COVERTRADE SERVICES
Professional Indemnity Insurance
Comprehensive protection against claims of negligence, errors, or omissions.
What Is Professional Indemnity Insurance?
Professional indemnity insurance covers you when a client says your advice, design or work cost them money. It pays the legal costs of defending the allegation and the compensation if it succeeds, and the defence costs matter as much as the settlement, because they are incurred whether or not the claim turns out to be justified.
It is sometimes called professional liability, PI or professional negligence insurance. Typical claims are a specification that turns out to be wrong, a deadline missed that costs a client a contract, a report that misses something, or advice that loses money. Nobody has to be injured and nothing has to be broken. The loss is purely financial, which is exactly what other policies do not cover.
We arrange it on its own or alongside public and employers' liability and cyber cover, which is how most professional firms end up buying it.
Professional Indemnity Or Public Liability?
They cover different kinds of harm, and having one does not cover you for the other.
Public liability covers physical harm. Someone is injured, or their property is damaged. You knock a laptop off a desk on a client's site, or a visitor trips over your cable.
Professional indemnity covers financial harm caused by your work or advice, with nothing physical involved at all. The drawing was wrong, the figures were wrong, the report missed something, the deadline slipped. The client is not hurt and nothing is broken; they are just out of pocket because of you.
Which you need depends on what you sell. If clients pay for your judgement, drawings, designs, figures or recommendations, that is the exposure professional indemnity exists for. Most professional firms carry both, and many contracts require both by name with a stated limit.
Claims-Made Cover, And Why It Catches People Out
Professional indemnity works differently from almost every other policy you buy. Most cover responds to when something happened. Professional indemnity responds to when the claim is made against you. The policy that pays is the one in force on the day the client complains, not the one you held when you did the work.
Three consequences follow, and each of them surprises somebody every year:
Continuous cover matters more than the premium. Let the policy lapse for a month, and a claim arriving in that month about work from three years ago has nothing to respond to. The old policy has expired and there is no new one.
The retroactive date decides how far back you are covered. A new policy often only covers work carried out after the date you first took cover. Switching insurer without carrying that date across can quietly wipe out years of past work. This is the single most common thing we find wrong on policies people bring to us.
Stopping work does not end the exposure. Claims can arrive years after a job, so when you retire, sell up or close the company you need run-off cover to keep answering for work already done. It is usually bought for six years, matching the limitation period for a contract claim.
How Much Does Professional Indemnity Insurance Cost?
Across the professional indemnity policies we place, premiums start at around £100 a year and the middle of the book sits near £295. A quarter run past £1,000, and specialist work with high limits goes considerably further.
It is one of the cheaper covers to hold and one of the more expensive to be without, because the defence costs alone on a disputed claim will exceed years of premium. What moves it is your profession and the size of the losses your mistakes could cause, your fee income, the limit of indemnity you need (often set by a contract or a regulator rather than by you) and your claims history.
These are premiums arranged for other businesses and are not a quote. Call 02382 000820 and we will go to the market for you.
Who Needs Professional Indemnity Insurance?
For some professions it is not optional. Solicitors, accountants, architects, surveyors, financial advisers, healthcare professionals registered with the HCPC and immigration advisers all have to hold it as a condition of registration or practice, and their regulators set minimum terms and limits.
For everyone else it is the contract that decides. Consultants, IT and web developers, marketing and design agencies, engineers, project managers, recruiters and property professionals are routinely asked to show a certificate before work starts, often at £1m or £2m, and public sector and large corporate contracts almost always specify it.
Our own book skews towards property professionals (letting, management and rent to rent) along with IT and web consultancies and contractors whose work involves design as well as installation. If your trade sits in that last group, the design element is easy to overlook: fitting to someone else's drawing is one exposure, producing the drawing yourself is quite another.
Check These On Your Policy
Four things worth confirming on any professional indemnity policy, including one you already hold.
- The retroactive date. How far back your cover reaches
- Whether defence costs sit inside or on top of the limit
- The limit your contracts actually require
- Whether it is any one claim, or aggregate
Monthly or annual payment, a named account manager, and an out-of-hours number.
Choosing Your Limit Of Indemnity
The limit is the most that can be paid out on a claim, and picking it by feel is how firms end up underinsured. Start with what your contracts require (many name £1m or £2m) then ask the harder question: if your worst mistake went wrong on your largest project, what would putting it right actually cost? On design and specification work, that figure is frequently a multiple of your fee.
