£1 Million Worth Of Cover? Who Needs That Much Professional Indemnity?

As an individual freelancer, maybe 1 million sounds a bit like Monopoly money to you

. What on earth could you do that would result in anyone suing you for that much? Well, whilst it's true that not every freelancer does need that amount of professional indemnity cover, you may be surprised by how many do.

You should always remember that when it comes to deciding how much professional indemnity you should have, it isn't primarily how much you earn from doing things right that matters. It's how much you could cost a client if you do things wrong. And we do all make mistakes from time to time.

Take the case of a Graphic Designer who is asked to design a flyer to promote an exhibition. He develops a high concept idea that is going to be expensive to produce but the client likes it and agrees to the cost. Unfortunately, the Graphic Designer inserts the wrong date for the exhibition. Nobody notices, the flyer goes into production and is mailed out directly from the printer.

By the time the mistake comes to light, there is very little time left before the exhibition. But the client insists that a new flyer is designed, produced and mailed out and his lawyers argue that the Graphic Designer should be held liable for the entire cost of doing so. Because of the lateness of the publicity, the exhibition is very poorly attended. The client's lawyers also argue that the Graphic Designer should be held liable for the money the client loses as a result. And just for good measure, since the client considers that his reputation has been damaged in such a way as to affect his future business, his lawyers add an amount to cover that to the sum total for which they plan to sue the Graphic Designer.

In this case, the total may not reach seven figures but you can see how one small mistake can trigger a whole chain of consequences. And why you might well need considerably more professional indemnity insurance than you first thought.

Now let's consider the example of a Consulting Engineer who makes a miscalculation in a design specification for a load-bearing structure that will form part of major infrastructure project. The implications of the mistake aren't realised until the construction phase of the project has begun. What happens? Construction has to be halted but a lot of the ongoing project costs still have to be met. The Consulting Engineer could be liable. Remedial work has to be undertaken. The Consulting Engineer could be liable. The project overruns and the main contractor faces substantial penalty payments for late completion. Again the Consulting Engineer could be liable. And that lot could easily add up to considerably more than 1 million.

Are you sure that your professional indemnity policy really provides you with all the cover you need? If in doubt, call 0161 833 2100 or email info@freelanceinsure.co.uk.

1 Million Worth Of Cover? Who Needs That Much Professional Indemnity?

By: ammenda

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