Professional indemnity insurance (often called PI insurance) is protects you against claims of negligence, misrepresentation, or mistake in the provision of professional services.
It is highly recommended you take out this insurance if your business provides services or advice. Mistakes can happen and in such instances professional indemnity insurance covers the cost of defending any allegations or claims made against you. If you’re in the wrong, the insurer will either pay to fix your mistake or compensate your client if that’s not possible.
Because of how often these incidents happen and the damage they can cause, many clients will insist you have in place in order to work with them.
Here are a few examples across different freelance professions where such professional indemnity insurance would be applicable:
Software Developer: A freelance software developer creates a custom application for a client’s business. After delivery, a critical flaw in the code leads to significant data loss for the client. The client sues the freelancer for negligence and loss of data. Professional insurance would cover the legal fees and any compensation that might be due to the client if the freelancer is found liable.
Graphic Designer: A freelance graphic designer creates a logo for a client, but unknowingly uses a design element that is similar to an existing trademarked logo. The client is then sued for trademark infringement. The designer’s professional insurance could cover legal fees and damages that arise from this claim.
Consultant: A freelance business consultant advises a client to implement certain changes in their business strategy. These changes result in significant financial losses for the client. The client claims the advice was unsound and sues the consultant. Professional insurance would help pay for the consultant's defence and any damages awarded to the client.
Copywriter: A freelance writer produces content that is later found to include plagiarised passages. The client, facing a lawsuit from the original content's author, sues the writer for compensation and damages. The writer’s professional insurance could cover legal costs and any settlements.
Photographer: A freelance photographer accidentally loses all photos taken at a major corporate event due to a memory card failure. The client sues for non-delivery of services. The photographer’s professional insurance could cover the legal defence and any compensation determined by the court.
.svg){kind=icon}
