Question 1

What does professional indemnity insurance cover?

Accepted Answer

Professional indemnity insurance (PI) covers legal defence costs and any damages awarded against you for civil claims arising from your professional services - including negligence, breach of duty, errors, omissions, breach of confidentiality, defamation, and dishonesty of employees. It does not cover criminal liability, contractual liability beyond what would arise by law, or claims arising from work that pre-dates the policy retroactive date.

Question 2

How much PI cover do I need?

Accepted Answer

The minimum depends on your regulator: solicitors regulated by the SRA need a minimum of GBP 2 million (or GBP 3 million for incorporated practices) under the SRA Minimum Terms and Conditions; architects regulated by the ARB need a minimum tied to fee income (typically GBP 250,000 to GBP 2 million); RICS-regulated surveyors have banded minimums based on income. Beyond regulatory minimums, the right limit depends on the value of work, contract requirements, and aggregation exposure.

Question 3

Is professional indemnity insurance mandatory?

Accepted Answer

For most regulated professions in the UK, yes. SRA-regulated solicitors, ARB-regulated architects, RICS-regulated surveyors, ICAEW/ACCA chartered accountants, FCA-regulated financial advisers, and several other regulators require PI cover as a condition of practising. Unregulated consultants are not legally required to hold PI but most client contracts demand it.

Question 4

Whats the difference between claims-made and occurrence-based PI?

Accepted Answer

Almost all UK PI policies are claims-made, meaning the policy responds to claims first notified during the policy period, regardless of when the work was done (subject to the retroactive date). Occurrence-based cover responds to events that happened during the policy period. Claims-made cover is why run-off insurance matters when you retire or close: without it, claims notified after the policy ends are not covered.

Question 5

What is run-off cover and when do I need it?

Accepted Answer

Run-off cover continues to respond to claims arising from past work after a firm has stopped trading, retired, or merged. It is typically held for six years (matching the standard contract limitation period in England and Wales) and is required by most regulators when a regulated firm closes. The premium is usually paid as a single up-front sum.

Question 6

Will making a claim increase my premium?

Accepted Answer

Often yes, particularly if the claim is paid. Insurers re-rate at renewal based on claims experience, the type of incident, whether systems or training changes have been put in place, and the prevailing market conditions for your profession. A notification that does not develop into a paid claim may have a smaller effect.

Question 7

What is a claims-notification or circumstance notification?

Accepted Answer

A circumstance notification is a written report to the insurer of facts that may give rise to a future claim, even if no claim has yet been received. Reporting circumstances during the policy period typically secures cover for any future claim that arises from those facts - even after the policy has ended. Failing to notify can lead to a claim being declined.

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