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No matter how hard you try to make your client's design dreams come true, clients can be hard to please. And no matter how experienced, good, and careful you are, everyone makes mistakes. If a client is unhappy with the finished product and sues you for negligence, it can cost thousands of pounds to defend and even more in settlement payments.
However, the right business insurance can protect you and your business financially against these and other perils. Below we explain the different types of business insurance that an interior designer might need or want, to help you choose the best cover for your business.
- Does an interior designer need insurance?
- Types of insurance for an interior designer
- How much is interior designer insurance?
Do Interior Designers Need Insurance?
- Professional indemnity insurance
- Public liability insurance
- Product liability insurance
- Employers' liability (for any employees)
- D&O insurance (if appropriate)
Yes, interior designers need insurance. In fact, to be a member of the British Institute of Interior Design (BIID), you need to carry the appropriate employers' liability, public liability, product liability and professional indemnity insurance. Where appropriate (e.g., your interior design business is structured as a limited company) you are required to have directors' and officers' insurance as well.
Requirements aside, it is a good idea to buy insurance to protect your business financially. And there are additional types of business insurance which can be beneficial. But what types do you really need? Let's take a look at the most common types of interior designer insurance in the UK so you can decide what cover is best for your business.
Types of Insurance for Interior Designers
An interior designer can face many different types of risk, such as dissatisfied clients claiming your work was negligent, injury claims from employees, loss of business equipment or stock, etc. Here are a few of the most common types of business insurance an interior designer might need, including examples for each to explain how they work.
Professional Indemnity Insurance for Interior Designers
An unhappy client can seek damages for losses resulting from your professional advice or service. Professional Indemnity (PI) insurance can protect you and your business financially against claims from dissatisfied clients, by covering the cost to defend these types of claims (e.g., by paying legal fees and the cost of an expert opinion) and also compensation payments you're found liable to pay.
PI is a critical component of cover for any profession where you're paid for your advice, such as interior design. In fact, the BIID requires members to hold Professional Indemnity insurance. Here are some examples of situations that can be covered by a PI insurance policy for an interior designer:
- Errors in drawings or plans
- Failing to obtain necessary materials causing delays
- Making a decision without consulting the client
- Using different materials than those agreed
- Giving poor advice
- Failing to anticipate a potential issue
- Failing to design within a project's budget
Most professional indemnity insurance policies are sold on a claims-made basis (as opposed to occurrence based), which means you're only covered so long as your insurance policy is still active. If your policy expires or is cancelled, you won't be covered anymore—even for previous work you did while the policy was still in force.
For this reason, when you decide to retire or take a break, an interior designer should look into "run-off" professional indemnity insurance to cover themselves because a claims can be made years later.
Public Liability Insurance for Interior Designers
In addition to professional indemnity cover, the BIID requires that members hold public liability insurance to protect against claims of property damage or bodily injury by a client or other member of the public—for example, slips and falls in your place of business.
Public liability insurance provides access to legal experts and pays for legal costs to help you defend a claim (whether justified or not) as well as covering compensation payments if you're found liable. It's common to find limits of £1 million, £2 million, £5 million or £10 million in the UK marketplace for public liability insurance.
- Public Liability Example: A client trips on a stack of samples you left on the floor. They fall and break their wrist, suing for lost wages while they're unable to work.
Product Liability Insurance
Product Liability insurance protects against claims of bodily injury or property damage due to the use of your business's goods or products—which can include goods you supplied to clients through your work as an interior designer. Like other liability coverages, product liability insurance provides financial protection by paying for legal defence costs as well as as compensation payments if you're found liable. Product liability insurance is often wrapped up with public liability within one policy.
- Product Liability Example: Fabric you sourced from abroad to cover furniture in your client's home has a toxic coating that causes a severe skin reaction. Your client sues you for damages.
