How much professional indemnity insurance do I need?

Do I need professional indemnity insurance?

You will need professional indemnity insurance if you provide professional services, such as:

  • expert advice
  • consultancy
  • design and specification advice

or if your work involves:

  • copyright issues
  • access to confidential data

While professional indemnity insurance is often associated with professionals such as lawyers and architects, it offers valuable insurance protection for builders and designers too.

Am I legally required to have professional indemnity insurance?

Professional indemnity insurance is not a legal requirement. (It is a legal requirement for some professionals so I’m unsure if we can simply say it is not a legal requirement. However, you may find that some clients will not work with you unless you have it, or it may be a contractual requirement on a new job.

Some trade associations may also require you to have cover.

How much professional indemnity insurance cover do I need?

You can usually choose the amount of cover you need. The appropriate level will depend on the nature of your business.

Start by checking with your trade association or any regulatory bodies. You should also check your client contracts, as they may require you to have a specific level of cover.

What other factors should I consider when choosing cover?

Think about the type of work you do, the types of clients you work for and the size of your projects. The more clients and projects you take on, the greater the risk of something going wrong.

Bear in mind that the cost of putting something right can quickly add up. If you’ve provided a faulty design, it’s not just the cost of providing a new design that you may have to cover. You could end up paying for:

  • the damage caused by the error
  • the cost of putting the problem right
  • the legal costs of a claim against you.

The amount of cover available may range from £50,000 to £5 million. If you take on small projects and small clients, you may want to choose a lower level of cover. Even then, smaller claims can still add up to a large amount, so be realistic about your level of risk.

Can someone help me work out exactly how much cover I need?

Get in touch with an experienced and reliable insurer, who can discuss your business needs and suggest a policy appropriate for you.