THE SHORT ANSWER
The fee alone does not measure the possible harm from the work. Ask which insurance is required and why, then check with your insurer or broker whether your policy covers the actual work and contractual promises. An insurance limit is not automatically a cap on your liability.
You quote $500 for a small project. The client's standard agreement requires $2 million of insurance. The numbers look absurd next to each other—but comparing the fee with the policy limit is only the start.
Ask what risk the requirement is meant to cover, whether you can obtain that cover, and what you are promising beyond it. A small fee can still involve sensitive data, production access or work capable of causing a larger loss. A generic supplier schedule can also contain requirements that do not fit your role.
Identify the policy before debating the number
Public liability, professional indemnity and cyber cover address different risks. They are not substitutes simply because their headline limits match. The British Business Bank's business insurance guide distinguishes these types and recommends discussing appropriate cover with a broker.
That source provides a UK overview. Policy wording, compulsory insurance and available products vary by jurisdiction and activity. For your project, ask your insurer or broker to assess the requirement against the work you will actually perform.
Send the whole requirement to your broker
Use this checklist rather than asking only “Am I insured for $2m?”
| Requirement | Question to resolve |
|---|---|
| Policy type and insured activities | Does the policy cover the service and entity named in this contract? |
| Limit and currency | Is the amount per claim, per event or aggregate across claims? |
| Excess or deductible | What amount would I fund myself? |
| Territory and jurisdiction | Are the client's location, the work and the agreed courts covered? |
| Duration | Must cover continue after delivery, and on what terms? |
| Contract wording | Are liabilities I assume by agreement excluded or restricted? |
| Evidence | Certificate, policy wording, client endorsement, or something else? |
Ask about exclusions relevant to your task: for example, security obligations, intellectual-property claims or use of client-supplied material. Whether any particular claim would be covered depends on the policy and facts; a certificate alone does not settle it.
If cover is written on a claims-made basis, ask the broker about notification timing, retroactive dates and any cover needed after you stop trading or change insurer. Do not promise years of continuing cover without pricing and checking that obligation.
Insurance and liability are separate clauses
A contract can require a $2m policy while imposing uncapped liability. It can also contain exceptions to a stated liability cap. The insurance figure does not itself rewrite those promises.
Read the unlimited-liability guide and compare the cap, indemnities and insurance schedule line by line. Ask whether defence costs reduce the available policy limit and whether the contractual cap includes costs and interest. These are questions to verify, not assumptions about every policy.
Negotiate the requirement using the actual project
The UK Government's Sourcing Playbook says its model contracts need tailoring, including insurance levels, to the project and market. That is public-procurement guidance, not a rule requiring your private client to change its terms. It is a useful example of why a template deserves a project-specific conversation.
You might ask the client to remove an irrelevant policy, accept your existing cover, limit production access or agree a different scope. If extra cover is genuinely needed and available, include its cost and continuing obligations when deciding whether the project works commercially. Do not certify compliance with a requirement you have not met.
A practical email
The insurance schedule appears to cover a broader supplier role than this project. Please confirm which policy types and limits are required for [defined work], whether the limits are per claim or aggregate, and how long cover must continue. I will check the full wording with my broker. Could we also review the liability and indemnity terms together, since the insurance requirement does not itself define my maximum contractual exposure?
If the answer changes your price or delivery date, record that before starting. The standard-contract negotiation guide gives a way to focus on a few material changes instead of arguing over every paragraph.
Put your own contract in context.
Starting notes from this guide are included; edit them before submitting.
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