Two phrases appear on almost every freelance insurance quote, they sound like variations on a theme, and they work in fundamentally different ways. One covers things that happened. The other covers complaints that arrive. Confusing them is how people end up uninsured for work they were insured for at the time.
The distinction has a name, it is not difficult, and almost nobody selling you the policy will explain it unprompted.
What each one is actually for
Public liability deals with the physical world. Someone trips over your equipment, you put a ladder through a client’s window, a visitor is hurt at your premises. It responds to injury and property damage caused to third parties.
Professional indemnity deals with your work product. You gave advice that turned out to be wrong, missed a deadline that cost a client money, delivered something that failed to do what you said it would. It responds to financial loss caused by your professional failings rather than by anything you knocked over.
A designer, a consultant or a developer working from a laptop needs the second far more than the first. A photographer carrying lighting rigs into other people’s buildings needs both, and will often find a client contract requires a specific sum of each.
| Public liability | Professional indemnity | |
|---|---|---|
| Responds to | Injury or damage to people and property | Financial loss from your advice or work |
| Usual basis | Occurrence: tied to when the incident happened | Claims made: tied to when the claim reaches you |
| Which policy pays | The one in force on the day of the accident | The one in force on the day you are notified |
| If you cancel it | Past incidents generally remain covered | Past work becomes uncovered unless you buy run-off |
| Hidden date to check | Not usually an issue | The retroactive date, which excludes earlier work |
| Who usually demands it | Venues, landlords, site operators | Clients, agencies, public sector frameworks |
Why “claims made” changes everything
An occurrence policy is the intuitive kind. The accident happened in March, you were insured in March, that policy pays, and it pays even if you cancelled it two years ago and the claim only arrived last week.
Professional indemnity does not work that way. It pays only if you hold a live policy on the day the claim is made against you. The date you did the work is nearly irrelevant, except in one direction: your policy carries a retroactive date, and work done before that date is excluded entirely.
Three consequences follow, and all three catch people out.
- A gap in cover is a gap in your whole history. Let the policy lapse for six weeks between insurers and a claim arriving in that window has nothing to attach to, regardless of when the work was done.
- Switching insurers resets the retroactive date unless you insist. A new policy may quietly set the retroactive date to today, which excludes every job you have ever delivered. Ask for continuity of the original date and check it appears on the schedule.
- Stopping work does not stop the exposure. Claims can arrive years after a project ends. Cancel the policy when you retire or take a salaried job and you are personally exposed to everything you ever did.
That last one is what run-off cover is for: a policy that continues to respond to claims about past work after you have stopped trading. It is usually bought for several years, often matched to the period in which someone can still bring a claim where you are, and it is cheaper than the final year of ordinary cover. It is also the single most commonly skipped purchase in the whole category.
The duty nobody reads
Policies require you to notify not only claims but circumstances: facts that might reasonably give rise to a claim later. A client sends an angry email saying your report cost them money. Nobody has demanded anything yet. That is a circumstance, and most policies require you to tell your insurer now.
Sitting on it is the expensive mistake. If you knew of the circumstance during one policy year and said nothing, the insurer for the following year can decline on the basis that you were aware of it before that policy incepted, and the earlier insurer can decline because you failed to notify in time. You end up falling between two policies you paid for.
Notifying a circumstance is not an admission and does not usually affect your premium by itself. It parks the matter with the insurer who was on risk at the time, which is exactly where you want it.
What to actually check on a quote
- The retroactive date. It should reach back to when you started doing this kind of work, not to the start of this policy.
- Whether the limit is per claim or in the aggregate. An aggregate limit is a pot for the whole year and can be exhausted by one bad run.
- Whether defence costs sit inside or outside the limit. Inside means legal fees eat the money meant to pay the claim, and legal fees are frequently the larger number.
- The actual definition of your professional services. Policies cover the activities they describe. Drift into a new line of work without telling the insurer and the new work may sit outside the wording.
- What the client contract demands. Many require a specific sum and a specific basis, and some require you to maintain cover for years after delivery, which is a run-off obligation in disguise.
- Territorial and jurisdiction limits. Where you can work and, separately, where you can be sued. Taking on a US client is the usual way to discover these are different things.
None of this requires a broker, though one is useful. It requires reading the schedule, which is two pages, rather than the policy wording, which is sixty.
Common questions
Do I need professional indemnity if I am a sole trader?
Trading structure does not change the exposure. A sole trader has unlimited personal liability, so if anything the need is greater, since a claim reaches your own assets rather than stopping at a company. Some regulated professions are required to hold it; everyone else decides based on how much a client could plausibly lose.
Does a limited company protect me instead?
Partially, and less than people assume. A company limits liability for the company’s debts, but a claim in negligence can be brought against the individual who gave the advice in some circumstances, and clients increasingly ask for personal guarantees or name individuals in contracts. The two protections solve different problems and are not substitutes.
How much cover should I buy?
Start from the worst realistic loss a client could suffer from your work rather than from your own fee. A small fee can sit underneath a very large consequential loss, which is the whole reason the category exists. Then check whether any client contract sets a floor, because that usually decides it for you.
Is employers’ liability the same thing?
No, and it is a third category with its own rules. It covers injury to your own staff, and in several countries it is legally compulsory the moment you have employees, with a minimum sum set by statute. Whether contractors or casual helpers count as employees for this purpose is a question worth asking directly rather than assuming.
Can I just add it when a client asks?
You can buy it quickly, but the retroactive date will usually be the day you bought it, so the work that prompted the request may fall outside. Buying cover before you need it is not an upsell in this category; it is the mechanism by which the cover works at all.
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