Professional Indemnity: Insured Risks

Professional Indemnity Insurance for Digital Professions is based on the principle of blanket coverage for your profession. Instead of listing every individual liability risk in a fixed coverage catalogue, it generally covers liability claims arising from your insured professional activities – unless a risk is explicitly excluded in the insurance terms and conditions.

This is particularly important for freelancers and companies working in fast-changing fields such as IT, Artificial Intelligence (AI), media, consulting and other services. New technologies, changing projects and evolving professional activities do not automatically require every individual risk to be added to your policy.

The risks listed below are therefore examples of typical insured scenarios rather than an exhaustive list.

The risks listed below are therefore only examples:

1. Insured Third-party Risks (e.g. Claims by Clients)

• Damage caused by incorrect programming, IT consulting, organisation or training
• Compensation for unsuccessful installation (e.g. implementation and integration damage) of your manufactured or delivered software
• AI-related third-party damage caused by errors, malfunctions or inaccurate results of AI systems or AI agents
• Damage that occurs before the client has released or accepted the service
• Damage caused by insufficiently tested products and services
• Damage caused by incorrect data acquisition, data processing and storage
• Damage caused by poorly or incompletely executed orders, so-called consequential damages (no exclusion for compensation instead of performance!)
• Compensation for non-performance of a contractual obligation
• Compensation for negligence in contract negotiations
• Compensation for late delivery or service (exceeding the deadline)
• Damage caused by business interruptions suffered by your customers
• Damage caused by lost sales or profits suffered by your customers
• Unsuccessful expenditures or investments by your customers in anticipation of proper performance
• Damage due to no-fault deviations from the agreed quality (e.g. within the framework of service level agreements)
• Damage caused by the violation of copyrights, license rights, domain rights, trademark rights, naming rights and personal rights as well as data protection laws (also in the USA/Canada)
• Damage due to infringement of patent rights
• Warnings and claims for damages due to publications for own products and services (e.g. incorrect legal notice or product description)
• Claims due to privacy violations, breaches of confidentiality and non-disclosure agreements as well as unfair competition and unfair advertising
• Contractual penalties due to the breach of confidentiality obligations or data protection agreements
• Poor execution by your subcontractors
• Compensation for damages as a result of data theft and information piracy by third parties
• Negligent transmission of viruses and other malware
• Damage related to web design, web hosting, internet providing

2. First-party Losses coverd by Professional Indemnity Insurance (FLI) and First-Party Financial Loss Insurance (FPL)

Not every financial loss affects a client or another third party. Your own business can also suffer a financial loss. Professional Indemnity Insurance already includes a limited range of first-party protection. With the optional First-Party Financial Loss Insurance (FPL), this protection can be extended significantly.

• Legal costs for enforcing outstanding fees – e.g. if a client offsets an alleged claim for damages against an undisputed invoice (included in FLI)
• Criminal defence costs – if criminal proceedings arise from an incident that could lead to an insured liability claim (included in FLI)
• Legal costs following an insolvency challenge – if an insolvency administrator demands repayment of fees already received from a client (included in FLI)
• Fidelity losses caused by employees – e.g. embezzlement, incorrect or duplicate transfers, missed discounts or certain calculation and data-entry errors (only coverd by FPL)
• Fraud and cyber fraud – e.g. social engineering, phishing, CEO fraud, manipulated invoices, fake supplier fraud or business email compromise (only coverd by FPL)
• Financial losses caused by employees or freelancers – if your company suffers a loss due to their negligent acts and they cannot legally be held liable for it (only coverd by FPL)
• Data protection fines, penalties and punitive damages – where they are legally insurable (only coverd by FPL)
• Loss of important work documents – costs to restore or reproduce your own documents, including electronic documents required for client projects (only coverd by FPL)
• Damage to reputation and fake news – including agreed costs for external PR support to prevent or mitigate reputational damage (only coverd by FPL)

3. Risks Covered by the Optional First-Party Cyber and Data Risks Insurance (FPC) Add-on

• Cyberattack on your own IT systems or data – e.g. a hacker encrypts or manipulates your network, cloud environment, software, AI models or electronic data and you incur costs for restoration, IT forensics or temporary replacement systems
• Data breach affecting personal data – e.g. attackers gain access to customer data and you incur costs for IT forensic analysis, identifying affected persons, legal advice, mandatory notifications or customer information

4. Risks Covered by the Optional AI-Related First-Party Losses (ARL) Add-on

• Incorrect or hallucinated AI output – e.g. an AI system produces faulty or inaccurate results that have to be identified, corrected and manually reworked, causing additional personnel or external service costs
• AI agent triggers an unintended action – e.g. an autonomous or semi-autonomous AI agent initiates an incorrect process or decision and additional costs arise for root-cause analysis, rollback, deactivation of the agent, data recovery or temporary workarounds

4. Risks Covered by the Optional Engineering Activities (ENG) Add-on

• Financial loss caused by faulty engineering of a technical component – e.g. an error in PLC software, control logic or another independently testable technical unit causes a malfunction during project testing and results in a financial loss for the client
• Property damage during testing or commissioning – e.g. an insured engineering service directly causes damage to machinery or other property during tests, simulations, commissioning or project-related acceptance tests