{"course":{"slug":"independent-creative","title":"Working for Yourself","url":"https://addaly.com/learn/independent-creative","level":"intermediate","track":"create"},"lesson":{"slug":"liability-and-insurance","title":"A small fee and a large exposure","url":"https://addaly.com/learn/independent-creative/liability-and-insurance","position":62,"of":84,"minutes":10,"answer":"Your exposure on a job is unrelated to what you were paid for it unless you cap it, so exclude consequential loss, get explicit written approval of the final proof for anything produced at volume.","keyIdea":"Your exposure on a job is unrelated to what you were paid for it unless you cap it, so exclude consequential loss, get explicit written approval of the final proof for anything produced at volume, and understand that most professional indemnity policies are claims-made rather than covering the year the work was done."},"body":{"format":"markdown","text":"## The asymmetry nobody prices\n\nA freelancer is paid a few thousand for a project. The client prints fifty thousand catalogues. The phone number is wrong.\n\nThe fee was small. The loss is not, and it is not proportional to anything you earned. This asymmetry is the whole subject: your potential exposure on a job is unrelated to what you were paid for it, unless you do something about it.\n\n> Figure: The fee and the exposure are unrelated until you cap them. Bars (rupees on one catalogue job): What you were paid for the artwork 25000; Reprinting fifty thousand catalogues 400000; Your liability, capped at the fee in your terms 25000. One sentence capping liability at the fee, an exclusion of consequential loss, and a written sign-off on the final proof cost nothing between them, and they cover the ordinary failure better than insurance does.\n\nTwo instruments address it. A limitation clause in your contract, and insurance. They work differently and neither replaces the other.\n\n## The limitation of liability clause\n\nA term that caps what you can be liable for. The common forms:\n\n**A cap at the fee.** \"The designer's total liability under this agreement shall not exceed the fees paid for the work.\" Simple and widely used.\n\n**A cap at a multiple of the fee**, or at a fixed sum, which a larger client may insist on.\n\n**Exclusion of indirect and consequential loss.** This is the one that matters most: excluding lost profits, lost business and reprint costs, as opposed to the direct cost of the work itself.\n\nThree honest qualifications. Such clauses are subject to national rules on unfair terms and reasonableness, and a court may set aside a cap it considers unreasonable, particularly against a consumer. Most systems do not permit you to exclude liability for death or personal injury caused by negligence, or for fraud. And a large client will often have its own contract with a far higher cap, which is a negotiation rather than a formality.\n\nNonetheless: a stated cap is enormously better than silence, it is normal commercial practice, and most clients accept it without discussion.\n\n## Proofreading, and who signs it off\n\nThe specific, recurring disaster in visual work is a typographical error in something produced at volume. It is worth building a process around, because it happens to everyone.\n\n**Get written sign-off on the final proof.** Not approval of the design: approval of the artwork exactly as it will be produced. Send the final PDF and ask for explicit confirmation: \"please check every detail including the phone number, the address, the prices and the spelling, and reply confirming this is approved for print.\"\n\nSay plainly in the terms that the client is responsible for checking factual content: names, numbers, prices, addresses, legal wording. You are responsible for producing what was approved; they are responsible for the accuracy of their own information.\n\nThis is not passing the buck. The client is the only party who knows whether their new phone number is correct. Making the responsibility explicit means the check actually gets done.\n\nThen check it anyway. Read the numbers aloud, backwards. It catches more than reading forwards, because it prevents your brain from processing the meaning and skipping the digits.\n\n## Professional indemnity insurance\n\nInsurance covering claims arising from professional work: negligence, errors, and depending on the policy, infringement of intellectual property rights, breach of confidence and defamation.\n\nWhether it is worth buying depends on what you do and for whom. It becomes clearly worth it when your work is produced at scale where an error is expensive; when you work with large organisations, many of which require it contractually; or when your work carries regulatory content such as medical, financial or safety information.\n\nIt matters less for small-scale, low-consequence work, though the premiums for a one-person creative practice are usually modest relative to a single project.\n\nTwo details worth understanding rather than skimming. Most professional indemnity policies are written on a **claims-made** basis, meaning they cover claims *made* during the policy period, not work done during it, so lapsing cover leaves past work unprotected, and \"run-off\" cover is what addresses that when you stop trading. And policies typically **exclude deliberate acts and known circumstances**, so a claim you could already see coming when you bought the policy is unlikely to be covered.\n\nRead what the policy actually excludes. Intellectual property infringement is included in some creative policies and excluded in others, and it is one of the more likely claims in this trade.