Key takeaways
- Design professionals when creating ideas and concepts for clients have an exposure to errors that can lead to financial losses for their clients
- Professional indemnity insurance can cover negligence, errors/omissions, breach of confidentiality, copyright infringement, and breach of contract
Design professional indemnity Insurance
Whether you provide graphic design, interior design, web design, landscape design, product design, it's important for you to consider business insurance to mitigate your potential risks. Even if an allegation is without merit, it can be costly and time consuming to defend.
Professional indemnity will be the most important business insurance a design professional can purchase given it can protect against a range of professional risks. If allegation arises an insurer can provide the expertise and financial support when you need it most.
Professional indemnity insurance can protect against the failure to exercise reasonable skill and care in provision of design, technical or advisory services. The cover will pay for a legal defence and cover potential damages, awards, or settlements and protect against a wide range of allegations including:
• Breach of contract
• Professional negligence
• Breach of confidentiality
• Intellectual property infringement
• Defamation
• Product disparagement
• Delay in agreed services
Why designers need professional indemnity insurance?
Design work is highly creative and subjective. Clients will often rely on your expertise and vision, sometimes investing significant budgets based on your advice. When things go wrong, designers can find themselves caught up in legal disputes, even if the claims are unfounded.
• Potential for high damages related to reputational damage
• Claims can include loss of revenue and consequential losses
• Handling of sensitive and confidential information
• Mistakes, errors and omissions can unfortunately happen
• Larger clients will commonly request cover under contract
What design activities carry greater risk of financial losses?
Clients reliant upon the design work undertaken can seek financial recourse if there is a failure to exercise reasonable skill and care. Dependent upon the type and size of the project there is potential for high severity claims.
A potential claim can have significant financial consequences if you are unfortunate enough to become the target of an allegation. The below identifies general types of design work characterised by risk:
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Lower risk activities include: interior design, graphic design, landscape design, and web design
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Medium risk activities include: fire protection design, security protection design
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High risk activities include: medical device design, children's products, installation, and product manufacturing
However, there are additional factors that can increase your risk profile, such as large clients, government entities, size of your contracts, architectural or technical design work, rather than aesthetic graphic design.
Suitable and adequate professional liability protection
It's important to make sure your professional indemnity is adequate to meet your design needs - not all policies provide the same level of protection and if the cover is not tailored to meet your requirements you could find out you are uninsured. Make sure you read any statements of facts, complete proposal forms fully, and adhere to your obligation to make a
fair presentation of your risk.
Your contact size and stated requirements can provide an indication as to how much cover you require, however it's important to remember that awards and judgements can exceed anything you agree under contract. It is always worth considering the worst case senario - that would include your client seeking damages for consequential losses.
How much does PI insurance for designers cost?
Your professional indemnity insurance premium will be based on a number of rating factors that will include:
• Turnover (last reported)
• Scope of services
• Level of cover required
• Claims history
Working with a specialist PI insurance broker
There's a common misconception that accessing insurance through a broker is more expensive. However, intermediaries such as ourselves can provide valuable support and knowledge when dealing with an insurer. We can provide an opinion on your cover and make sure you arrange the correct cover to meet your needs.
Important considerations to make:
• Review your cover annually
• Understand any further policy limitations and exclusions
What other business insurance should designers consider?
Designers should also consider the following insurance products:
About the author
Simon Taylor is a respected senior industry professional and a Chartered Insurance Broker with over 20 years’ of experience in the commercial insurance sector as an underwriter, broker and director.
