Professional Indemnity Insurance
Public liability answers for injury and damaged property. Professional indemnity insurance answers for the far more common commercial disaster: a specification that did not work, a report that was wrong, a design that had to be rebuilt — pure financial loss, with nothing broken and nobody injured. It is written on a claims-made basis, which is where most of the trouble starts.
Not the Same Thing as Public Liability
Professional indemnity responds to civil liability arising out of your professional services — the advice, designs, specifications, reports and recommendations you are paid for — and it usually funds the cost of defending the allegation as well as any damages.
The distinction that matters is the nature of the loss. Public liability is built around bodily injury and damage to third-party property. If a consultant specifies equipment that cannot meet the client’s production requirement, nobody is injured and nothing is broken; the client simply loses the cost of redesign, replacement and the output they did not get. That is a pure financial loss, it is outside a public liability wording, and it is precisely what PI is for.
It is also not directors’ and officers’ cover. PI answers for the firm’s professional work. D&O answers for what a director did in running the business. A firm that needs one frequently needs the other, and they are not interchangeable.
It is one of seven covers in the same family; our liability insurance page sets out which of them answers which claim.
Four Reasons
Professional indemnity is not universally compulsory. There are three ways a firm ends up needing it, and a fourth way it ends up wishing it had.
Several professional bodies set minimum terms as a condition of practising. Falling below them can stop you practising lawfully and can trigger disciplinary consequences, not just a coverage gap.
Client appointments, framework agreements and public-sector contracts routinely specify a limit. Winning the work can depend on evidencing cover that matches the clause before you start on site.
If clients act on your drawings, reports, calculations or recommendations, they can lose money when those turn out to be wrong. No regulator has to ask before that exposure exists.
Passing professional work to another firm does not pass the liability with it. Your appointment is with the client, and their claim comes to you first whoever actually did the work.
The Mechanism Nobody Explains
Most business insurance responds to events during the policy year. Professional indemnity does not. It responds to claims made and notified during the policy year, whenever the work was done. Three consequences follow, and all three catch firms out.
The retroactive date. Your policy will cover past work back to a stated date and no further. A firm that has changed insurer several times, or had a gap, can find a decade-old project sitting outside every policy it has ever held.
Circumstances, not just claims. If something has gone wrong and might turn into a claim, it usually has to be notified now, under the policy currently in force. Waiting until the letter arrives can move the claim into a policy year that will not accept it — and switching insurer in between is exactly when that gap opens.
Run-off. Closing the company or retiring does not stop the work generating claims. Cover has to continue after you stop trading for as long as the exposure lasts, and legal limitation periods and insurance duration answer two different questions. One does not extinguish the other.
Minimum Terms
These are the current published positions for three of the professions Park acts for. They change, and adequate cover often means more than the minimum.
SRA minimum terms require at least £3m per claim for relevant recognised and licensed bodies, and £2m otherwise. Defence costs sit outside that minimum, so the real requirement is higher than the headline figure.
Minimum limits are set by preceding-year turnover: up to £100,000 of turnover, £250,000 of cover; £100,001 to £200,000, £500,000; above £200,001, £1m. Special activities carry their own wording requirements.
Current ARB guidance supports adequate and appropriate cover, normally at least £250,000 each claim, with specified exceptions where aggregate cover applies. It is guidance, and departures need justifying.
Most professions have no statutory minimum at all. The number then comes from the client contract, from what the firm could actually absorb, and from the largest single project it has on the go at the time.
These figures are the published minimums at the time of writing and they are reviewed by the bodies that set them — RICS in particular has issued updated UK minimum wording during 2026. They are a floor, not a recommendation: adequate cover for a practice frequently sits well above its regulatory minimum, and the right number depends on the work, the contracts and the claims history rather than on the profession alone. Check the current rules for your own body, or ask us and we will check them with you.
Reading the Clause
A contractual limit is four questions pretending to be one number. We read the clause against the policy before you sign, not after a claim.
Five million each and every claim is a very different policy from five million in total for the year. A firm with three live disputes discovers which one it bought at the worst possible moment.
Costs inclusive of the limit erodes the cover every time a solicitor is instructed. Costs in addition leaves the limit intact for damages. On a long technical dispute the difference is substantial.
Many appointments require cover to be maintained for six or twelve years after completion. That is a run-off obligation, and it binds the practice long after the fee has been spent and forgotten.
Contracts imposing a fitness-for-purpose or guarantee obligation go beyond reasonable skill and care, which is what PI insures. The clause can be uninsurable as drafted, and it is worth knowing before signing.
Before You Renew
Two policies with the same limit and the same premium can behave completely differently. It is settled in the definitions.
The definition of your professional business is the gate every claim passes through. Services you have added, or ones you used to offer and quietly stopped, need to be inside it or the claim does not start.
Some wordings respond to negligent acts only. Others extend to wider civil liability — breach of confidentiality, intellectual property, defamation. Which one you hold is a definition, not a limit.
Loss of documents and the dishonesty of employees are commonly separate insuring clauses. Both are omitted more often than anyone notices, and both produce claims that feel like they should be covered.
The cost of putting the work right, and of acting to stop a loss getting worse, may be covered, sub-limited or excluded outright. This is where the difference between two wordings shows up in pounds.
Professional indemnity rarely stands alone. For most practices it sits inside a wider business insurance programme alongside public liability, employers’ liability and office cover, and for multi-entity or group practices inside a corporate insurance programme where the named insureds and the contractual obligations have to line up across every company.
Named People
Fee income by service, the largest project on the books, the services you have dropped, and anything that has gone quiet but not away. It is a longer conversation than most covers and it is the one that sets the terms.
Ian Snowdon looks after professional services clients and places most of the PI on our book. Paula Hunter and Kate Thompson handle new appointments and renewals across the same trades. Colin Thompson runs notifications from this office — and on a claims-made policy, notifying a circumstance correctly and on time is most of the work. The full process is on our claims support page and the rest of the team is on meet the team.
Professional Indemnity Enquiry
Six questions and an optional upload. The two that matter most are what you do now and what you used to do — historic services are where claims-made cover goes wrong. Attach the current schedule if you have it, and the contract clause if a client has asked you for a limit. We will come back within one working day. No fee, no obligation.
Common Questions
Public liability responds to injury and damage to third-party property. Professional indemnity responds to financial loss caused by your professional work when nothing has been broken and nobody has been hurt. Most professional firms need both, and neither substitutes for the other.
Not universally. It is compulsory for some regulated professions as a condition of practising, it is frequently required by client contracts, and for everyone else it is a commercial decision. The consequences of not holding it differ completely between those three.
The policy that responds is the one in force when the claim is made against you and notified, not the one that was in force when you did the work. That is why the retroactive date, prompt notification of circumstances and continuity between insurers all matter so much.
Probably. Work you did before you stopped can still generate a claim, and a claims-made policy only responds if cover is in force when that claim arrives. Run-off cover exists for exactly this, and some professional bodies and contracts require it for a set period.
It depends what the clause means. Five million each claim is not the same as five million in aggregate, and whether defence costs sit inside or outside the limit changes the real protection considerably. Send us the clause and we will read it against the policy.
Your appointment is with the client, so their claim comes to you regardless of who did the work. Whether your policy responds, and whether you can then recover from the subcontractor, depends on the wording and on what their own cover looks like. Both are worth checking before the project, not after.
Yes. Send the schedule and we will tell you what we would change. If it is correctly arranged, we will say so.
