Professional indemnity insurance covers the cost of claims that your professional advice, service or work was negligent, inadequate or caused a client financial loss. Where public liability deals with physical injury and property damage, professional indemnity deals with mistakes in what you advise or produce. Any business that gives advice, handles client data, or delivers a professional service carries the exposure, and for some professions the cover is mandatory.
The defining feature of professional indemnity is that it responds to economic loss caused by a professional failing, rather than physical harm. A missed deadline, a flawed design, negligent advice, or a breach of professional duty can all trigger a claim even where nobody was injured and nothing was physically damaged.
What does professional indemnity cover?
It covers your legal defence costs and any damages where a client alleges you were negligent, made a mistake, gave poor advice, breached a professional duty, or caused them financial loss through your work. Most policies also extend to related exposures such as breach of confidentiality, loss of documents or data, and defamation, though the exact scope varies by wording.
Who needs professional indemnity insurance?
Anyone whose clients rely on their expertise: consultants, accountants, solicitors, architects, engineers, surveyors, designers, IT contractors, marketing agencies and many others. For several regulated professions it is compulsory. Solicitors, accountants, architects and financial advisers, among others, are required by their regulators to hold professional indemnity cover to defined minimum terms.
How is professional indemnity different from public liability?
The two answer different risks. Professional indemnity covers financial loss from your advice or service; public liability covers physical injury or property damage. A consultant who gives negligent advice faces a professional indemnity claim; the same consultant who injures a client’s employee on site faces a public liability claim. Advice-led businesses often need both. Our guide on professional indemnity vs public liability covers the distinction in detail.
What is a claims made policy?
Professional indemnity is almost always written on a claims-made basis, meaning the policy that responds is the one in force when the claim is made against you, not the one in force when you did the work. This matters when you change insurer or stop trading: cover has to be maintained continuously, and run-off cover may be needed after you cease, because a claim can arrive years after the work was done.
How much professional indemnity cover do I need?
Cover is written to a limit of indemnity, and the right level depends on the size of the contracts you handle and the potential loss if your work goes wrong. Regulated professions have minimum limits set by their regulator; others are often guided by client contracts, which increasingly specify a required level. The limit should reflect the largest loss a client could realistically suffer.
Getting the cover right
Professional indemnity wordings vary widely, particularly on the claims-made trigger, run-off and the definition of your professional business, and the right limit depends on your work and your contracts. A broker can match the wording and limit to your exposures and make sure continuity is maintained when you renew or change insurer. To arrange or review professional indemnity cover, get a quote or speak to the team.