The golden age of craftsmanship is over. Anyone who dares to take the step into self-employment today is doing so more and more often in “new jobs”. Eg in the IT-, Creative or consulting industry. As exciting as these new fields of activity are, the liability situation has become just as complex. Many underestimate this, as well as the gaps in professional liability providers in terms of the scope of insurance.


Personal liability mercilessly underestimated

The start-up boom in Germany continues: More and more experts are daring to take the step into self-employment, Startups and Company enter the market with innovative concepts and new services. For example, at the beginning of 2013 there were around 1,23 millions of self-employed in Germany, as the statistics portal Statista shows. By comparison, ten years ago it was just 533.000.

But no matter if entrepreneur or “old hand” in self-employmentBusiness: In my claims practice, I find time and again that personal liability is mercilessly underestimated when damage occurs as a result of errors in connection with professional activity.

Risk through legal and contractual liability

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However, the fact that the customer or third parties can take the independent service provider in the event of liability or recourse in the event of liability or recourse results from the statutory provisions - in particular the liability law in the BGB. Anyone who inflicts damage (personal injury, property or property damage) to another person is legally responsible by law.

Then they come risks from contractual specifications of project brokers and clients, which freelancers often have to accept willy-nilly in a competitive market. They offer the opportunity to claim against the freelancer on the basis of contractual agreements and promises of performance, which can go beyond the statutory liability (speak: increased liability).

Damage examples from the IT, creative and consulting practice

The scope of the possible risks is also illustrated by the following:

Self-marketing went backwards:

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Because she published a protected word mark as a slogan on the business platform XING, a freelancer from the media area fluttered into the house with a warning. Provisional dispute: 100.000 Euro.

Consulting without success:

Because the analyzes and recommendations for action of a freelance consultant are not what you want Success for his client, who held him liable for the missed project award with a cost claim of 70.000 euros.

Total loss:

Due to a small mishap while working in the System a self-employed IT expert installed the POS system of his customers lame. For an hour, nothing worked in 400 branches - a loss of around 200.000 euros in sales.

Many self-employed people therefore take preventive measures and try to exclude or at least limit liability in their general terms and conditions. However, this is not optimal Solution.

What does a professional liability insurance?

As practice shows, such a disclaimer by terms and conditions is deceptive, because in most cases disclaimers or limitations in the terms and conditions do not stand up to judicial review. It is not so easy to “undermine” legal liability.

Existence-threatening damage can be covered by a professional liability insuranceInsurance can be cushioned. But be careful: Professional liability insurance is not the same as professional liability insurance.

Dangerous retreats of professional liability insurers

For instance, many providers traditionally only cover personal injury and material damage as well as resulting consequential damages, leaving the protection of so-called pure assets - including, for example, legal violations, deliberation errors or programming failures - completely out of the question.

And also in terms of co-insurance of the already mentioned contractual liability, most insurers are cautious. In particular, when the occupational liability insurance is offered on the basis of the General Liability Conditions (AHB). These categorically exclude claims that go beyond legal liability.

Separating wheat from chaff

The “chaff from wheat” also separates when it comes to “protecting against legal violations”: some insurers make protection in the event of legal violations dependent on a previous legal examination, which is difficult to implement in practice.

Or they completely exclude the cost overpowered in the case of legal violations in Common Law countries (USA, England, Canada) - in times of global professional services a dangerous insurance gap.

Checklist - Important criteria of professional liability insurance

But of course there is another way. To make freelancers and the self-employed aware of the protection that good professional liability insurance can offer, I have one checklist compiled with selected criteria:

  1. The definition of insured activities and services should be kept open (so-called open cover). The co-insurance of activities from overlapping industries is also optimal.
  2. The current professional liability insurance should also provide protection for pure property damage - including, for example, infringements.
  3. Claims in the area of ​​contractual liability as well as breaches of secrecy agreements and data protection laws should be insured.
  4. Publication risks, eg by self-marketing, own website, blogs or social media profiles, should be covered. Likewise, violations of competition and advertising.
  5. The territorial scope should apply at least to Europe and Switzerland. Online Business recommends worldwide coverage.
  6. Depending on the business model and the branch of the self-employed, the professional liability insurance should also cover optional claims, such as
  7. Rescission of the client from the project,
  8. Personal liability (corporate liability) as managing director or interim manager
  9. certain typical contractual penalties in terms of contract or project contracts
  10. Damage caused by hacker and cyber attacks (DoS attacks, computer abuse, data theft, etc.)

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