Insurance policies PPC agencies should consider for ad spend and client disputes

Key takeaways

• Professional indemnity insurance is non-negotiable. It protects you if a client sues you for a mistake in your work, like a costly ad spend error or a strategy that didn't deliver results.
• Cyber liability insurance is critical for PPC work. Managing client ad accounts and budgets makes you a target. This covers data breaches, fraud, and the cost of getting campaigns back online.
• Employer's liability insurance is a legal requirement. If you have any employees, even part-time or temporary staff, you must have this by law. Fines for not having it are severe.
• Standard business insurance isn't enough. General policies often exclude the specific digital risks PPC agencies face. You need tailored PPC agency insurance coverage.
• Review your coverage as you grow. The level of cover you need increases with your team size, client budgets, and the complexity of your work.

Why is insurance different for a PPC agency?

PPC agency insurance coverage needs to be specific because your risks are unique. You're not just giving advice. You're directly controlling and spending client money in real-time platforms.

A simple typo in a campaign setting can burn through a client's budget in hours. A data breach could give a hacker access to multiple client ad accounts. These aren't theoretical risks. They happen regularly.

General business insurance often has exclusions for 'professional services' or 'digital assets'. That means a standard policy might not pay out if a client sues you over a failed Google Ads campaign. You need policies built for the job you do.

Getting this right protects your agency's bank balance. It also makes you a more credible partner to larger clients, who will often ask for proof of your insurance before they sign a contract.

What does professional indemnity insurance cover for PPC?

Professional indemnity insurance is your main defence against client lawsuits. It covers legal costs and compensation if a client claims your work was negligent, caused them financial loss, or breached your contract. For PPC agencies, this directly applies to ad spend errors, campaign failures, and unmet performance promises.

Imagine you accidentally set a daily budget of £5,000 instead of £500. The client's monthly budget is spent in a day with poor results. They demand you repay the £4,500 overspend. Your professional indemnity policy would handle the claim.

Another common scenario is a 'strategy dispute'. A client hires you to increase leads, but after three months, their cost-per-lead has doubled. They claim your strategy was flawed and sue for their lost retainer fees and lost business. This is exactly what professional indemnity is for.

The level of cover you need depends on your client contracts and budgets. A good starting point for a small PPC agency is £1 million. If you handle large monthly ad spends (£50k+ per client), you may need £2 million or £5 million in cover. Specialist accountants for PPC agencies can advise on appropriate levels based on your commercial scale.

Why is cyber liability insurance essential for managing ad accounts?

Cyber liability insurance protects your business from losses caused by digital attacks and data breaches. For a PPC agency, this is critical because you hold the keys to your clients' advertising budgets. A hacker accessing your team's email could reset passwords and take over ad accounts.

This isn't just about stealing money. A hacker could sabotage campaigns, change targeting to inappropriate content, or simply delete everything. The cost to restore campaigns, investigate the breach, and notify clients can be huge.

A good cyber liability policy covers several key areas. First, it covers the cost of the incident response. This includes forensic IT experts to find out how the breach happened. It also covers legal advice, client notification costs, and credit monitoring for affected individuals.

Second, it covers business interruption. If your systems are down and your team can't work on client campaigns, the policy can cover lost income. Finally, it covers regulatory fines. If client data is compromised, you could face fines from the Information Commissioner's Office (ICO).

Given that PPC platforms are a prime target for fraud, as noted in industry reports on digital risk, this policy is no longer optional. It's a core part of responsible PPC agency insurance coverage.

When do you need employer's liability insurance?

You need employer's liability insurance the moment you hire your first employee. This is a legal requirement in the UK. The law defines an employee broadly. It includes full-time, part-time, temporary, and contract workers under your direct supervision.

Even if you only have one junior account manager, you must have this cover. The policy must provide at least £5 million of protection and be from an authorised insurer. You can be fined £2,500 for every day you are not properly insured.

This insurance protects you if an employee gets ill or injured because of their work. In a PPC agency, this might not seem like a high risk. But consider repetitive strain injury from poor workstation setup, or work-related stress leading to a mental health condition.

If an employee successfully sues you, the costs can be enormous. Legal fees, compensation, and long-term care costs could easily bankrupt a small agency. Employer's liability insurance covers all these costs, protecting your business assets.

You must display your employer's liability insurance certificate in your workplace. If you work remotely, you should make it easily available to your team, such as in a shared digital folder.

