,000 annually. Guaranteed income insurance would give you up to EUR 36,000. This works out as a replacement income of EUR 3,000 per month.

It’s important to know that, if you have a company, your guaranteed income may be linked to an EIP (individual pension entitlement). This combination means your premium may be much lower for your guaranteed income,  and you’re directly contributing to your pension savings at a fiscally advantageous tariff.

Would you like to know more?

Do you want to give yourself the best protection like many other freelancers? Get in touch by emailing jesse.mertens@vanbreda.be or calling +32 (0)3 217 67 53. Together, we can offer you a fully digital follow-up so you don’t have to make time for meetings at our offices.

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