A professional indemnity policy that lapses without run-off can leave a perfectly competent firm uninsured for work it finished a decade ago.
Most UK directors instinctively assume their PI policy works the way their employers’ liability or public liability policy works: if the negligent act happened while you were insured, you are covered. That is not how professional indemnity insurance is written. PI in the UK is almost universally a claims-made product, and the difference between claims-made and occurrence cover is the single most important policy mechanic for any professional firm to understand. Get the trigger wrong at a transition — a renewal, a change of insurer, a merger, a closure — and you can find yourself self-insuring the worst exposures on your back-book.
The trigger of a liability policy is the event the policy uses to decide whether the cover responds. An occurrence policy is triggered by the underlying event — the slip, trip, injury, or property damage — happening during the period of insurance. A claims-made policy is triggered by the claim being made against the insured, or being notified to insurers, during the period of insurance. The negligent act can have happened years earlier.
Public liability and employers’ liability policies are written on an occurrence basis because the legal exposure they cover — bodily injury and property damage — has a date that is easy to identify and broadly contemporaneous with the incident. The construction worker is hurt today, the policy that responds is the one in force today, and the insurer who wrote that policy in 1998 still pays for the disease claim that emerges in 2026.
Professional indemnity does not work that way. The negligent advice given in 2018 may not produce a measurable loss until the client’s transaction unravels in 2026. By that point the professional may have changed insurer five times. If PI were written on an occurrence basis, the 2018 insurer would be on risk for a claim notified in 2026, with all the reserving, reinsurance and pricing uncertainty that implies. The market settled on claims-made because it allows underwriters to close their books with reasonable certainty.
The practical consequence for the insured is that the policy in force when the claim is made — not the policy in force when the work was done — is the policy that pays. Provided the retroactive date is right, that policy will reach back across the firm’s history. If the policy lapses and is not replaced, that historical liability has no insurer attached to it. The firm becomes its own insurer for every piece of work it has ever done.
A standard UK PI wording will set out the insuring clause along the following lines: the insurer agrees to indemnify the insured against civil liability arising from the conduct of the professional business, provided that the claim is first made against the insured during the period of insurance and notified to the insurer in accordance with the policy conditions. Two dates matter alongside the inception date and expiry date: the retroactive date and the date of notification.
The retroactive date is the cut-off behind which the policy will not respond. A policy with a retroactive date of “none” or “unlimited” will respond to any negligent act in the firm’s history, subject to the claim being made during the period of insurance. A policy with a retroactive date of, say, 1 January 2020 will not respond to work done before that date, even if the claim arrives during the current period.
The notification date matters because most policies require notification of circumstances likely to give rise to a claim, not just notification of formal claims. Notifying a circumstance during the policy period locks the cover in for the eventual claim, even if the claim itself arrives years later. Insurance Act 2015 has tightened the law on conditions precedent — section 11 limits an insurer’s ability to refuse a claim where the breach of a clause could not have increased the risk of the actual loss — but the market still treats late notification as a serious issue and brokers should not rely on section 11 doing the work after the event.
The interaction with limitation is where the two triggers diverge most painfully. Limitation Act 1980 gives a claimant six years from breach of contract under section 5 and six years from when damage was suffered in tort under section 2. Section 14A adds a further three-year window from the date of knowledge for latent damage, capped by section 14B at fifteen years from the negligent act. A professional firm therefore has a realistic exposure window of fifteen years for most engagements, and longer where deliberate concealment under section 32 is in play or where the Defective Premises Act 1972 applies. An occurrence policy from 2010 would still be the insurer for a 2024 claim. A claims-made policy bought in 2010 is not — only the policy in force when the 2024 claim is made will respond, provided the retroactive date allows.
A mid-sized design practice changes PI insurer at the 2024 renewal. The outgoing wording had a retroactive date of “none”. The incoming insurer offers a 10% premium reduction but inserts a retroactive date of 1 January 2018, on the basis that the firm has been with its previous insurer since then. The broker accepts the change without flagging the implication.
In late 2025 the practice receives a letter of claim alleging negligent design on a project completed in 2016. The damage — water ingress through an inadequately specified facade detail — emerged in 2024. The claim is properly made against the firm in 2025, during the current period of insurance.
The 2025 policy declines the claim because the negligent act predates the 1 January 2018 retroactive date. The previous insurer declines because the claim was not made during its period of insurance. The firm is uninsured for a claim ultimately settled at £450,000 plus £80,000 of defence costs. Had the retroactive date been preserved at “none” at the 2024 renewal — a point worth at most a small premium uplift to negotiate — the claim would have been paid in full.
Confirm the retroactive date on the expiring policy and require the incoming policy to match it. Do not accept a later retroactive date as a trade-off for premium without quantifying the gap.
Reconcile any change of insurer against your firm’s longest possible limitation exposure. For most professionals the answer is fifteen years under section 14B of the Limitation Act 1980. For surveyors and architects working on dwellings, the answer is now thirty years retrospective under section 135 of the Building Safety Act 2022 — and a renewal without continuity for that work is an immediate problem.
Check the notification clause and the broker’s handling of circumstances. If the firm has identified anything that might become a claim, notify it before renewal so cover attaches to the expiring policy.
Make sure the broker confirms in writing that there is no gap in retroactive cover between the outgoing and incoming policies. A one-line confirmation in the renewal report is sufficient evidence if something goes wrong later.
If the firm is closing, merging or being acquired, treat run-off as a discrete purchase exercise and not a continuation of the existing programme. The economics of run-off are different and the placement is best handled three months ahead of the relevant date.
Apex’s view: claims-made cover is fit for purpose for professional services, but the market still sells it as if buyers understood it. They mostly do not. Every PI renewal where the insurer changes should produce a written confirmation that the retroactive date has been preserved, signed off by someone in the firm who understands what the date means. We have seen firms uninsured for seven-figure claims because nobody noticed a retroactive date had shifted by two years at the previous renewal. That is a brokerage failure as much as an insurer one, and the remedy is process rather than premium.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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