Professional indemnity insurance is one of those phrases that makes faces glaze over. We know the looks all too well. It’s a combination of “what are you talking about?” and “this is boring” all at the same time. But here at Dinghy, we want to help you get past those blank expressions – because you need to know about professional indemnity insurance. In our experience, it’s essential for freelancers to cover themselves against potentially big financial losses and messy, time-consuming legal battles.
In this blog, we’ve stripped it down to just the bare necessities – the things you need to know about professional indemnity insurance. We’ve also sorted you out with some examples so you can see how professional indemnity insurance works in the real world. Then at the end, we’ll show you how to get hooked up with your own protective cover.
What is it?
Professional indemnity insurance protects you and your clients if they think you have made a mistake in your work that ends up losing them money. Claims can appear at the time or may come to light later for work you’ve done in the past – typically a client has 7 years to make a claim against you.
There are various types of mistakes or breaches that can give rise to a claim:
If you make a mistake or don’t take adequate care.
Example: An architect makes a mistake on a plan, and the incorrect measurement means that a steel lintel is ordered in the wrong size. This holds up the client’s extension work and means the part has to be re-ordered. The client claims against the architect for the time lost on the build and for the costs of the extra materials.
If you give your client some advice backed up by your professional opinion, but it all goes very wrong.
Example: An IT consultant advises on the selection of a virtual server for a client, which later fails and the client loses important data and work. The client claims damages for the loss.
Defamation, libel and slander
When something you write, say or share causes damage to someone else’s reputation. The complainant can claim for mental anguish and distress caused, as well as any financial losses.
Example: A wedding photographer has heard a rumour that a venue is about to go bust, and emails his customer to let them know their big day might be under threat. The venue loses their booking – and others – and sues the photographer for defamation.
When your work appears similar to someone else’s or you’ve used materials belonging to someone else without attribution, payment, credit and/or permission.
Example: A graphic designer puts in a copyrighted image as a placeholder in a leaflet design, but forgets to replace it before the document goes to print. The owner of the image claims for breach of copyright, and the client claims for the legal and compensatory costs and the costs of redesigning and reprinting their flyer.
Breach of confidentiality
If you accidentally share confidential data or information with someone who shouldn’t see it.
Example: A marketing consultant emails a strategy report they have prepared for a client to someone else in error – who just happens to be a competitor.
Benefits of professional indemnity cover from Dinghy:
- It covers the costs of compensation and legal fees, which can run into tens or even hundreds of thousands of pounds.
- You get a dedicated legal team to fight your corner, who will take over the case so that you can continue to work while it is sorted out.
- You can turn your cover down when you’re not working, so you’re protected for claims from previous work, but you’re not actively paying for cover you’re not using. This world-first feature is unique to Dinghy!
- It also includes our Freelancer Assist – a dedicated service that will help you chase unpaid invoices, and provide access to legal, tax and counselling helplines.
How much does it cost?
The cost of professional indemnity insurance will vary according to your profession – some occupations are at a higher risk of claims than others, so the price of your insurance may reflect that (but that makes it extra-important to have!). Our website can give you a free, no-obligation quote in seconds with just a few key pieces of information.
What level of cover do I need?
We don’t sell policies offering below £100,000 of professional indemnity cover, because we think this is the minimum required to cover a claim. For many occupations and freelance businesses, cover of £1m might be more appropriate.
Hopefully now your reaction to professional indemnity insurance is more “oh, I get it” than “huh, what’s that?”
If you need to get a policy in place to protect yourself, your clients, and your business, you can head to our website for a free quote in under 2 minutes.