A contract limits your liability, but Insurance is the money that actually pays for it. If a client sues you for a major bug, you don't want to pay for lawyers out of your own pocket.
1. What is Professional Indemnity (PI)?
Also known as Errors & Omissions (E&O), this insurance covers you if you make a mistake that costs your client money. It is common for Software Engineers and Consultants.
2. Backing Up Your Contract
Your contract scan might show that you have a Mutual Indemnity clause. PI Insurance ensures that if you do have to indemnify the client, your insurance company handles the bill.
3. High-Security ID Formatting
Applying for business insurance often involves a lot of paperwork and ID verification.
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Frequently Asked Questions (FAQ)
Is insurance mandatory?
Usually no, unless it is required by a specific corporate contract. Check the "Insurance" section of your MSA for specific requirements.
How much does it cost?
For most solo freelancers, PI insurance is quite affordable, often costing less than your monthly cloud accounting subscription.
Does insurance cover 'Ghosting'?
No. Insurance covers legal liability for mistakes. If a client simply refuses to pay, that is a collections issue, not an insurance one.