\n\n## Public liability, and the other kinds\n\n**Public liability** covers injury or damage to third parties: relevant if you shoot on location or install work.\n\n**Equipment insurance** covers your tools, which for a photographer may be the largest asset in the business.\n\n**Contents cover** matters if you work from home; a domestic policy frequently excludes business equipment and business use, which people discover after a burglary.\n\n## The free protections that do most of the work\n\nBefore buying anything, four habits remove a large share of the realistic risk:\n\n1. **A written proof approval** for everything produced at volume.\n2. **A liability cap and an exclusion of consequential loss** in your terms.\n3. **A client indemnity for material they supply.**\n4. **Archived evidence**: the approved PDF, the approval email, the licences, the dated files.\n\nNone of these cost money. Together they cover the ordinary failures far more effectively than insurance does, because they prevent the claim rather than paying it.\n\n## What to do when something goes wrong\n\nTell the client immediately, before they find it. Establish what was approved and by whom, from the documents rather than from memory. If you are insured, notify the insurer early: most policies require prompt notification and late notice can prejudice cover.\n\nDo not admit liability in writing before you understand the position, and do not offer to pay for a reprint in the first emotional hour. Many policies also restrict your ability to admit liability without their consent. Be responsive, be factual, and find out what actually happened first.\n\nWhere it was your error and the sum is small, fixing it at your own cost quickly is often the right commercial decision and buys a great deal of goodwill. Where the sum is large, this is exactly the situation the contract and the insurance exist for.\n\n## The limitation\n\nInsurance and contract terms are national products. What a limitation clause may exclude, whether an indemnity is enforceable, what insurers offer and what is legally required all differ by country, and a policy bought in one country may not respond to a claim brought in another, which matters if you have foreign clients.\n\nThe general shape is stable: cap what you can, exclude consequential loss, get written approval for anything produced at volume, and insure when the consequences of an error exceed what you could absorb. The specifics need a local answer, and it is a cheap one to obtain relative to a single claim."},"check":{"question":"A designer stops freelancing and cancels her professional indemnity policy. Eighteen months later a claim arrives about a catalogue she produced three years ago, while the policy was in force. What is the likely position?","options":[{"text":"Covered, because the work was done during a period when the policy was active and the policy responds to the work rather than to the timing of the claim.","correct":false,"tempting":"Describes an occurrence basis, which is how many people assume all insurance works and how some other classes of policy do work."},{"text":"Probably not covered, because claims-made policies respond to claims made during the policy period, which is what run-off cover exists to address.","correct":true},{"text":"Covered, provided she notifies the former insurer promptly, since prompt notification is the operative condition in professional indemnity policies.","correct":false,"tempting":"Prompt notification is a genuine and strictly enforced condition, but it applies to a live policy, and there is no longer one to notify under."},{"text":"Not covered, because policies exclude claims arising after a business ceases trading, so the cover ended when she stopped working rather than when she cancelled.","correct":false,"tempting":"Reaches the right outcome by the wrong mechanism; cover ends with the policy period, and run-off would extend it past the end of trading."}]},"prev":{"slug":"when-someone-takes-it","title":"Your work will be stolen and the courts are not the answer","url":"https://addaly.com/learn/independent-creative/when-someone-takes-it"},"next":{"slug":"the-ai-question","title":"The client will ask, so decide your answer before they do","url":"https://addaly.com/learn/independent-creative/the-ai-question"},"authorship":"Founder and series editor: Dr Mustafa Mun. Written by AI models to a written standard. Exam keys checked blind by a second model: 3,665 of 3,666 agreed. Academic review invited.","review":{"status":"Draft, open for academic review"},"cite":"Addaly (2026) 'A small fee and a large exposure', in Working for Yourself. Edited by M. Mun. Addaly. Available at: https://addaly.com/learn/independent-creative/liability-and-insurance (Accessed: 13 October 2026).","licence":{"name":"CC BY-NC-SA 4.0","url":"https://creativecommons.org/licenses/by-nc-sa/4.0/"},"reader":{"schema":1,"title":"A small fee and a large exposure","courseTitle":"Working for Yourself","module":{"index":6,"slug":"ownership-and-risk","title":"Ownership, rights and risk"},"answer":null,"keyIdea":"Your exposure on a job is unrelated to what you were paid for it unless you cap it, so exclude consequential loss, get explicit written approval of the final proof for anything produced at volume, and understand that most professional indemnity policies are claims-made rather than covering the year the work was done.","hero":{"kind":"figure","figure":{"t":"figure","label":"Figure","figure":{"type":"bars","unit":"rupees on one catalogue job","title":"The fee and the exposure are unrelated until you cap them","series":[{"label":"What you were paid for the artwork","value":25000},{"label":"Reprinting fifty thousand catalogues","value":400000,"highlight":true},{"label":"Your liability, capped at the fee in your terms","value":25000,"highlight":true}],"caption":"One sentence capping liability at the fee, an exclusion of consequential loss, and a written sign-off on the final proof cost nothing between them, and they cover the ordinary failure better than insurance does."