Employers' Liability Insurance
Employers' liability insurance (EL) is compulsory for any business that has any employees—it's required by law and the BIID if you have employees. So if you hire an office manager, assistant or other interior designer you will need EL insurance, even if your workers are temporary or part time. EL insurance covers legal costs and compensation payments you're found liable for if an employee becomes ill or is injured at work and consequently sues you.
- Employers' Liability Example: An employee is injured while carrying samples to your car, suing you for compensatory damages.
Business Equipment Insurance
Business equipment cover can help protect your computers, 3D printers and other specialist tools against loss or damage. While the terms of a policy will vary by insurer, it's typical for theft, accidental damage, fire, flood and storms to be covered. If you take any equipment with you when you work away from your main business premises, for example to client sites, then you can get extra cover to accommodate this added risk.
- Tools/Equipment Cover Example: A fire in your place of business damages all of your business equipment. You claim for their value under your equipment insurance so that you can replace your equipment and get back to work.
Personal Accident Insurance
If a workplace injury prevents you from working, personal accident insurance can pay you a monetary benefit to help you pay for your bills and living expenses while you're out of work. Note: personal accident cover is a "benefit" (which means the premium is not a tax deductible business expense) and is usually paid as a weekly payout for a temporary injury (e.g., broken foot) or a lump sum payout for a permanent disability (e.g., loss of an eye).
- Personal Accident Example: You trip and fall while managing a client's renovation, injuring your back. You're unable to work for a few weeks, and claim for a weekly benefit while you recover.
Directors and Officers Insurance
Directors and Officers insurance protects the individual directors and officers of a company from claims made by shareholders, investors, employees, regulators or other third parties regarding their role. If an interior designer's decisions or actions prove to be a breach of duty, they may be held directly responsible—and that's where D&O insurance comes in. D&O insurance can cover their resulting losses, for instance legal fees to defend a claim and/or settlement payments.
D&O insurance is required by the BIID where appropriate—for example, a sole trader would not need D&O insurance but a director in a limited company would.
- Directors and Officers Example: If as a company director you make a decision that proves to be detrimental to your company's business prospects, the investors in your company hold you liable and sue.
Commercial Vehicle insurance is necessary for company-owned cars, or if you carry goods, tools or equipment. However if you just drive your personal car between client sites and carry only samples then you might only need to declare business use on your regular car insurance (and not pay extra for commercial cover). If you're unsure it's best to explain exactly how you use your vehicle to your insurance company or a specialist broker to determine which type of vehicle insurance you need.
- Commercial Vehicle Example: While an employee is driving your company-owned car to a client's home, they have an at-fault accident at a roundabout. There's damage to both vehicles, which is covered by your comprehensive commercial car insurance plan.
Depending on your specific needs, there could be other types of business insurance that you might need for your interior design business (e.g., directors and officers, business interruption, legal expenses, etc.). You may also need commercial property building insurance for a business premises, or to let your home insurance company know if you run your business from your home. Talk to a specialist insurer or broker if you are unsure of the business insurance coverage you need for your interior design business.
How Much is Insurance for an Interior Designer?
Interior design insurance costs from around £100 a year for the most basic professional indemnity and public/product liability coverage. However, prices can rise depending on factors like policy coverage limits, your turnover, your business structure (sole trader, partnership, limited company), past claims history and even where you live.
Plus, employers' liability insurance can cost in the range of £60 to £200 per employee, and D&O insurance typically costs at least a few hundred pounds a year—if you need these additional coverages.
If you want to be a member of the BIID, interior designers need the following insurance coverages: appropriate employers' liability (if you have any employees), public liability, product liability and professional indemnity insurance. Where appropriate you are required to have directors' and officers' insurance as well.
If you have company-owned vehicles and/or deliver goods (e.g., fabrics, furnishings, materials, decorations, etc.) then you will certainly need commercial vehicle insurance. For a private car that you simply use to visit clients, you may only need to declare business use on your regular car insurance—this may cover carrying samples, but won't cover making deliveries.