Learning when to say no as a freelancer
Professional indemnity insurance can protect your business against a financial claim made against you by a client who believes they have suffered a loss due to poor service or bad advice.
It can even cover the cost of your legal defense when you are accused of a mistake, you haven’t made.
The level you require will depend on your profession and the services your company offers. Stressful and costly losses can be incurred via: –
- Advice and consultancy – Clients can claim compensation if there’s a mistake in the advice you’ve provided.
- An expert service – A client can make a claim if you make mistake in designs, plans or calculations.
- Handling client information – You could face a claim if you accidentally disclose data or infringe on your client’s legal rights.
Some clients will insist that you have PI before you can start working for them and in some industries it is compulsory.
What level is needed?
If you are able to choose your own level of cover then there are a few things you will want to consider selecting the right level for you. Our policy offers limits ranging from £100k all the way up to £5 million, to suit your individual requirements. Considering your type of profession or creative field of work; you may wish to consider the following:
IT Consultants -Explore rectification costs
These could be very costly in the event of a serious mistake you’ve made. Costs could also include fees and charges for a specialist 3rd party to resolve the issue and see the project through to completion.
Creative & Media – Think about the potential legal fees in the event of a court case against you
Legal defense costs are not simply the costs needed in order to defend yourself but also those incurred by your client legal fees incurred by your client that may become payable by YOU if a case is awarded in their favor. Costs such as these could run into eye watering figures.
Project Managers – Consider the maximum compensation that could be awarded against you
We know that you do your job properly, but everyone makes mistakes and so when considering what indemnity limit to buy, you need to consider both compensation payments as well as legal defense costs. Think about what could happen, what effect it may have and how much it would cost. We would suggest that you err on the side of caution here to ensure that your limit is enough to protect you, should you need it.
Translators and Interpreters – Consider the fact that compensation claims, and legal defense costs can vastly exceed your contract value.
It is only common sense that the larger the company you deal with the bigger the legal department and the greater chance of a claim made against you if a mistake leads to financial loss.
You may be doing a small £50 job for a customer, but you need to remember that compensation payments and defense costs are not limited to the value of your contract. For example, if you make a mistake in the translation of some food packaging and the manufacturer must recall their product, they are going to look to you to reimburse their loss, which will be no doubt substantially more than they paid you to do the work.
Why is professional indemnity insurance important?
As you will know, working for yourself has its benefits but it also comes with its risks. If you make a mistake (and we all do) or are accused of making one that has caused your client financial loss, then you could be responsible for both hefty legal costs and heavy compensation payments. We hope that you never have a claim launched against you but if the worst should happen and you cost your client money through a mistake, then it makes good business sense to have a policy in place that can protect you. Would your business stand a chance at surviving if a client claims you’ve lost them money?
As you will know, working for yourself has its benefits but it also comes with its risks. If you make a mistake (and we all do) or are accused of making one that has caused your client financial loss, then you could be responsible for both hefty legal costs and heavy compensation payments. We hope that you never have a claim launched against you
What does professional indemnity insurance cover?
At ipro, our professional indemnity policy can help protect you from the risks you face in your line of work. Unlike many other providers, we include full retroactive cover which means that our policy can cover claims from incidents that happened in the past but are not yet known about, even if you had no insurance in place at the time.
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