Professional indemnity insurance offers protection if you make a professional error. Such damages are monetary, such as the loss your client suffers or the costs incurred because of your mistake. The amounts involved can be very high, which is why it’s such an important insurance for freelancers.
Professional indemnity insurance covers damage you have caused due to professional misconduct. These damages are always expressed in money, such as lost profits, or extra costs because of a mistake.
Find which claim amounts, damages and circumstances are covered in the terms and conditions.
You helped a client with a new marketing campaign. Everyone was enthusiastic, but once it’s launched, the public responds very negatively to it. Your client suffers reputational damage and loses profits. You’re held liable for this.
Covered: wrong advice, reputational damage, lost profits
You have an assignment to test software. You unknowingly change something, causing a large chunk of work to be lost. The work has to be redone, and you are held liable for the extra costs and lost profits because of the delay.
Covered: professional errors, lost profits, reparation costs
Clients often require their freelancers to have this insurance, especially for assignments where you as a freelancer have a lot of (big) responsibilities. Should things go wrong, this insurance can prevent unpleasant situations.