This question trips up a lot of freelancers when buying insurance.
Sorry to break it to you, but there isn't a straightforward answer when deciding how much cover you need.
There are, however, certain factors we can consider to arrive at a sensible figure.
The most common level of cover is £1,000,000.
This is usually the number clients request if they have an insurance clause in their contract. It's the most common level of cover our customers select when buying insurance.
You can also choose your level of cover depending on your budget. £1,000,000 of professional indemnity costs £14 per month. £2,000,000 is around £19 per month.
If you use With Jack to arrange your insurance and opt for monthly payments, this gives you the flexibility to increase or decrease your level of cover without any admin fees. Your monthly payments will automatically update.
If you're still undecided and want to dive deeper into choosing your level of cover, you can estimate your maximum probable loss.
To calculate your maximum probable loss, ask yourself:
- What is at risk?
- What is it worth?
- How much of it is likely to be damaged, and to what extent?
Let's cover this in freelancer speak, not insurance lingo.
What Type Of Clients Are You Working With?
Corporations handling expensive transactions, or small 'mom and pop' businesses?
Companies with a larger turnover, dealing with sensitive information or higher-cost products pose a bigger threat, therefore should have a higher level of cover.
Choose your level of cover with your type of clients in mind.
If You Made A Mistake, What Could Be The Extent Of The Damage?
Think worst case scenario. What's your responsibility to the client? What's at stake if you make a mistake?
Say you're a developer and have built an eCommerce store for a client. A bug in your code means it's down for a day. How much income has your client lost? As the developer, you're potentially liable and your client could seek compensation.
Furthermore, if you've used this code in other client work—and the bug has affected their business—they could all seek compensation.
Be wise about the extent of the damage and whether potential mistakes could extend beyond just one client.
What Limit Of Insurance Is Your Client Requesting?
More and more clients are contractually requiring that a professional has insurance. What limit is your client asking for?
With Jack doesn't charge admin fees, so you can increase your cover at any point if a client is demanding a higher level of cover.
With monthly payments, you can bump up your insurance for the duration of the project before returning to your standard level of cover.
Choose What You Can Afford
"How much cover do I need?" is a bit like asking how long a piece of string is. By looking at your type of clients, the mistakes you could make and the extent of the damage, as well as client contracts, you can arrive at a sensible figure.
It's worth noting that professional indemnity insurance doesn't just pay compensation to a client, but covers legal fees as well. These can all add up, so it's worth choosing the highest level of cover you can afford.