Insurance checklist for performance marketing agencies

Key takeaways

• Professional indemnity is non-negotiable. It covers you if a client sues over a mistake in your work, like a costly ad campaign error or a missed target.
• Cyber risk insurance is critical for handling client data and ad accounts. It pays for recovery costs and legal fees if you suffer a data breach or ransomware attack.
• A public liability policy protects you from third-party injury or property damage claims. This is essential if clients or freelancers visit your office or you work on a client's site.
• Treat insurance as a commercial asset, not just a cost. The right cover can be the difference between a manageable incident and a business-ending lawsuit.
• Review your cover annually or when you take on a big new client. Your insurance needs to grow and change alongside your agency's revenue and risk profile.

For performance marketing agencies, insurance isn't just a tick-box exercise. It's a fundamental part of your commercial strategy. A single claim can wipe out months of profit, or worse, threaten your entire business.

Understanding the right performance marketing agency insurance cover types is about protecting the value you've built. It safeguards your cash flow, your client relationships, and your ability to win new business. Many clients, especially larger ones, will ask for proof of specific covers before they even sign a contract.

This checklist breaks down the essential insurance cover types you need. We'll explain what each one does, why it matters for your specific work, and how to make sure you're not underinsured. Think of it as a practical guide to building a financial safety net that lets you focus on growth.

Why is insurance a commercial priority for performance marketing agencies?

Insurance is a commercial priority because it directly protects your agency's profitability and viability. A major claim can destroy your cash reserves, damage client trust, and halt growth. For performance marketers, the risks are high-value and specific, making tailored cover a smart business investment.

Your work involves managing significant client ad spend, handling sensitive customer data, and making strategic calls that directly impact revenue. A mistake here isn't just an unhappy client. It can lead to a lawsuit for substantial financial losses.

Furthermore, the right insurance cover types are often a prerequisite for winning larger contracts. Enterprise clients and procurement teams will routinely request certificates of insurance. Not having them can immediately disqualify you from lucrative opportunities.

From a purely financial perspective, insurance is a predictable, manageable cost that protects against unpredictable, catastrophic losses. It turns a potential business-ending event into a manageable operational incident. Specialist accountants for performance marketing agencies often highlight that robust insurance is a hallmark of a professionally run, scalable business.

What is professional indemnity insurance and why do you need it?

Professional indemnity insurance protects you if a client claims your advice or work caused them a financial loss. It covers legal defence costs and any compensation you're ordered to pay. For performance marketers, this is your most critical policy, as your core service carries inherent financial risk for clients.

Imagine you make an error setting up a Google Ads campaign. A misplaced decimal point could blow through a monthly budget in hours. Or, your strategic recommendation to shift spend to a new platform fails to deliver results, costing the client missed sales targets.

In these scenarios, the client could sue to recover their lost ad spend and the revenue they believe you cost them. Your professional indemnity policy steps in. It pays for lawyers to defend you and covers any settlement or damages, up to your policy limit.

The level of cover you need depends on your client contracts and project sizes. A small agency might start with £1 million cover, but agencies handling six or seven-figure monthly ad spend should consider £2 million, £5 million, or more. Always check what your client contracts require.

How does cyber risk insurance protect your agency?

Cyber risk insurance covers financial losses and recovery costs from data breaches, ransomware, and other cyber incidents. It pays for things like forensic investigations, client notification, credit monitoring, legal fees, and regulatory fines. For agencies managing client ad accounts and customer data, this risk is very real.

Performance marketing agencies are prime targets. You hold login details for valuable advertising platforms like Meta Ads and Google Ads. You often have access to client customer databases for targeting and analysis. A hacker gaining access can steal funds, hijack accounts, or leak sensitive data.

A ransomware attack that encrypts your project files and financial data could bring work to a complete halt. Without cyber insurance, the costs to investigate, recover data, and manage client communications come straight from your pocket. These costs can easily run into tens of thousands of pounds.

A good cyber risk insurance policy doesn't just pay out after an event. Many provide access to emergency response teams who can help contain a breach immediately. This support is invaluable in limiting damage and protecting your agency's reputation.

When do you need a public liability policy?

You need a public liability policy if members of the public, clients, or freelancers visit your business premises, or if you or your team work on a client's site. It covers claims for bodily injury or property damage caused by your business activities. Even a simple accident can lead to a costly lawsuit.

Think about a client visiting your office for a meeting. If they trip over a loose cable and break their wrist, they could make a claim against your business for their medical costs and lost income. Your public liability policy would handle this.

