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Professional Indemnity Insurance for Graphic Designers

Written by

Shaun McGowan

As a Graphic Designer you are an essential member of your clients’ marketing team. You are responsible for the visual aspects of all their communication campaigns, and for ensuring their brand is accurately represented in all their digital and printed promotional materials.

You may be involved in the concept development and creation of core marketing assets such as their brand style guide, website and corporate brochures, or in offering expert advice on branding, communication or marketing strategy. You may also be responsible for coordinating other contractors such as photographers and printers.

As a professional your clients have the right to rely on your advice, and to expect you to meet deadlines and complete projects to a high standard. If you make an error or fail to deliver work as expected, and the client loses money or business as a result, they can take legal action against you to recover their losses. They could claim that:

  • You missed a vital deadline
  • You made an error in your work -You plagiarised work or breached someone else’s copyright
  • You breached their confidentiality

Even if you are working in collaboration with your client and following their instructions or guidelines, you could still be at risk of a negligence claim.

Why do Graphic Designers need professional indemnity insurance?

If you are offering your services as a Graphic Designer, especially if you are running a design studio or employing other people, it’s extremely important that you have professional indemnity insurance (PII). Here are some the reasons:

  • Many businesses, especially public sector organisations, won’t engage your services unless you have adequate insurance to protect their business if you make a mistake that costs them money.
  • There is always a risk that someone will claim your original work is an infringement of their copyright. It is almost impossible to make an exhaustive check and be sure that no one has ever used a similar style or design. Intellectual property infringement claims, whether founded or not, can be extremely costly to defend.
  • You will usually be working to deadlines, often as part of a larger project schedule. If you fail to deliver on time the knock-on effect on could be severe and your client could incur substantial extra costs – which they may seek to recover from you.
  • If one of your employees makes a mistake, from a copyright infringement to an innocent error like emailing a document to the wrong client, you could be held personally for the outcome.
  • If you are responsible for selecting, scheduling and supervising other contractors such as printers, you could be held liable for their failure to deliver on time or to the expected standard.
  • Your personal assets, as well as your business and reputation, are at risk if a client sues you for professional negligence.

What does professional indemnity insurance cover?

You may already have public liability insurance in place to protect you if someone has an accident in your studio, or for any physical damage you may cause to another person or their property. However, this won’t cover you if one of your clients suffers a financial loss as a result of a mistake you or your employees make, or advice you give them.

A professional indemnity policy covers your legal costs if you need to defend your business against a negligence or copyright infringement claim – whether or not that claim is found to be true. PII also covers the damages that are awarded against you if a negligence claim is upheld, up to the limit in your policy.

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How much is professional indemnity insurance for Graphic Designers?

The cost of your professional indemnity insurance is your annual premium. The amount you pay will depend on a number of factors, including:

  • The amount of cover you wish to take out
  • Your turnover
  • Whether you offer your services on a freelance basis, or run a design studio with other employees
  • Where you are located (you will pay different levels of stamp duty in different states)

You may also choose to add features like retroactive protection or runoff cover to your policy, for an additional cost.

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Professional indemnity insurance case study

A freelance Graphic Designer was engaged by an SME to completely overhaul their brand, including the design of a new logo and the creation of a style guide setting out colours, fonts and usage guidelines. Once the new brand was finalised the client commissioned a new website and a suite of printed marketing collateral, including brochures, letterhead and business cards.

Six months later a rival company filed an intellectual property infringement suit against the client, claiming that the new brand was too similar to their own and was a breach of their copyright. The infringement was upheld and the client had to take down their website and stop using their printed materials.

The client filed a negligence claim against the Graphic Designer for the cost of developing a new brand, redesigning the website and reprinting all their marketing materials. They also claimed for lost business during the period when the website was offline, and for the fines they had to pay to the rival company for breach of copyright.

Damages of $637,000 were awarded against the Graphic Designer. His professional indemnity insurance covered these plus his legal costs of almost $40,000. The excess he paid on the claim was just $[xxx].

List of Graphic Design services that need professional indemnity insurance

If you offer any of the following services as a Graphic Designer then it is extremely important that you have the protection of professional indemnity insurance, or your personal and business assets could be at risk:

  • Advertising
  • Banner design and creation
  • Brand development
  • Branding strategy
  • Communications strategy
  • Concept design
  • Digital media design and creation
  • Email marketing and statistics
  • Event branding
  • Graphic design
  • Interior graphics
  • Logo animation
  • Logo design
  • Marketing strategy
  • Photography
  • Print buying
  • Print design
  • Print management
  • Project management
  • Signage design and creation
  • Social media profile design
  • Web design and development
  • Web statistics analysis
  • Web template design
  • Wire framing

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About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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