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Ever Had a Client Expect You to Take Out an Insurance Policy?

Got an interesting though somewhat disturbing email a few days ago from a commercial freelancer. She wrote:

I wanted to get in touch because I have a concern that’s starting to affect my commercial writing business, and others will likely be coming up against this more frequently as well. In the past six weeks, I have been asked to sign contracts with three corporations. One company wanted me to obtain a General Liability policy in the amount of $1 million (has absolutely no relevance to freelance writing); the other two companies are insisting I obtain Errors & Omissions insurance, which also is irrelevant.

Errors & Omissions insurance is professional liability insurance for mistakes or negligence. One financial Web site said: “It protects a company against claims for financial injury that allege a product failed or the company failed to perform services, causing a loss of use of tangible or intangible property to others.”

I sent the following reply to my contact at one of the companies:

“Here’s the problem: If I/we as freelance writers are writing about a company’s products, the information provided to us comes from the company or company sources. The company is responsible for the accuracy of this information and having their legal departments sign off on the final document. With words, you could never gauge how someone would be making a purchasing decision and how your choice of language influenced that. The only thing you can gauge is whether the facts are correct or not—statistics and so on. And it is the company’s responsibility to check their facts and give a final okay.

“Also, the company always touches the piece last, and unlike an actual product such as a computer, medical device, electric fan or something else that could have flaws due to its manufacture, words can be changed and altered by the client right up to the last moment–or continuously, if the words are in an electronic format. Therefore, the final copy or ‘product’ is never static and the product the original writer produces can and often is very different from the final product the public sees.”

Her reply was that she completely agreed, but her hands were tied. Either I obtain the insurance or I cannot work for that particular company. This is a company I do quite a bit of work for, so I am probably going to cave in and purchase this insurance; she thought it could cost up to $1,000 per year.

I feel like this is a big issue that’s only going to get bigger, and this change is happening fast. I feel like we need to educate corporations about the fact these types of insurance have no relevance to what we do. I thought this might be helpful for other freelancers to know that this is happening and perhaps we can work together to find ways to deal with this (or get around it).

Other actions I’ve been asked to take within the past year (by only large corporations, not smaller businesses) that I have never been asked to do in the 12 years prior:

1. Change from a sole proprietorship to an LLC
2. Obtain a Dun and Bradstreet number
3. Take steps towards becoming a registered woman-owned business
4. Provide information about my personal health insurance coverage and homeowner’s insurance

Companies are trying to cover themselves, but need to be educated about what we do. Any advice freelancers can share with each other regarding this would help us all.

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PB: Okay, so all of this is just bizarre to me, but if this person’s encountered it multiple times from different companies, something’s going on. I’ve never gotten hit with any of these demands in 15 years, though in the past 4-5, I haven’t been working (by choice) with many large companies. And in 15+ years in the business, I’ve never ever heard of any copywriter being hit with a lawsuit over copy they wrote, nor even heard of someone who knew a copywriter in that situation. We’re talking about Powerball lottery odds here.

Given the fundamental irrelevance of this concern on the part of these companies to what freelance commercial writers do, and the ensuing demands being made of this particular copywriter (and others, presumably), in my humble opinion, it has all the earmarks of corporate legal departments working overtime to come up with anything that could possibly go wrong. Pretty much the raison d’etre of the legal profession anyway.

But why now all of a sudden? Any thoughts?

Have any of you come across any of these demands from your bigger clients?

If so, how did they explain their thinking on it?

And if so, how did you deal with it?

Any other input based on specific knowledge of industry trends?