While professional indemnity insurance isn’t a legal requirement, how compulsory this type of cover is may depend on your line of work. Businesses operating within some industries might find clients or regulatory bodies require it to meet contractual obligations.

This could apply to you if you’re a life coach, consultant, web developer or a tutor or private teacher. That’s not to say these are the only professions which might have professional indemnity insurance needs, as cover can support other types of business, too.

For instance, if a graphic designer sends a magazine to print containing an error, amending and reprinting could be costly for the client. Another example, would be if a student doesn’t achieve the grades they were hoping for and a parent places the blame with their tutor.

Tech or management consultants working with various clients could be at risk of suffering a data breach, exposing those they work with to financial and reputational harm.

You might be required by a regulatory body or client to have a professional indemnity policy in place before you start working on a contract.

This type of cover could be pertinent for those providing a professional service and for those required to handle client data or intellectual property. It may, therefore, be beneficial to have comprehensive PI insurance cover as soon as you start taking on clients.

If an employee gets a task wrong, there’s been a breach, or even if you feel there’s no error on your part at all, you may still have to defend yourself.

How much professional indemnity insurance your business will require is dependent on the potential financial impact of a mistake in your line of work.

Your policy amount should be enough to cover the cost of defending or settling any claims you could potentially face.

To calculate this, it may be a good idea to check your contracts and the value of your projects, then discuss the sum with peers or even a professional body.

At Hiscox, we look at each business on an individual basis, so we’ll tailor a policy to your needs – providing reassurance that you’re properly protected.

Along with giving yourself the freedom to work as you wish, you also encounter increased risk when going solo.

If in your position as a sole trader or freelancer you’re open to clients claiming you made a mistake or gave bad advice, professional indemnity insurance may help cover the cost of defending yourself or resolving those issues. 

Sole traders may find they fall under a group of professionals who have their insurance needs determined by those they work with – for instance, professional indemnity and public liability could be required in order to secure a contract.

Yes, professional indemnity insurance is tax deductible as business insurance is regarded as an ‘allowable expense’. This is because it’s considered an essential outlay – several other business expenses are also categorised in this way.