Understanding ‘Claims Made’ Insurance for Designers

One of the most important things to understand about Professional Indemnity Insurance (PII) is that it works differently from most other types of insurance. While policies like Public Liability or Employer’s Liability cover events when they happen, PII works on a “claims made” basis.

What Does “Claims Made” Mean?

A “claims made” policy responds to claims made against you during the period the policy is active, regardless of when the actual work was done.

Example:
You completed a design project in 2020. In 2022, the client raises a complaint and makes a claim. The policy you held in 2022 — when the claim was made — is the one that responds, not the one from 2020.

Why This Matters

Because claims can arise years after a project ends, it’s essential to keep your Professional Indemnity Insurance active — even after the work is completed or the client relationship ends.

If you let your policy lapse, you may be left unprotected if a client brings a claim based on past work.

What Should Be Referred to Insurers?

Policies define what qualifies as a “claim”, and this can differ between insurers. Generally, a claim may include:

• Legal or arbitration proceedings
• Regulatory actions
• A written demand for compensation from a client

In addition to actual claims, many policies also require you to notify them of “circumstances” — issues that might lead to a future claim.

What Counts as a “Circumstance”?

There’s no universal rule, but some common examples include:

• Discovering an error or oversight in your work
• A client expressing dissatisfaction
• A dispute over unpaid fees or contract terms

Even if you think the issue will be resolved without escalation, it’s wise to notify your insurer. Failing to do so could affect future cover if the situation later develops into a formal claim.

Key Points to Remember

• PII is “claims made” – it must be active when a claim is made, not just when work is done
• You must report both actual claims and potential circumstances
• Keep cover in place long-term – even beyond active projects or into retirement
• Review your policy wording carefully – different insurers have different definitions

Frequently Asked Questions (FAQs)

Do I need PII if I’m a freelance designer working from home?
Yes — if you provide design services or advice, you can be liable for professional errors, no matter where you work.

Is insurance legally required?
Only Employer’s Liability is legally required (if you employ staff). Other types, like PII or Public Liability, may be contractually required or strongly advisable.

What happens if I cancel my policy after finishing a project?
You risk being uninsured for future claims about that project. Always maintain cover for the full liability period — often 6 to 12 years, or more.

What is run-off cover and do I need it?
Run-off cover protects you after you stop trading, retire, or close your business. It ensures you’re still insured if claims arise from past work.

What’s the difference between a ‘claim’ and a ‘circumstance’?
A claim is a formal demand for compensation. A circumstance is any situation that might reasonably lead to a claim. Most PII policies require both to be reported promptly.