Liability caps and indemnification for freelancers

These two clauses decide how much you could owe if something goes wrong. In a client's standard template, the answer is often "everything".

Updated 21 October 2026. General information, not legal advice.

Limitation of liability

This clause sets the most each party can owe the other for a mistake. With no cap, a bug, a missed deadline or a typo in a campaign could, in theory, cost far more than the project paid you.

Common protections:

• A cap, often the total fees paid under the contract (or in the last 12 months).
• No indirect losses: lost profits, lost data, lost business and similar consequential damages are excluded.
• Mutual: the same limits apply to both sides.

Many countries do not allow excluding liability for intent, gross negligence or personal injury, which is why the example keeps them outside the cap.

Indemnification

To indemnify means to cover the other party's losses from claims, usually claims brought by someone else. A narrow indemnity is normal: if your work infringes someone's copyright, you cover the client. A broad one, "any claims arising from the services", can make you pay for problems you did not cause.

• Limit it to third-party claims caused by your breach or by infringement in materials you supplied.
• Exclude claims caused by the client's own materials, instructions or changes.
• Make it mutual where the client supplies content you use.
• Keep it within the liability cap, or agree a separate, specific limit.

Insurance

Professional liability (also called errors and omissions) insurance exists for this risk. If a client asks for high limits, ask what insurance they expect you to have and price it in.

This guide is general information, not legal advice. Rules differ between countries and states, and a clause that is common in one place can be unenforceable in another. For a high-stakes contract, ask a lawyer where you or your client are based.