What other insurance policies should a PPC agency consider?

Beyond the three core policies, other types of insurance can round out your protection. Public liability insurance covers you if a member of the public is injured or their property is damaged because of your business activities. For example, if a client visits your office and trips over a cable.

Directors' and officers' liability insurance (D&O) is worth considering as you grow. It protects the personal assets of your company directors if they are sued for alleged wrongful acts in managing the business. This could be from a disgruntled shareholder or an employee.

Legal expenses insurance can be useful. It helps cover the cost of pursuing or defending legal actions that aren't covered by other policies. This might include contract disputes with suppliers or employment tribunals.

Finally, consider business contents and equipment insurance. This covers your physical assets like computers, monitors, and office furniture against theft, fire, or damage. If your team works from home, check if the policy covers equipment used outside the main office.

Building a complete PPC agency insurance coverage package means looking at all angles of risk. It's not just about the obvious digital threats.

How much does insurance for a PPC agency typically cost?

Insurance costs vary widely based on your agency's size, revenue, team, and claims history. For a small PPC agency with a few employees and modest client budgets, you might pay between £800 and £2,500 per year for a combined package of essential policies.

Professional indemnity is usually the most expensive part. The price depends on your cover limit (£1m, £2m, £5m), your annual revenue, and the services you offer. Agencies that promise specific performance results often pay more.

Cyber liability insurance has become more standard and affordable. It might add a few hundred pounds to your annual premium. The cost reflects your cybersecurity measures. Using two-factor authentication and having a clear data policy can lower your premium.

Employer's liability insurance is relatively inexpensive, often costing a few hundred pounds per year. The price is linked to your payroll size and the perceived risk of your work.

The best way to get an accurate price is to speak to a broker who specialises in insurance for marketing and tech agencies. They understand the specific risks and can get you quotes from insurers who won't exclude PPC work.

How should PPC agencies document insurance for clients?

You should proactively share your insurance details with clients. It builds trust and is often a contractual requirement. The best practice is to include a clause in your service agreement stating you hold appropriate professional indemnity and cyber liability insurance.

When a client, especially a larger one, asks for proof, provide them with a certificate of insurance. This is a one-page document from your insurer that states your policy numbers, coverage limits, and the period of cover. You can usually generate this from your insurer's online portal.

Do not send your full policy wording unless specifically asked. The certificate is the standard proof. Some clients may ask to be named as an 'additional insured' on your policy. This gives them direct protection under your policy. Discuss this with your broker, as it can sometimes affect your premium.

Keep your insurance documents organised and easily accessible. Renew your policies on time. A lapse in cover, even for a day, could be disastrous if a claim arises during that gap. Using a financial planning template can help you track renewal dates and budget for the costs.

What are the biggest insurance mistakes PPC agencies make?

The biggest mistake is not having any insurance, or assuming a general policy is enough. This leaves you personally liable for six-figure claims. Another common error is underinsuring. Having £500,000 of professional indemnity cover is useless if a client sues you for £750,000 in lost ad spend.

Many agencies forget to update their cover as they grow. If your revenue doubles or you take on a client with a £100k monthly budget, your old insurance limits may be too low. You must inform your insurer of significant changes to your business.

Failing to understand policy exclusions is a major risk. Read the fine print. Some policies exclude claims related to 'guaranteed results' or 'financial performance'. If your contract promises a specific ROI, make sure your insurance doesn't invalidate your cover.

Finally, agencies often treat insurance as a set-and-forget cost. You should review your policies annually with your broker. Discuss new services you offer, changes in client contracts, and new regulations that might affect your risk profile.

When should a PPC agency get professional insurance advice?

You should get advice before you sign your first client contract. Getting the right PPC agency insurance coverage from day one is much easier than trying to fix a problem after a claim. A specialist broker can help you choose the right policies and limits for your business model.

Seek advice again whenever your business changes significantly. This includes hiring your first employee, landing a much larger client, expanding into a new service (like Facebook Ads management), or if your revenue jumps by more than 50%.

If a client makes a formal complaint or threatens legal action, contact your broker immediately. Do not admit liability or agree to anything before speaking to them. Your insurer will guide you through the process and may appoint a lawyer to handle the case.

Think of insurance as a strategic business tool, not just a cost. The right cover lets you trade with confidence, pitch for bigger clients, and sleep at night knowing your life's work is protected. For comprehensive support on building a resilient agency, our commercial insights for agencies explore related financial strategies.