},"alt":"Figure: The fee and the exposure are unrelated until you cap them. Bars (rupees on one catalogue job): What you were paid for the artwork 25000; Reprinting fifty thousand catalogues 400000; Your liability, capped at the fee in your terms 25000. One sentence capping liability at the fee, an exclusion of consequential loss, and a written sign-off on the final proof cost nothing between them, and they cover the ordinary failure better than insurance does."}},"blocks":[{"t":"h2","id":"the-asymmetry-nobody-prices","runs":[{"text":"The asymmetry nobody prices"}]},{"t":"p","runs":[{"text":"A freelancer is paid a few thousand for a project. The client prints fifty thousand catalogues. The phone number is wrong."}]},{"t":"p","runs":[{"text":"The fee was small. The loss is not, and it is not proportional to anything you earned. This asymmetry is the whole subject: your potential exposure on a job is unrelated to what you were paid for it, unless you do something about it."}]},{"t":"p","runs":[{"text":"Two instruments address it. A limitation clause in your contract, and insurance. They work differently and neither replaces the other."}]},{"t":"h2","id":"the-limitation-of-liability-clause","runs":[{"text":"The limitation of liability clause"}],"role":"limit"},{"t":"p","runs":[{"text":"A term that caps what you can be liable for. The common forms:"}]},{"t":"p","runs":[{"text":"A cap at the fee.","b":true},{"text":" “The designer’s total liability under this agreement shall not exceed the fees paid for the work.” Simple and widely used."}]},{"t":"p","runs":[{"text":"A cap at a multiple of the fee","b":true},{"text":", or at a fixed sum, which a larger client may insist on."}]},{"t":"p","runs":[{"text":"Exclusion of indirect and consequential loss.","b":true},{"text":" This is the one that matters most: excluding lost profits, lost business and reprint costs, as opposed to the direct cost of the work itself."}]},{"t":"p","runs":[{"text":"Three honest qualifications. Such clauses are subject to national rules on unfair terms and reasonableness, and a court may set aside a cap it considers unreasonable, particularly against a consumer. Most systems do not permit you to exclude liability for death or personal injury caused by negligence, or for fraud. And a large client will often have its own contract with a far higher cap, which is a negotiation rather than a formality."}]},{"t":"p","runs":[{"text":"Nonetheless: a stated cap is enormously better than silence, it is normal commercial practice, and most clients accept it without discussion."}]},{"t":"h2","id":"proofreading-and-who-signs-it-off","runs":[{"text":"Proofreading, and who signs it off"}]},{"t":"p","runs":[{"text":"The specific, recurring disaster in visual work is a typographical error in something produced at volume. It is worth building a process around, because it happens to everyone."}]},{"t":"p","runs":[{"text":"Get written sign-off on the final proof.","b":true},{"text":" Not approval of the design: approval of the artwork exactly as it will be produced. Send the final PDF and ask for explicit confirmation: “please check every detail including the phone number, the address, the prices and the spelling, and reply confirming this is approved for print.”"}]},{"t":"p","runs":[{"text":"Say plainly in the terms that the client is responsible for checking factual content: names, numbers, prices, addresses, legal wording. You are responsible for producing what was approved; they are responsible for the accuracy of their own information."}]},{"t":"p","runs":[{"text":"This is not passing the buck. The client is the only party who knows whether their new phone number is correct. Making the responsibility explicit means the check actually gets done."}]},{"t":"p","runs":[{"text":"Then check it anyway. Read the numbers aloud, backwards. It catches more than reading forwards, because it prevents your brain from processing the meaning and skipping the digits."}]},{"t":"h2","id":"professional-indemnity-insurance","runs":[{"text":"Professional indemnity insurance"}]},{"t":"p","runs":[{"text":"Insurance covering claims arising from professional work: negligence, errors, and depending on the policy, infringement of intellectual property rights, breach of confidence and defamation."}]},{"t":"p","runs":[{"text":"Whether it is worth buying depends on what you do and for whom. It becomes clearly worth it when your work is produced at scale where an error is expensive; when you work with large organisations, many of which require it contractually; or when your work carries regulatory content such as medical, financial or safety information."}]},{"t":"p","runs":[{"text":"It matters less for small-scale, low-consequence work, though the premiums for a one-person creative practice are usually modest relative to a single project."