Progressing from my last post on financial planning for freelance translators and inspired by a suggestion from Marie at Looking Glass Translations, I thought I’d turn my gaze to the thorny topic of insurance for freelancers. I should confess that I’m by no means an insurance expert and my research is inevitably based on my experiences and my specific case: please do consult an insurance broker or financial adviser before making any big decisions on this or any other financial matters!
Insurance is a way of covering various aspects of your life and/or business to make sure you don’t suffer unduly if the worst comes to pass. You pay a premium to make sure you can continue more or less as normal if disaster strikes – how much you want or can afford to pay often determines whether or not you take out the particular insurance.
There are many types of insurance and I’m only going to look at the main ones that affect freelance translators: home contents insurance, travel insurance, critical illness insurance, sickness and accident insurance, life insurance, professional indemnity insurance and product insurance (extended warranties) – not the most thrilling list, I admit!
Home contents insurance
This might seem self-evident as most of us have to have this anyway, whether or not we work from home, but it is well worth making sure your insurer is aware that you work from home. In most cases it isn’t an issue and there is no extra charge, especially if your work as a translator is mainly classed as clerical and you don’t have vast amounts of stock or receive regular visitors to the house. However, if you don’t tell them and then come to make a claim, it would be unthinkable to find you weren’t covered because you hadn’t told them – so just do it, even if THEY don’t ask the question. Your home insurance should cover you for third party liability if any visitors to the house were to injure themselves and claim against you, but do check if you’re likely to have lots of visitors due to your business.
Again, this might not necessarily seem relevant, but if you do travel to see clients or even to attend conferences or workshops, it’s worth checking that your travel insurance covers you for business travel – not all policies do. Make sure too that you’re covered for valuable possessions such as your laptop away from the home, whether on your home insurance or your travel policy.
Critical illness insurance
If you’re the sole or main breadwinner in your household, then this is definitely one form of cover you should be considering. These policies usually pay out if you’re diagnosed with a critical or terminal illness (usually specified in a long list). This might enable you to pay off your mortgage, or any other debts, so you and your dependants can avoid major financial worries if the unthinkable happens. The price of this kind of cover has come down over recent years, so if you took out a policy some years ago, it might be worth chatting to a financial adviser or contacting a life assurance broker such as Lifesearch to see if you can get the same cover for cheaper nowadays. I cut the price of my premium by half by reviewing my critical illness cover a few years ago.
Sickness and accident insurance
This is sometimes called income protection cover and you have to be very careful what you’re signing up for this kind of policy if you’re self-employed. Any sort of redundancy or unemployment cover really doesn’t apply, so you’re just looking at obtaining cover if you have an accident or serious (but not critical) illness that means you are unable to work for any length of time. Obviously, any premium quotations would be based on stringent medical checks and you have to disclose a full medical history otherwise any cover might be invalid. Again, it’s best to seek specialist advice, but be very careful to read the small print as there are often complicated strings attached: cover usually doesn’t start for 3 to 6 months after you’re diagnosed or have an accident, so you’ll still need to have your own financial cushion for the interim period. You can choose how long you want the cover to continue after claiming, from just a few years to until retirement age, but with some policies the amount paid out reduces after a certain period. I did a brief search on a comparison website for research purposes, and to cover under 50% of my net profits, the cheapest premiums I found ranged from £130 to £160 a month, with premiums increasing every 5 years once you’re over 36. If your income were to decrease (other than due to illness), the onus would be on you to disclose this to the insurers, as otherwise any claims would be null and void. Admittedly, I’m over 50 and have already decided that this kind of policy isn’t for me, but even when I was younger I found the associated costs prohibitive. I prefer to establish a cushion of between 3-6 months’ income to cover short-term incapacity, whether due to illness or accident, and take a risk on the rest – each individual must make their own mind up what’s right for them, of course….
