What Is the Cost of Professional Indemnity Insurance?
Risks threaten freelancers and the selfemployed in all industries. Modern Professional Indemnity Insurance has their back and protects them from financial disaster in the case of a damage event. But how much does Professional Indemnity Insurance actually cost? We'll tell you.
Article Overview:
Calculation Examples: What Does Professional Indemnity Insurance Cost?
Costs of Professional Indemnity Insurance for IT Freelancers
Costs of Professional Indemnity Insurance For Marketing Agencies
Costs of Professional Indemnity Insurance For Consultants
What Does Professional Indemnity Insurance Cost For Your Business?
Calculation Examples: What Does Professional Indemnity Insurance Cost?
The premium for Professional Indemnity Insurance depends on a number of factors. It is therefore difficult to give a generalised price for every industry and every insurance company. Your annual premium depends on the following points:
- Term
- Turnover
- Start-up discount
- Sum insured
- Deductible
Accordingly, it can be in the low three-digit or four-digit range. To give you more orientation, we have put together some calculation examples for various sectors.
#1 Costs of Professional Indemnity Insurance for IT Freelancers
As a first example, let's take IT freelancer Tobias, with a previous year's turnover of between 75,000 and 100,000 euros.
Startup
As Tobias has already been working as a freelancer in the IT sector for several years, he does not receive a start-up discount of 15 per cent (within the first two years of insurance).
Sum Insured
When choosing the sum insured, it is important to consider the extent of the damage that Tobias can cause to his customers. In practice, financial losses are by far the most common and should therefore be insured comprehensively. As a general rule, the larger the companies you work with, the higher the sum insured you should choose. Tobias' clients are mainly self-employed people and a few medium-sized companies. He chooses a sum insured of one million euros.
Sum Insured for General Liability
As Tobias has no employees, works from home and rarely has to leave the office for appointments, he chooses the lowest sum insured of two million euros for General Liability. He does not expect any relevant personal injury or property damage. But carelessness can happen quickly, so he doesn't want to give up General Liability cover altogether.
This damage event, in which an IT company accidentally triggered the extinguishing system in the rented server room, shows how quickly such General Liability can pay off: Unintentional Emergency in Server Rooms – a Real exali Damage Event.
Adjust Deductible
In insurance, the term ‘deductible’ refers to the amount you have to pay yourself in the case of a damage event. Think about the amount you can cover yourself. The standard amount is 250 euros - both for financial losses and property damage. This amount can be adjusted for financial losses. Tobias decides that he would rather save on the annual premium and therefore selects an deductible of 500 euros for financial losses. In return, he receives a discount of 5 per cent on the premium for financial loss liability (VSH), i.e. EUR 495,90 instead of EUR 522.
Which Term Should I Choose?
Tobias has been in the business for years and therefore decides in favour of an insurance term of three years. He therefore receives a premium discount of 10 per cent.
What Other Risks Do You Want To Insure?
Tobias now ends up with the additional modules. Here he can expand his insurance, depending on the particular risks his business harbours. Tobias selects the Additional Add-on for First-Party Cyber and Data Risks Insurance (FPC). He chooses a sum insured of 150,000 euros. With the additional module, Tobias protects his business against damage caused by cybercrime. In the end, the Professional Indemnity Insurance with the additional FPC module costs 588 euros net p.a. (699 euros gross).
Calculation example Professional Indemnity for IT freelancers including the Add-on for First-Party Cyber and Data Risks Insurance (FPC)
#2 Costs of Professional Indemnity Insurance For Marketing Agencies
For our second example, let's take Nina's marketing agency. As a founder, she receives a 15 per cent discount and chooses a turnover of less than 50,000 euros. With 300,000 euros as the sum insured for financial losses and General Liability (2 million euros), the example calculation looks like this:
Example calculation for Professional Indemnity Insurance in the media sector
#3 Costs of Professional Indemnity Insurance For Consultants
Our next example is Claudia. She has just set up her own business as a management consultant. As a business founder, she receives a 15 per cent discount. With an expected annual turnover of up to 100,000 euros, a sum insured for financial losses of 300,000 euros and General Liability (2,000,000 euros), the calculation for a contract term of three years turns out as follows:
Example calculation of Professional Indemnity Insurance for consultants
Written warnings are a major risk for any business. You can read here how to deal with them properly: Have You Received a Written Warning? This Is How You Should Respond.
What Does Professional Indemnity Insurance Cost For Your Business?
Would you like to know what your Professional Indemnity Insurance through exali costs? With the online calculator, you can put together the ideal insurance coverage for your business with just a few clicks. To do this, first select your activity and (in the premium calculator) the country in which your place of business is located. Then enter your (expected) annual turnover and decide which sums insured and additional modules make sense for your business.
Vivien Gebhardt is an online editor at exali. She creates content on topics that are of interest to self-employed people, freelancers and entrepreneurs. Her specialties are risks in e-commerce, legal topics and claims that have happened to exali insured freelancers.
She has been a freelance copywriter herself since 2021 and therefore knows from experience what the target group is concerned about.
