Common professional indemnity insurance claims against self-employed professionals

Professional indemnity insurance protects you if a client claims your work, advice or services caused them a financial loss. It covers your legal costs and any compensation you may owe. Even if a claim against you is unfounded, the cost of defending yourself can be significant, which is why PI insurance matters even when you are confident in your work.

For a broader overview of the cover available to freelancers and contractors, take a look at our guide to freelancer and contractor insurance.

The most common types of professional indemnity claims include allegations of negligence, breach of contract, intellectual property disputes and breach of confidentiality. The specific risks vary by profession, but no sector is immune.

Yes. A client can make a claim against you even if you believe you acted with full care and professionalism. The cost of defending a claim (regardless of the outcome) is reason enough to have PI insurance in place.

It can. If a client suffers a loss as a result of a third party error in your work, for example incorrect data from a supplier, they may still pursue a claim against you. PI insurance can cover your defence costs and any settlement, even in complex cases involving third parties.

The following scenarios show how PI claims arise across different professions, and why cover is so important whatever your line of work.

Creative and media

You are a graphic designer working on a client project when another company claims you have infringed their intellectual property by copying their designs. They sue you for damages. Brand marks and logos being mimicked is more common than many people realise, and similarities in design can occur entirely by accident. PI insurance will respond to cover this type of claim where an alleged copyright breach is unintentional. If you work in a creative field, it is worth reading our advice on how to avoid copyright infringement as a freelancer, and understanding what intellectual property rights apply to your work.

In another common creative scenario, a wedding photographer misses the church ceremony due to poor navigation and arrives at the wrong location. The client makes a negligence claim for the cost of the shoot. Even a straightforward logistical error can result in a claim, and PI insurance covers the costs of defending and settling it.

Information technology

An IT contractor provides analytical reports based on complex data. Due to an error in data supplied by a third party provider, the reports are incorrectly calculated and the client invests money based on wrong information. The client claims damages, alleging the contractor failed to demonstrate reasonable care when checking the data. Validating all information supplied by a third party is not always possible, and this is a common scenario across many sectors.

In a separate case, an IT contractor installs new software onto a client's business systems. During the upload, a virus is unknowingly introduced, rendering the client's entire system unusable for several days. The client seeks to recover lost revenue from the contractor. The contractor had no malicious intent, but the financial impact on the client was significant. Without PI insurance, those costs would have fallen entirely on the contractor.

Accounting and finance

A self-employed accountant fails to meet HMRC filing deadlines for a client, resulting in interest charges and penalties. The delay was caused by the client being slow to provide the necessary information, but the accountant is still held responsible. This is one of the most common PI claims in the accounting sector. Claims are usually limited to the interest and penalties imposed by HMRC, as the underlying taxes are not recoverable from the accountant. A robust case management system with thorough records of all client correspondence (including any delays caused by the client) is essential to supporting your defence.

In another accounting scenario, a self-employed accountant fails to advise a client that their income has exceeded the VAT registration threshold, currently set at £90,000 in taxable turnover over any rolling 12 month period. The client subsequently faces a liability and claims against the accountant. Monitoring your clients' finances on a monthly or quarterly basis can help you spot when they are approaching the threshold, allowing you to act in good time.

Counselling and wellbeing

A counsellor inadvertently discloses information shared by a client during a private session. The client claims this constitutes a breach of their duty of care. Confidentiality is at the heart of the counselling relationship, and where a breach is unintentional, PI insurance can cover the legal costs of defending the claim as well as any compensation owed. In the rare circumstances where breaching confidentiality is necessary, the BACP Ethical Framework for the Counselling Professions provides clear guidance on how to navigate those situations.

Counsellors also face the risk of a client interpreting advice in an unintended way, or claiming the counsellor said something they did not. Good recordkeeping is your best protection. A dated record of your sessions and the guidance you gave will allow you to defend yourself against allegations of negligent advice. 

While insurance protects you financially, good practice can help prevent claims from arising in the first place. Some steps worth taking:

• Keep thorough, dated records of all client communications and advice given
• Document any delays or incomplete information provided by clients
• Use clear contracts that set out the scope of your work and your responsibilities. IPSE members can access contract templates and legal guidance as part of their membership, including advice on what to include in a contract for services
• Monitor your clients' circumstances regularly, particularly in financial and advisory roles
• Stay up to date with the ethical and professional standards relevant to your sector