What every freelancer should know about PI insurance

But the reality is that if anything does go wrong... anything at all... somebody may end up suing you. And when this happens, professional indemnity insurance will pay for itself many times over.

The purpose of professional indemnity insurance is to protect you from those times when a client, or anyone else, decides that some aspect of your work has been seriously below expectations - and it has done their business some material damage.

It's common that when a system or project doesn't work as specified, the employees of the company will point to the freelance contractor as the reason nothing works. We've also seen the cases where one company accuses another of "stealing" their ideas. In these circumstances, professional indemnity insurance becomes a serious requirement.

The biggest concern that a freelance worker should have is that insurance of this kind needs to be purchased before anything happens. Someone who has already been named in a claim for negligence or confidentiality breach will not be able to race out and get professional indemnity insurance. For the claim to be covered, the policy must already be in place.

It isn't as though your client will tell you in advance. The discussions which lead to a claim are invariably sudden and ugly; you may have found everything to be just fine only a day or two earlier. Suddenly, there's a letter in the post about a pending claim, and the client is alleging misconduct.

Without professional indemnity insurance, settling the claim may cost tens of thousands of pounds. The freelance contractor frequently doesn't have that sort of funding on hand, and even if it is available, it can seriously impact the course of his business.

When working with clients, even those that you find trustworthy and honest, professional indemnity insurance is an absolute necessity. The alternative is simply too high a risk to take.

If you wish to be contacted about professional indemnity insurance, please request a call back from one of our financial advisors.