Client contract PI · Practical guide

Decoding client contract PI insurance requirements

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited (FCA FRN 724952) · Published 14 July 2026

Almost every UK commercial and public-sector contract includes a PI insurance clause. The language is often technical, sometimes ambiguous, occasionally impossible to meet at reasonable cost. This guide decodes the common clauses and shows how professional firms structure PI to comply.

The five most common contract requirements

  1. Cover-limit floor — the ‘not less than’ amount.
  2. Per-claim vs aggregate language.
  3. Retroactive date requirements.
  4. Run-off obligation at contract end.
  5. Named-insured / additional-insured requirements.

Cover-limit floor decoded

‘Not less than £X per claim’

The floor amount. Your policy must have at least this per-claim limit. Firms typically carry cover above this to allow for aggregation and multiple claims.

‘Not less than £X in aggregate’

The aggregate limit across all claims in the year. Aggregate limits smaller than per-claim limits are unusual but possible with certain wordings.

‘Each and every claim’ vs ‘in the aggregate’

‘Each and every claim’ = per-claim. Your policy must provide the specified limit for each individual claim, not shared across multiple.

Retroactive date decoded

What it means

The date from which cover applies. Claims arising from acts before the retroactive date are not covered. Client contracts often specify ‘retroactive date not later than [date the client began work with the consultant]’.

Common failure

Consultant starts working with client 2024. Consultant's current PI has retroactive date 2019. Contract specifies retroactive date not later than 2024 — consultant is compliant. If PI retroactive date is 2024, consultant is exposed for any pre-2024 work.

What to test

Retroactive date should be earlier than the earliest engagement date with any client you serve. Continuous cover with no gap is essential; a lapse resets the retroactive date to the new inception.

Run-off obligation decoded

Standard clause

‘Consultant shall maintain PI cover for [X years] after the earlier of contract end or professional retirement.’ This is a contractual obligation to buy run-off.

What length is typical

Six years is the market default. Some contracts specify longer — ten or twelve years. Public-sector prime-contractor and BSA-touching residential contracts commonly require 12 years or more.

Failure to buy run-off

Where the consultant's duty is contractual and they fail to buy run-off, the client can seek damages for the value of the lost cover. Personal exposure follows.

Named-insured / additional-insured decoded

Named insured

The party the policy is issued to. Standard practice: PI is in the consultant's name, not the client's.

Additional insured

Some contracts require the client to be named as additional insured on the consultant's PI. This is unusual and often rejected by PI insurers. Standard practice: consultant provides evidence of cover but does not add client as additional insured.

Waiver of subrogation

Some contracts require waiver of subrogation in favour of the client. This limits the insurer's right to recover from the client after paying a claim. Insurers may or may not agree.

Common contract clauses that cause practical problems

  1. ‘Consultant shall indemnify Client from any and all loss...’ — unlimited indemnity beyond PI cover. Negotiation point.
  2. ‘Cover shall be provided by an A-rated insurer at all times.’ — ties consultant's renewal decision to a rating floor.
  3. ‘Consultant shall not settle any claim without Client's written consent.’ — complicates claim-handling.
  4. ‘Cover shall include cyber liability at £Xm.’ — requires cyber alongside PI; two products, not one.
  5. ‘Consultant shall provide certificate of cover on request.’ — broker's standard task; not usually an issue.

How to structure PI to meet common contract types

Public-sector prime contract

£10m per claim + 12-year run-off + retroactive date to engagement start + A-rated insurer. Layered programme common.

Corporate commercial contract

£5m per claim + 6-year run-off + retroactive date to engagement start. Standard commercial PI.

SME commercial contract

£1m-£2m per claim + 6-year run-off. Standard commercial PI.

Residential development / BSA-touching

£5m-£10m per claim + extended run-off (up to 30 years) + retroactive date discipline. Specialist wording.

Frequently asked

What should I do if a client contract requires cover I can't match?
Negotiate. Excessive requirements are common in template contracts. Broker can advise on realistic market pricing and help structure a compliant response.
Do I need to add my client as additional insured?
Usually no. Standard practice is to provide evidence of cover without naming client. Additional-insured status can complicate claims and is often refused by insurers.
What if my retroactive date is later than a client's contract requires?
Renegotiate the contract or accept the gap. Retroactive date can typically be extended at renewal but not retrospectively made earlier.
How do I prove compliance to my client?
Broker provides certificate of insurance evidencing the specified terms. Some clients require the actual policy document; broker handles this.
What if I'm in breach of contract PI requirements?
Depends on the breach. Contractual damages, right of client to terminate. Immediate remediation via broker is standard first step.

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