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Professional Indemnity Insurance – What is it and do I need it?

Freelancers, contractors and small business owners are only human. 99% of the time you’re probably on the ball – meeting your clients’ needs and never messing up. But when something does go wrong, and the finger ends up being pointed at you – this is where Professional Indemnity insurance can save the day.


What is Professional Indemnity Insurance?


Professional Indemnity insurance (sometimes referred to as PI insurance) offers protection for your business against a customer suing you for a financial loss that they believe was caused through your negligent advice and / or services.


While in reality most claims are settled before they get to court, the legal costs involved can build up very rapidly – even in quite minor disputes. Your Professional Indemnity insurance provider will defend claims on your behalf, covering your legal fees and meeting any damages you have to pay if you are found liable.


Here are a couple of recent claim examples when freelancers, contractors and small businesses were thankful to have had Professional Indemnity Insurance in place:



  • A contractor working on the development of a major new shopping centre provided drawings with incorrect measurements of a new stairwell, resulting a in two week delay to the project. The main contractor had to rectify the work, and filed a claim against the worker for £12,900


  • The policy holder was working on the construction of a new building and provided incorrect setting out plans, resulting in the incorrect positioning of a wall. The claimant rectified the error at a cost of £4,000


Do I need Professional Indemnity insurance?


Professional Indemnity insurance should be considered by any self-employed worker who is providing design, advice or specifications during the course of their role.


While it isn’t a contractual requirement in every instance, most clients will specify that it’s required in their contracts before working with you.


How much professional indemnity insurance do I need?


In the vast majority of cases, holding £1,000,000 Professional Indemnity will meet the contractual requirements of your client and be sufficient to cover the potential exposure of the work you are completing. However, it is important to check the terms of your contract and consider the size of a claim that could be made against you if something were to go wrong – especially if you are working highly specialised roles and industries or working on high value projects.


Other small business insurance


Some other articles you might find useful:


What is Public Liability Insurance?


What is Employers’ Liability Insurance?


Can Crunch help me get covered?


Yes! If you’re a freelancer, contractor, or small business owner, Crunch can provide business insurance tailored to you, including up to £1 million Professional Indemnity cover (excess of £500).


Get an instant quote today.


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