Is Professional Liability Insurance Worth It for Independent Contractors?

Independent contractors often enjoy the flexibility of working on their own terms, but with that freedom comes added financial responsibility. Unlike traditional employees, contractors are often responsible for managing their own risks, including potential liability for other parties’ losses. Professional liability insurance is one option that can help, but is it worth it?

What Professional Liability Insurance Covers

Professional liability insurance (sometimes called errors and omissions insurance) may help cover costs if a client claims that your work caused them financial harm. This could stem from mistakes, missed deadlines or advice that didn’t deliver the expected results. Coverage may include legal defense fees, settlements or judgments, which can be financially overwhelming without insurance.

Why Contractors May Need It

Contractors often work directly with clients, and even small oversights can lead to disputes. For example, if a consultant’s advice leads to financial losses or if a freelance designer delivers a project late and it costs the client revenue, claims may follow.

Professional liability insurance can help address these risks, allowing contractors to continue working without the full weight of a lawsuit falling on their shoulders.

Deciding If It’s Worth It

Whether professional liability insurance is worth it may depend on the type of work you do and the level of risk involved. Professions that involve specialized knowledge, advice or direct client deliverables may be more likely to face claims.

Additionally, some clients require proof of professional liability insurance before signing a contract. Evaluating your work, client expectations and the potential cost of disputes can help you decide if this coverage is right for you.

Learn More

Professional liability insurance can be an important consideration for independent contractors who want to address the financial risks tied to their work. Contact us at our office today to explore coverage options with Pride Insurance.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.