How I learned to stop worrying and love insurance

How to make freelancer insurance work for you. A review of the risks for creatives and the way that insurance helps.

Who doesn’t love free stuff? From the classic ‘buy one get one free’ to the one month free trial, it’s a tried and tested marketing strategy that giving something for free will grab your customer’s attention.

However, what happens when the numbers in the promotion go wrong?

That’s exactly what happened to two marketing professionals working at Hoover in the UK. In a classic “something for nothing” marketing move they decided to offload surplus stock in warehouses by offering free return flights to the USA for every £100 spent on Hoover products. But they missed the crucial component….putting a cap on the number of people who could take up the offer.

image source https://cached.imagescaler.hbpl.co.uk/resize/scaleWidth/1486/cached.offlinehbpl.hbpl.co.uk/news/OMC/Hoover-1280-20150721110943767.jpg

Nearly 600,000 customers bought the cheapest Hoover they could, simply to pick up the flight tickets. The warehouses emptied, but the marketing campaign then put massive strain on the factories and supply chain; and cost Hoover an estimated £50m ($70m) in losses! Losses from which it never recovered and ultimately resulted in the British branch of Hoover being sold to Candy.

Move forward 25 years and the marketing landscape has changed. No longer is marketing simply in-house or the domain of large agencies. The 21st century has seen the rise of the freelancer with companies’ marketing departments now a mix of freelancers specialising in graphic design, marketing, video editing and more.

With that rise means that these types of mistakes are no longer restrained to the company itself. This new wave of creative freelancers are now carrying the risk of making these mistakes themselves, and paying the financial costs too.

Yet from our research here at getdinghy.com we have found that many creative freelancers feel they don’t have a risk. A common theme is that they are producing work for a client and as soon as they hand it over their risk has gone. The question we are often asked is “Surely once a client has signed-off my work that’s the end of the risk?”

The myth of the handover and the client sign-off

It is a common misconception that if your client signs-off your work, then you are off the hook for any design flaws, video glitches, marketing errors or copywriting problems that may come in the future. However problems can arise after the event, and if the client thinks you should have spotted them they can still be put back on you. Even if you can argue that you did nothing wrong, the cost of legal fees to defend yourself can amount to thousands of pounds.

As an example of a logo with the best intentions, the UK Office of Government Commerce (the OGC) commissioned a new logo. They spent £14,000 on the design and received back the following:

 

 

On first glance, it met the brief. It was modern, had the departments letters and good symmetry with the repeating circle shape.

So with the logo approved, the OGC then spent money on their print run of pens, business cards, mouse mats, flyers and all the other merchandising they needed.

On the day of the launch, they brought their excited new employees in to see their new stationery, who held their pens up and saw something slightly different:

Very quickly the design was scrapped; but not before some quick-witted employees had managed to sell some of the paraphernalia on eBay, immortalising the design error for future generations to see!

So, as a designer, what can be done about this problem of mistakes being found after the event? No-one wants to spend their lives looking over their shoulders in case something they did yesterday comes back to bite them.

This is where Professional Indemnity Insurance comes in. Professional Indemnity, also known as PI Insurance and Professional Liability insurance, responds to claims for:

  • Negligence: when you make a mistake or don’t use a reasonable duty of care
  • Bad advice: when you told your client it was the right thing, but it turned out to be a disaster.
  • Defamation, libel & slander: unknowingly damaging the reputation of any person or organisation, including mental anguish or emotional distress
  • Copyright infringement: when someone alleges that your work is too similar to theirs
  • Claims expenses: legal costs to defend you and other costs in setting the matter right

As soon as you buy the insurance, your liability exposure is covered. It will cover you for any mistakes you made from the first moment you bought it, even if the claim is brought years later. The only caveat is that you must keep an active policy, even if you are not working. The moment you cancel your insurance, you lose all your historic insurance protection. So if someone then makes a claim you’re on your own.

That’s why here at Dinghy we have created the world’s first on-demand freelancer insurance where you can switch down your insurance when you’re not working. You pay less, yet keep your full insurance cover ready for when your next contract starts. We see it as the fairest way for freelancers to buy insurance – why pay for something you are not using?

What about Limitation of Liability Clauses?

Some of the more contract savvy freelancers will use contracts with their clients that use Limitation of Liability clauses. These can be used very effectively, and should be considered for your contracts. However, they need to be carefully drafted and legal advice sought when being used.

In the UK, for instance, if the liability caps imposed in the contract are too low then you run the risk of the entire clause becoming unenforceable leaving you potentially at risk of unlimited liability.

So even with the use of a Limitation of Liability Clause there will always be some element of liability attached to the contract. Which is why you should buy Professional Indemnity Insurance.