Similarly, if you're working at a client's office and accidentally spill coffee on their expensive laptop, damaging it, your public liability cover could pay for the replacement. Without it, you'd be paying out of your agency's account.

While some performance marketers work entirely remotely, this policy becomes essential the moment you have a physical office space or conduct in-person work. It's a relatively low-cost cover that protects against surprisingly common and expensive accidents.

What other insurance cover types should performance marketers consider?

Beyond the core three, performance marketers should consider employers' liability, directors' and officers' liability, and business equipment cover. These address specific risks related to having employees, making strategic decisions, and owning essential tech. The right mix depends on your agency's structure and growth stage.

Employers' liability insurance is a legal requirement in the UK if you have any employees, including full-time, part-time, or even temporary staff. It covers claims from employees who become ill or injured because of their work. The minimum cover is £5 million, and you can be fined for not having it.

Directors' and officers' liability insurance protects the personal assets of your company's directors. If someone sues the company for alleged wrongful acts in leadership (like a strategic mistake that harms the business), this policy covers legal costs. It's increasingly important as you grow and take on investors.

Business equipment cover protects your laptops, monitors, and other essential gear against theft, loss, or damage. If your team relies on specific high-spec machines for data analysis and campaign management, replacing them suddenly could be a significant unbudgeted cost.

How much cover do you actually need for each policy?

The amount of cover you need is based on your potential liability, which is often tied to your contract values, client size, and asset value. A good rule is to match or exceed the requirements in your client contracts and consider the worst-case financial impact of a mistake. Underinsuring can be as risky as having no insurance at all.

For professional indemnity, look at the largest project or retainer value you handle. Could a mistake on that account lead to a claim for the entire contract value, plus lost client revenue? Many agencies set their cover at 2-3 times their largest annual client fee. If your biggest client pays £200,000 a year, £1 million in cover is a sensible minimum.

For cyber risk insurance, consider the cost of a serious data breach. According to a report by IBM, the global average cost of a data breach in 2023 was $4.45 million. While smaller, a severe incident for an agency could easily cost £50,000-£100,000 in forensic, legal, and notification services.

For public liability, standard policies often start at £1 million or £2 million. This is usually sufficient for most agencies. The key is to ensure the policy includes the activities you actually do, like visiting client sites or hosting events.

How should you choose and manage your insurance provider?

Choose a provider that specialises in or understands the digital and marketing sector. They will better grasp your specific risks, like ad account liability. Manage your policies by reviewing them annually, updating covers when you win a big new client, and keeping clear records of all certificates and documents.

Don't just go for the cheapest quote online. A broker who works with creative and tech businesses can help you find policies with the right clauses. For example, does the professional indemnity policy clearly cover errors in managing programmatic ad buys or social media campaigns?

When you get quotes, be brutally honest about your activities. If you handle customer data for email marketing, say so. If you manage six-figure monthly ad budgets, disclose it. Withholding information can invalidate your entire policy when you need to claim.

Create a simple system to manage your insurance. Store digital copies of your policy documents and certificates of insurance where you can easily find them. Set a calendar reminder to review your cover every year, or whenever your business model changes significantly. To understand how insurance and other operational costs impact your bottom line, take the Agency Profit Score — a free 5-minute assessment that reveals your financial health across profitability, cash flow, and operations.

What are the common mistakes agencies make with insurance?

The most common mistakes are buying the cheapest policy without checking the details, failing to increase cover as the agency grows, and not understanding what is excluded from their policy. Many agencies also forget to add new services or subsidiaries to their existing cover, creating dangerous gaps.

Buying on price alone is risky. A cheaper policy might have high excesses (the amount you pay first in a claim), exclude key activities like media buying, or have lower sub-limits for certain risks like cyber extortion. Always read the key facts document.

Growth creates insurance gaps. If your revenue has doubled but your professional indemnity cover hasn't changed, you're likely underinsured. The same goes if you've moved from managing £10k to £100k monthly ad budgets. Your potential liability has grown.

Exclusions are critical. Most policies won't cover deliberate acts, fraud, or known issues you had before the policy started. Some may exclude claims arising from work done by specific subcontractors unless they have their own insurance. Know these details before you need to claim.

Getting your performance marketing agency insurance cover types right is a clear sign of commercial maturity. It protects the business you're building and gives you the confidence to pitch for bigger, better clients. Treat it as a key part of your financial infrastructure, not an afterthought.

If you're unsure about your current cover or how to align it with your growth plans, seeking professional advice is a smart move. The right cover is an investment in your agency's future stability and success.