}]},{"t":"p","runs":[{"text":"Two details worth understanding rather than skimming. Most professional indemnity policies are written on a "},{"text":"claims-made","b":true},{"text":" basis, meaning they cover claims "},{"text":"made","i":true},{"text":" during the policy period, not work done during it, so lapsing cover leaves past work unprotected, and “run-off” cover is what addresses that when you stop trading. And policies typically "},{"text":"exclude deliberate acts and known circumstances","b":true},{"text":", so a claim you could already see coming when you bought the policy is unlikely to be covered."}]},{"t":"p","runs":[{"text":"Read what the policy actually excludes. Intellectual property infringement is included in some creative policies and excluded in others, and it is one of the more likely claims in this trade."}]},{"t":"h2","id":"public-liability-and-the-other-kinds","runs":[{"text":"Public liability, and the other kinds"}]},{"t":"p","runs":[{"text":"Public liability","b":true},{"text":" covers injury or damage to third parties: relevant if you shoot on location or install work."}]},{"t":"p","runs":[{"text":"Equipment insurance","b":true},{"text":" covers your tools, which for a photographer may be the largest asset in the business."}]},{"t":"p","runs":[{"text":"Contents cover","b":true},{"text":" matters if you work from home; a domestic policy frequently excludes business equipment and business use, which people discover after a burglary."}]},{"t":"h2","id":"the-free-protections-that-do-most-of-the-work","runs":[{"text":"The free protections that do most of the work"}]},{"t":"p","runs":[{"text":"Before buying anything, four habits remove a large share of the realistic risk:"}]},{"t":"ol","start":1,"items":[[{"text":"A written proof approval","b":true},{"text":" for everything produced at volume."}],[{"text":"A liability cap and an exclusion of consequential loss","b":true},{"text":" in your terms."}],[{"text":"A client indemnity for material they supply.","b":true}],[{"text":"Archived evidence","b":true},{"text":": the approved PDF, the approval email, the licences, the dated files."}]]},{"t":"p","runs":[{"text":"None of these cost money. Together they cover the ordinary failures far more effectively than insurance does, because they prevent the claim rather than paying it."}]},{"t":"h2","id":"what-to-do-when-something-goes-wrong","runs":[{"text":"What to do when something goes wrong"}]},{"t":"p","runs":[{"text":"Tell the client immediately, before they find it. Establish what was approved and by whom, from the documents rather than from memory. If you are insured, notify the insurer early: most policies require prompt notification and late notice can prejudice cover."}]},{"t":"p","runs":[{"text":"Do not admit liability in writing before you understand the position, and do not offer to pay for a reprint in the first emotional hour. Many policies also restrict your ability to admit liability without their consent. Be responsive, be factual, and find out what actually happened first."}]},{"t":"p","runs":[{"text":"Where it was your error and the sum is small, fixing it at your own cost quickly is often the right commercial decision and buys a great deal of goodwill. Where the sum is large, this is exactly the situation the contract and the insurance exist for."}]},{"t":"h2","id":"the-limitation","runs":[{"text":"The limitation"}],"role":"limit"},{"t":"p","runs":[{"text":"Insurance and contract terms are national products. What a limitation clause may exclude, whether an indemnity is enforceable, what insurers offer and what is legally required all differ by country, and a policy bought in one country may not respond to a claim brought in another, which matters if you have foreign clients."}]},{"t":"p","runs":[{"text":"The general shape is stable: cap what you can, exclude consequential loss, get written approval for anything produced at volume, and insure when the consequences of an error exceed what you could absorb. The specifics need a local answer, and it is a cheap one to obtain relative to a single claim."}]}],"check":{"question":[{"text":"A designer stops freelancing and cancels her professional indemnity policy. Eighteen months later a claim arrives about a catalogue she produced three years ago, while the policy was in force. What is the likely position?"}],"options":[{"text":[{"text":"Covered, because the work was done during a period when the policy was active and the policy responds to the work rather than to the timing of the claim."}],"correct":false,"tempting":[{"text":"Describes an occurrence basis, which is how many people assume all insurance works and how some other classes of policy do work."}]},{"text":[{"text":"Probably not covered, because claims-made policies respond to claims made during the policy period, which is what run-off cover exists to address."}],"correct":true,"tempting":null},{"text":[{"text":"Covered, provided she notifies the former insurer promptly, since prompt notification is the operative condition in professional indemnity policies."}],"correct":false,"tempting":[{"text":"Prompt notification is a genuine and strictly enforced condition, but it applies to a live policy, and there is no longer one to notify under."}]},{"text":[{"text":"Not covered, because policies exclude claims arising after a business ceases trading, so the cover ended when she stopped working rather than when she cancelled."}],"correct":false,"tempting":[{"text":"Reaches the right outcome by the wrong mechanism; cover ends with the policy period, and run-off would extend it past the end of trading."}]}],"order":[3,1,2,0],"why":null},"prev":{"slug":"when-someone-takes-it","title":"Your work will be stolen and the courts are not the answer","minutes":9},"next":{"slug":"the-ai-question","title":"The client will ask, so decide your answer before they do","minutes":9}}}