Professional indemnity explained

Does PI cover claims from people who are not your client?

Reviewed by the Apex broking team · Last reviewed 2026-10-31

A non-client claim is a professional negligence claim brought by someone you had no contract with, such as a lender, buyer or investor who relied on your work. It matters because your exposure can reach well beyond the people who paid you.

Part of: Professional indemnity insurance

In short

Professional indemnity insurance usually covers civil liability to third parties as well as to clients, provided the claim arises from your professional business and the policy terms are met. Whether a non-client can sue at all depends on the law: a duty of care can arise where you assumed responsibility to them, or knew they would rely on your work for a particular purpose. Reliance letters, collateral warranties and the Contracts (Rights of Third Parties) Act 1999 can also give third parties direct rights. Contractual promises that go beyond your liability at law may need the insurer's agreement.

The short answer

Usually, yes. Most UK professional indemnity insurance is written on a civil liability basis, which means it responds to your legal liability to any third party arising from your professional business, not only to the client who signed your engagement letter. That is subject to the policy terms, exclusions and limit.

There are really two questions. First, can the non-client sue you at all? That is a question of law, and the answer is often no. Second, if they can, will your policy respond? That depends on the wording, and in particular on whether you have accepted extra obligations by contract. Our page on civil liability versus named activities wordings explains why the policy form matters.

When can a non-client bring a claim?

Without a contract, a third party normally has to show that you owed them a duty of care in negligence. For advice and reports, where the loss is usually financial, the courts are cautious.

Negligent misstatement. Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 established that a duty can arise without a contract where there is a special relationship and the adviser assumes responsibility for the statement. On the facts, the bank's disclaimer defeated the claim. See our note on Hedley Byrne and on assumption of responsibility.
Limits on who can rely. In Caparo Industries plc v Dickman [1990] UKHL 2 the House of Lords held that auditors did not owe a duty to an investor who bought shares relying on audited accounts. A duty generally needs the adviser to know that the statement will be passed to an identifiable person or class, for a particular purpose, and relied on. See Caparo v Dickman.
Valuers and buyers. In Smith v Eric S Bush [1990] UKHL 1 a mortgage valuer was held to owe a duty to the house buyer, who paid for the valuation and was very likely to rely on it. Our page on Smith v Eric S Bush covers the detail.

Profession	Typical non-client claimant	How the duty usually arises
Valuers and surveyors	Lender, or the buyer of a mortgaged property	Known reliance on the valuation; lenders also often instruct directly
Architects and engineers	Funder, tenant or later purchaser	Collateral warranty or third party rights
Accountants and auditors	Lender, investor or buyer of the business	Reliance letter, or a specific assumption of responsibility
Solicitors	Intended beneficiary of a will	A duty recognised in limited circumstances

Contracts that give third parties direct rights

Many non-client claims do not rely on negligence at all, because the professional has signed something that creates a direct obligation.

Reliance letters. A letter allowing a named lender or buyer to rely on your report. It can turn a doubtful negligence duty into a clear one, so its terms, including any cap, matter.
Collateral warranties. Common on construction projects, giving funders, tenants and purchasers a contractual right against the designer. Our collateral warranty review and guide to collateral warranties and PI explain what to look for.
Third party rights. Under section 1 of the Contracts (Rights of Third Parties) Act 1999, a third party identified by name, class or description can enforce a contract term if the contract expressly says so, or if the term purports to confer a benefit on them, unless the parties did not intend it to be enforceable. Many professional appointments exclude the Act and grant specific rights instead; see the Act in construction contracts.

How PI usually responds

Where a third party has a valid claim in negligence, a civil liability PI policy usually responds in the same way as it would to a client, subject to its terms. Contractual routes need more care.

Contractual liability exclusions. Policies commonly exclude liability you have accepted by contract that goes beyond what you would owe at law, such as fitness for purpose wording or onerous indemnities in a warranty.
Matching terms. Warranties and reliance letters usually work best when they mirror your appointment, including any liability cap and net contribution clause.
Shared limit. Claims by clients and third parties normally share the same limit of indemnity, which can affect how much cover you need.

Lender claims against valuers are a well known example of third party exposure; see why lenders sue surveyors.

Illustrative examples

Illustrative example 1. An accountant prepares management accounts for a client. Without telling the accountant, the client gives them to a bank to support a loan. The bank later alleges the accounts were wrong. Without knowledge of the bank's reliance, a duty to the bank is much harder to establish, though the PI insurer would usually still handle the defence.

Illustrative example 2. The same accountant signs a reliance letter addressed to the bank for that loan. The bank's position is now much stronger, and the insurer will want to see that the letter's terms were within what the policy covers.

Illustrative example 3. A structural engineer signs a collateral warranty to a tenant that adds a fitness for purpose obligation not in the appointment. A claim based on that extra obligation may fall within a contractual liability exclusion.

Common mistakes and what to check

Assuming no contract means no claim. Reliance by a known third party can be enough.
Signing reliance letters or warranties on the other side's form without review.
Forgetting that reports often travel. Engagement letters that limit who can rely on your work help.
Treating third party claims as outside PI. They are usually inside it, which is why limits should reflect them.

Before your next renewal, ask your broker:

Is the policy a civil liability wording, and does it cover liability to third parties?
What does the contractual liability exclusion say, and which warranty terms would need insurer approval?
Is the limit adequate given how many parties can rely on your work?

For a related scenario, see can a client sue me personally as a director.

Apex arranges PI cover for UK professionals whose work is relied on by third parties; a broker reads every enquiry.

Sources

Frequently asked

Can someone who is not my client sue me for negligence?

Yes, in some circumstances. A non-client can claim if you owed them a duty of care, for example because you knew they would rely on your advice for a particular purpose, or if you gave them direct rights through a reliance letter, collateral warranty or third party rights clause. Many speculative third party claims fail on duty.

Does professional indemnity insurance cover third party claims?

Usually, yes. Most UK PI policies are written on a civil liability basis and cover legal liability to third parties arising from your professional business, subject to the terms. Liability you accepted by contract beyond your legal duties, such as onerous warranty wording, may be excluded unless the insurer agreed it.

What is a reliance letter?

A reliance letter is a document that allows a named third party, such as a lender or buyer, to rely on a report you prepared for someone else. It usually sets out the purpose, any liability cap and how long reliance lasts. Check its terms match your appointment and your PI before signing.

Can I stop third parties relying on my report?

You can reduce the risk. Engagement letters and reports commonly state who the work is for, its purpose, and that no one else may rely on it without your written consent. Disclaimers must be reasonable to be effective against some claimants, so they help but do not guarantee protection.

Do collateral warranties need my insurer's approval?

Often, yes, if the warranty goes beyond your appointment. Many PI policies exclude liability you accept by contract that you would not otherwise owe at law. Insurers or brokers commonly review warranties that add fitness for purpose duties, wider indemnities or longer liability periods. Warranties that mirror the appointment usually raise fewer questions.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.