Professional indemnity explained

PI for a side business while you are employed

Reviewed by the Apex broking team · Last reviewed 2026-10-31

Side business PI is professional indemnity insurance you buy yourself for paid work done outside your job. It matters because your employer's policy generally stops at work done for your employer.

Part of: Professional indemnity insurance

In short

If you do paid professional work on your own account while employed, your employer's PI policy is unlikely to cover it, because it is written for the employer's business. You usually need a separate policy, as a sole trader or through your own company, describing the side work accurately. Check your employment contract first: many restrict outside work or work for the employer's clients. Regulated professionals should check their regulator's rules on private practice, such as SRA guidance for freelance solicitors. Keep cover in place, or buy run-off, if the side business stops.

The short answer

If you do paid professional work on your own account while you are employed, you usually need your own professional indemnity insurance for it. Your employer's PI policy is bought to protect the employer's business and is generally limited to work done for that business and its clients. Evenings and weekends spent advising your own clients sit outside it.

The same applies in reverse: a small PI policy you buy for your side business will not usually cover your day job. Keeping the two separate, and describing each accurately, is what makes both work.

Whether you need PI at all depends on the work. If clients rely on your advice, design, code, reports or specialist skill, a mistake can cause them a financial loss they may claim back from you. Our guide do I need professional indemnity insurance sets out the usual triggers.

Why your employer's policy does not reach your side work

An employer's PI policy commonly names the firm and its employees as insureds, but only for the firm's declared professional business. Private work you invoice yourself is not the firm's business, and employers are generally liable for employees' acts in the course of employment, not for their private ventures. Our page on vicarious liability and PI explains that link.

Situation	Employer's PI	Your own PI
Work for the employer's clients, on the employer's behalf	Usually responds, subject to terms	Not needed for this work
Private client invoiced by you or your company	Usually not	Needed if a client could claim a loss
Free advice to friends in your professional field	Usually not	Worth checking; see PI for free advice
Work for a former employer's client after you leave	Not for new work	Needed, and check your contract first

PI is usually claims-made, so what matters is the policy in force when a client complains. A claim about side work done years ago will need your own policy, or run-off, to be in place at that time; see claims-made vs occurrence.

Your employment contract comes first

Before you insure a side business, check your contract of employment and any staff handbook. Many contracts contain clauses about:

outside work or second jobs needing permission;
working for, or soliciting, the employer's clients or competitors;
confidential information and intellectual property created in your own time;
conflicts of interest, especially in advisory roles.

Insurance cannot fix a breach of your employment contract, and a policy will not cover your employer's claim against you for breaching it. Some employers ask employees doing approved outside work to hold their own PI; see can my employer require PI insurance.

Sole trader or limited company, and regulated professions

You can buy PI as a sole trader or through a limited company. As a sole trader the policy protects you personally; through a company it protects the company and usually its directors. The choice affects contracts, tax and who a client sues, so read sole trader vs limited company for PI before deciding. Small-scale policies for low-turnover freelancers are widely available; see PI for sole traders.

If you are in a regulated profession, your regulator may have its own rules on private practice:

Solicitors. SRA guidance says a freelance solicitor must have adequate and appropriate insurance if they provide reserved legal services, and that the duty then covers all their client work. Clients must be told before engagement that the solicitor is not required to meet the SRA's minimum terms. See the SRA guidance on adequate and appropriate insurance.
Surveyors. RICS says regulated firms must provide adequate and appropriate indemnity for their work. If you are an RICS member offering surveying services privately, check RICS rules before taking instructions; see RICS PI requirements for surveyors.
Other professions. Accountants, architects and health professionals commonly face body-specific rules. Do sole practitioners still need regulator-mandated PI covers the pattern.

Illustrative examples

These examples are illustrative only.

Example 1: the employed developer

A software engineer employed by a bank builds booking systems for small businesses at weekends through a limited company. Their employer's policy does not mention the company, so the engineer buys a small PI policy for the company, with a business description covering web and app development. The approach for new IT freelancers is in PI for new IT consultants.

Example 2: the in-house HR adviser

An HR manager drafts employment contracts for a friend's café for a fee. A dismissal goes wrong and the café blames the contract. Without personal PI, the HR manager faces the claim alone.

Example 3: the side business that grows

A consultant's side work grows to the point where they resign. They keep the same PI policy, increase the limit and update the description, so there is no gap for work done while employed.

Common mistakes and what to check

Assuming the employer's policy follows you because you use the same skills.
Describing the side business vaguely. Under the Insurance Act 2015 you owe a duty of fair presentation, and a narrow description can leave work uncovered; see work outside your declared business description.
Cancelling the policy when the side business stops. Negligence claims can arrive years later: the Limitation Act 1980, section 14A allows some negligence claims up to three years from when the claimant learns of the damage, if that is later than six years from when the claim arose. Consider run-off cover.
Forgetting public liability if you visit client premises; see public liability insurance.

When you approach a broker, have ready a clear description of the work, expected fee income, the type of clients, any contract insurance clauses and confirmation that your employer has no objection where the contract requires it.

Apex arranges PI for freelancers and side businesses; a broker reads every enquiry.

Sources

Frequently asked

Does my employer's PI insurance cover my freelance work?

Usually not. An employer's PI policy is generally limited to the employer's declared business and work done on its behalf. Private work you invoice yourself, or through your own company, sits outside that. If clients rely on your side work, you normally need your own policy.

Is PI a legal requirement for a small side business?

For most unregulated occupations, no. It becomes a requirement if your regulator says so, or if a client contract asks for it. Even where it is optional, PI pays defence costs and compensation if a client says your work caused them a loss.

Do I need to tell my employer about my side business?

Check your employment contract and handbook. Many contracts require permission for outside work or restrict work for clients or competitors. Insurance does not protect you against your employer's claim for breaching your contract, so sort that out before you start.

Can a freelance solicitor work without SRA minimum terms insurance?

SRA guidance says a freelance solicitor must have adequate and appropriate insurance if they provide reserved legal services, but does not have to buy cover on the minimum terms and conditions. Clients must be told before engagement that the solicitor is not required to meet the minimum terms.

What happens to my PI if I stop the side business?

PI is usually claims-made, so cancelling it means a later claim about past work may be uninsured. Many freelancers keep cover running or buy run-off for a period after they stop, particularly where clients relied on reports, designs or advice that could be questioned years later.

Talk to a broker about this cover

Tell us what your business does, your turnover and any claims. A broker reads every enquiry and comes back with options. No fee for a quote. Or call 0117 325 0027.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.