On the other hand, some sort of life (term) insurance is probably a good idea for most freelancers, especially if you have dependants who would suffer if something happened to you. This kind of cover is usually relatively inexpensive, especially if you take it out sooner rather than later – again, seek advice from the experts.
Professional indemnity insurance
This is basically insurance to protect your business should a client make a claim against you on the basis of alleged failings in one of your translations. Opinions seem divided within the profession as to whether or not this is essential: I know of a number of consummate professionals who don’t have it, and just as many who do – the choice is yours. I’ve certainly never heard of anyone making a claim (in Europe at least), but then can you afford to take the risk of losing your business (and your house!) if someone were to claim against you? The cost of this kind of insurance is now relatively low, especially if you’re a member of a professional translators’ association such as the ITI, and I certainly think it’s well worth taking out, particularly if you work for direct clients. You can choose the amount of cover you need: in my case I was asked to take out cover when signing a major contract with a direct client, so used the specified figure as my benchmark. I opted for the scheme promoted by the ITI at the time, which also provides cover for the cost of defending claims made against you and aspects such as accidental breach of copyright or confidentiality, loss of documents, libel and slander and compensation for court attendance. They often cover third-party liability too. For £500,000 of cover, my last premium (covering a 15-month period) was £65 – a small price to pay for peace of mind. I personally don’t work with any clients in the US, but you do have to sign an undertaking that your turnover in the US doesn’t exceed a certain percentage, otherwise the premium is subject to change.
Last but not least, extended warranties are a way of extending insurance cover on your office equipment: computers, printers, etc. I don’t normally take out this kind of policy, regarding them as an expensive rip-off, but I do make one exception to my rule in the case of printers. Over my 25 years of freelancing, printers have been one of the items that I’ve had to replace most frequently – usually when they’re 13 months’ old or just out of their manufacturer’s guarantee! It was my student son who alerted me to the benefits of covering my printer when he was working at Curry’s as a weekend job many moons ago. The cost of a 3-year extended warranty on a printer is relatively cheap, at between £9 – £19, but if you know, as I did, that your printer gets a lot of use and invariably fails just out of warranty, even £19 is a small price to pay to get a brand-new printer, no questions asked! My current printer, a Lexmark all-singing, all-dancing multi-fax/scanner/printer model, actually came with its own 5-year parts warranty, and I was amazed when the sheet feeder failed recently (4 years in!) and Lexmark replaced the whole printer by sending out a new machine in the next post!
Yet again, it’s a question of working out what matters to you: printer cover is relatively cheap for the convenience of getting a new printer if the old one fails, whereas covering a computer is pretty expensive. I usually have a desktop and a laptop computer on the go (plus an old netbook and a mini iPad!), so if there was a problem with one machine, I could always work on another while the problem was being fixed. If you don’t have a back-up computer or you’re particularly accident-prone, you might prefer to take out computer cover. These policies often cover accidental damage too, whereas a standard manufacturer’s warranty doesn’t. (And I must admit to almost wishing I had taken the plunge when I carelessly knocked a cup of tea over my month-old laptop earlier this year! Fortunately, after drying it out overnight next to a radiator and crossing all fingers and toes, it came back to life, seemingly unharmed by its ordeal, the next morning – phew!).
Finally, covering your own intellectual expertise is probably the simplest, yet most important thing you can do to cover your business. Most translators use CAT tools these days, yet many people don’t make sure that their precious translation memories/glossaries, often the product of many years’ work and experience, are safeguarded in the event of the house burning down or a major break-in and robbery. I’ve covered this subject at length in my post on backing-up, so do make sure you save all your important files elsewhere, preferably off-site. It’s extremely inexpensive and protects all your valuable knowledge – priceless!
Well, that concludes my round-up of the insurance options for translators. I’m bound to have missed something and would love to hear others’ experiences. Everyone’s requirements are different, but I hope I’ve provided food for thought at the very least. Make sure you’ve covered all YOUR bases….