Not another bill – surely!

If this is the first time that you are learning of Professional Indemnity Insurance then you may be feeling that pinch on the wallet of thinking that here is another outgoing to add to your list. Well we hear you! That’s why we have used technology to bring you freelancer insurance that strips out all the costs; no admin fees (ever!) and you only pay at the end of the month for what you’ve used, so no upfront payments to hurt your cashflow.

It is also the world’s first on-demand freelancer insurance; so if you’re between contracts you can reduce your insurance costs by putting your insurance into holiday mode; you pay less but keep your full cover.

Finally the cost is not excessive; from only 25p a day you can buy £100,000 Professional Indemnity Insurance; and that price will also go down if you’re not working.

I’m always super-careful; why would a claim happen to me?

Most people are careful in their work; no-one wants to make a mistake. Not only is it bad for business, but you lose time trying to fix the work that you did before.

However, some times you can think you’ve done everything right, but still be found by a judge to be in the wrong.

In October 2017, US rapper Eminem won £315,000 in compensation from the New Zealand National Party (NZNP) after they purchased a song called “Eminem Esque” from an Australian-based music production library and used the song in a political broadcast.

The NZNP thought they were safe to use it for their advert; they had done their homework and used a song that had been registered with one of New Zealand’s main industry copyright bodies, the Australasian Mechanical Copyright Owners Society (AMCOS), was licensed and available for purchase. They were wrong.

The song was judged to be a copy of Eminem’s own Lose Yourself. The Judge acknowledged that “the Party took extensive advice and sought assurances from industry professionals that the track could be used by the Party”. Yet that wasn’t enough to prevent the National Party being issued with the fine, and now starting legal action against the production house that supplied the song – something their professional indemnity insurers will be working with them on.

In case you are wondering how similar the songs are, you can see the political broadcast video here:

And compare it to the original here:

Is there any other insurance that I should buy as a freelancer?

Well we think so! If you work in client’s offices, in a co-working space, or if clients come to visit you then you should look at Public Liability Insurance. This insurance covers you if you were to accidentally spill your coffee on someone else’s laptop, or if someone was hurt tripping over your bag.

At getdinghy.com we also offer 24 hour replacement for your Business Equipment. As a freelancer, we know that your equipment, such as your laptop, is the key to your business. Every day without it is a day you can be losing money. That’s why we have developed world-wide cover with a 24 hour replacement policy and a 24/7 claims reporting functionality. If we cannot find a replacement for you, or simply can’t reach you, within 24 hours, then we will offer instant cash transfer to your bank account; enabling you to find a solution.

We also offer Cyber Liability if you hold client data on your phones or computers then this is an important cover. If you are hacked and lose the data, then the standard Professional Indemnity insurance doesn’t cover this. Your client may claim for negligence against you; but also your client can run up considerable costs in notifying the customers that their data was lost; and those costs are included in this insurance, up to 5,000 customer records.

At getdinghy.com we also love to hear from freelancers what insurances they want – for instance, from feedback we are now developing our the Freelancer Assist package that will include:

  • Legal Expenses Insurance
  • Tax investigation support, including IR35 investigations and self assessment return queries (even if you use an accountant, would you trust your accountant to sort out a problem they’ve created?)
  • A counselling helpline
  • A legal and tax helpline and more

For all our early adopters, as a thank you for their support we will add it for free to all our customers who sign up before we set it live.

So if you’re thinking of buying freelancer insurance, now is the time.

 


Dinghy are changing the way insurance works for freelancers, creating the world’s first on demand insurance for freelancers where you can save money if you’re not working but keep your full insurance protection.

Also offering 24 hour worldwide equipment replacement and an online self-service area for changing your insurance, they provide a full package for freelancers.

Powered by their bespoke technology platform. Backed by Balderton Capital and partnered with Lloyd’s of London they offer rock solid insurance at reasonable prices.

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Robert Hartley
Rob Hartley ACII has worked in insurance for over 17 years in Europe, USA and the Caribbean. He is inspired to improve the image of insurance and bring it back to being a social good. Having also worked as a freelance web developer and an insurance consultant he is passionate about improving insurance for freelancers. In 2017 he co-founded getdinghy.com, a B-Corp (pending) insurance provider that specialises in freelancer insurance.
Robert Hartley

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Robert Hartley

Robert Hartley

Rob Hartley ACII has worked in insurance for over 17 years in Europe, USA and the Caribbean. He is inspired to improve the image of insurance and bring it back to being a social good. Having also worked as a freelance web developer and an insurance consultant he is passionate about improving insurance for freelancers. In 2017 he co-founded getdinghy.com, a B-Corp (pending) insurance provider that specialises in freelancer insurance.