Then check two details that decide what the limit is really worth. Are defence costs paid on top of it, or do they come out of it? A £1m limit with costs inside can be substantially eroded before a penny of compensation is paid. And is it “any one claim” or “in the aggregate”? Aggregate means the limit is shared across every claim in the year, so a second claim may find little left.
These are the terms that separate two policies quoting the same headline limit at very different premiums, and they are why comparing professional indemnity on price alone rarely works.
If You Have Had A Claim Or A Complaint
Declare it, including the circumstance that has not become a claim yet. Professional indemnity policies require you to notify anything that might give rise to a claim, and doing so promptly is what secures cover under the policy in force at the time. Saying nothing and hoping a rumbling dispute goes away is the quickest way to lose the cover you have been paying for.
A declared claim narrows the market rather than closing it. Underwriters here read the file. What the dispute was about, whether it was resolved, and what you changed in your process afterwards. Tell us the detail and we will find the insurers prepared to read it.
Run-Off Cover When You Stop
Because the policy responds to when a claim is made rather than when the work was done, cancelling on your last day of trading leaves every previous year unprotected. Run-off cover keeps a policy answering for work already completed after you have stopped doing it, on retirement, on selling the business, or when a company is wound up.
It is normally arranged for six years, matching the limitation period for a contract claim, and the premium usually steps down each year as the exposure ages. If you are selling, buyers and their solicitors will ask about it, so it is worth settling before the negotiation rather than during it. Premiums can be paid monthly or annually.
What We Need To Quote
What your business actually does and the services you provide, your annual fee income, the limit of indemnity you need and whether a contract or regulator sets it, the retroactive date on any policy you already hold, your qualifications and how long you have been trading, and any claims or circumstances in the last five years. A copy of your current schedule answers most of it.
Protect Your Business
So why wait? Protect your business today with CoverTrade's comprehensive insurance coverage. Contact us now to schedule a consultation with one of our expert advisors.
Cover that often goes with this
The gaps we most often find sitting next to this policy.
Common questions
What does professional indemnity insurance cover?+
It covers claims that your advice, design or work caused a client a financial loss: a wrong specification, a report that missed something, a missed deadline that cost them a contract, advice that lost them money. It pays the cost of defending the allegation as well as any compensation, which matters because defence costs are incurred whether or not the claim turns out to be justified. Nothing has to be physically damaged and nobody has to be injured; the loss is purely financial.
What is the difference between professional indemnity and public liability insurance?+
Public liability covers physical harm. Someone is injured or their property is damaged. Professional indemnity covers financial harm caused by your work or advice, with nothing physical involved. Knock a laptop off a client's desk and that is public liability; give them a figure that turns out to be wrong and costs them £40,000 and that is professional indemnity. Having one does not cover you for the other, and most professional firms carry both.
Do I really need professional indemnity insurance?+
If you are a solicitor, accountant, architect, surveyor, financial adviser, healthcare professional registered with the HCPC or an immigration adviser, it is compulsory as a condition of registration. For everyone else it is usually the contract that decides: consultants, IT and web developers, agencies, engineers, project managers and property professionals are routinely asked to show a certificate at £1m or £2m before work starts. The practical test is whether clients are paying for your judgement.
How much does professional indemnity insurance cost?+
Across the policies we place, premiums start at around £100 a year and the middle of our book sits near £295. A quarter run past £1,000, and specialist work at high limits goes considerably further. It is one of the cheaper covers to hold and one of the more expensive to be without, because defence costs alone on a disputed claim exceed years of premium.
What is a retroactive date?+
It is the date your cover reaches back to. Professional indemnity responds to when a claim is made, not when the work was done, so a policy taken out today will often only cover work carried out after the day you first took cover. If you switch insurer and the retroactive date is not carried across, years of past work can quietly lose their protection. It is the single most common fault we find on policies people bring to us, worth checking on yours now.
What is run-off cover and do I need it?+
Run-off cover keeps a professional indemnity policy answering for work you have already completed after you stop trading. Because claims can arrive years after the job, cancelling on your last day leaves every previous year unprotected. It is normally arranged for six years, matching the limitation period for a contract claim, and the premium steps down each year. If you are selling the business, buyers and their solicitors will ask about it.
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